As filed with the Securities and Exchange Commission on August 22, 2013September 28, 2016
Registration No. 333-190027333-213591
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MID-AMERICA APARTMENT COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
| Tennessee | 6798 | 62-1543819 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer | ||
Identification Number) |
6584 Poplar Avenue
Memphis, Tennessee 38138
(901) 682-6600
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
H. Eric Bolton, Jr.
Chairman of the Board of Directors and
Chief Executive Officer
6584 Poplar Avenue Suite 300
Memphis, Tennessee 38138
(901) 682-6600
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| Gilbert G. Menna, Esq. | Richard F. Mattern, Esq. | |||
| Mark S. Opper, Esq. | ||||
| Goodwin Procter LLP | ||||
| The New York Times Building | ||||
| 620 Eighth Avenue | ||||
| New York, New York 10018 | ||||
| Tel: (212) 813-8800 | ||||
| Fax: (212) 355-3333 | Fax: (901) 549-5999 | |||
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions to the closing of the mergers described herein.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.¨
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):¨
| Large Accelerated filer | x | Accelerated filer | ¨ | |||
| Non-accelerated filer | ¨ (Do not check if a small reporting company) | Smaller reporting company | ¨ | |||
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ¨
Exchange Act Rule 14d-1(d) (Cross-Border Issuer Third Party Tender Offer) ¨
CALCULATION OF REGISTRATION FEE
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| Title of each class of securities to be registered | Amount to be registered(1) | Proposed maximum offering price per share | Proposed maximum aggregate offering price(2)’ | Amount of registration fee(3) (4) | ||||
Common Stock, $0.01 par value per share | 33,567,969 shares | N/A | $2,242,131,222 | $305,826.70 | ||||
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Title of each class of securities to be registered | Amount to be registered | Proposed maximum offering price per share | Proposed maximum aggregate offering price | Amount of registration fee(1)(6) | ||||
Common Stock, $0.01 par value per share | 38,182,840 shares(2) | N/A | $3,520,350,102(3) | $354,500 | ||||
8.50% Series I Cumulative Redeemable Preferred Stock, $0.01 par value per share | 867,846 shares(4) | N/A | $59,916,088(5) | $6,034 | ||||
| (1) | Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $100.70 per $1 million of the proposed maximum aggregate offering price. |
| (2) | Represents the estimated maximum number of shares of Mid-America Apartment Communities, Inc. |
| Estimated solely for purposes of calculating the registration fee required by Section 6(b) of the Securities Act, and calculated pursuant to Rules 457(f)(1) and 457(c) under the Securities Act. The proposed maximum aggregate offering price of the MAA common stock was calculated based upon the market value of |
| (4) | Represents the estimated maximum number of shares of 8.50% Series I Cumulative Redeemable Preferred Stock of MAA to be issued in connection with the parent merger described herein, calculated by applying the exchange ratio of one share of 8.50% Series I Cumulative Redeemable Preferred Stock of MAA for one share of 8 1⁄2% Series A Cumulative Redeemable Preferred Shares of Post Properties to 867,846 shares of 8 1⁄2% Series A Cumulative Redeemable Preferred Shares of Post Properties outstanding as of September 9, 2016. |
| (5) | Estimated solely for purposes of calculating the registration fee required by Section 6(b) of the Securities Act, and |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this joint proxy statement/prospectus is not complete and may be changed. Mid-America Apartment Communities, Inc. may not sell the securities offered by this joint proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell these securities nor should it be considered a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY—SUBJECT TO COMPLETION, DATED AUGUST 22, 2013SEPTEMBER 28, 2016
JOINT PROXY STATEMENT/PROSPECTUS
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To the Shareholders of Mid-America Apartment Communities, Inc. and the Shareholders of ColonialPost Properties, Trust:Inc.:
The board of directors of Mid-America Apartment Communities, Inc., which we refer to as MAA, and the board of trusteesdirectors of ColonialPost Properties, Trust,Inc., which we refer to as Colonial,Post Properties, have each unanimously approved an agreement and plan of merger, dated as of June 3, 2013,August 15, 2016, by and among MAA, Mid-America Apartments, L.P., Martha Merger Sub, LP, ColonialPost Properties, Post GP Holdings, Inc. and Colonial Realty Limited Partnership,Post Apartment Homes, L.P., which we refer to as the merger agreement. Pursuant to the merger agreement, MAA and ColonialPost Properties will combine through a merger of ColonialPost Properties with and into MAA, with MAA surviving the merger, which we refer to as the parent merger. If completed, we believe the parent merger will create the preeminentpremier Sunbelt-focused multifamily real estate investment trust or REIT, in the United States with a pro forma total market capitalization of approximately $8.7$17 billion and a pro forma equity market capitalization of approximately $5.4$12 billion, each as of June 30, 2013.August 12, 2016, the last trading day before the announcement of the parent merger. The combined company, which we refer to as the Combined Corporation, will retain the name “Mid-America Apartment Communities, Inc.” and its common stock will continue to trade on the New York Stock Exchange, or NYSE, under the symbol “MAA.” H. Eric Bolton, Jr., the current chairman and chief executive officer of MAA, will serve as the chairman and chief executive officer of the Combined Corporation following the parent merger. The obligations of MAA and ColonialPost Properties to effect the parent merger are subject to the satisfaction or waiver of certain conditions set forth in the merger agreement (including the approvals of each company’sthe MAA and Post Properties shareholders).
If the parent merger is completed pursuant to the merger agreement, each ColonialPost Properties shareholder will receive 0.3600.71 shares of MAA’s common stock, $0.01 par value per share, which we refer to as MAA common stock, for each Colonial common share of beneficial interest,Post Properties’ common stock, $0.01 par value per share, which we refer to as ColonialPost Properties common shares,stock, held immediately prior to the effective time of the parent merger, with cash paid for fractional Colonialshares of Post Properties common shares.stock. MAA shareholders will continue to hold their existing shares of MAA common stock. The exchange ratio is fixed and will not be adjusted to reflect changes in the price of MAA common stock or the price of ColonialPost Properties common sharesstock occurring prior to the completion of the parent merger. MAA common stock is currently listed on the NYSE under the symbol “MAA” and ColonialPost Properties common shares arestock is currently listed on the NYSE under the symbol “CLP.“PPS.” Based on the closing price of MAA common stock on the NYSE of $67.97$102.15 on May 31, 2013,August 12, 2016, the last trading date before the announcement of the proposedparent merger, the 0.3600.71 exchange ratio represented approximately $24.47$72.53 in MAA common stock for each Colonialshare of Post Properties common share.stock. Based on the closing price of MAA common stock on the NYSE of $62.26 on August 20, 2013,$95.95 onSeptember 27, 2016, the latest practicable datetrading day before the date of this joint proxy statement/prospectus, the 0.3600.71 exchange ratio represented approximately $22.41approximately$68.12 in MAA common stock for each Colonialshare of Post Properties common share.stock. The value of the merger consideration will fluctuate with changes in the market price of MAA common stock.stock. We urge you to obtain current market quotations for MAA commonstockand Post Properties common stock.
In addition, in the parent merger, each outstanding share of Post Properties’ 8 1⁄2% Series A Cumulative Redeemable Preferred Shares, $0.01 par value per share, which we refer to as Post Properties Series A preferred stock, will be automatically converted into the right to receive one newly issued share of MAA’s 8.50% Series I Cumulative Redeemable Preferred Stock, $0.01 par value per share, which we refer to as MAA Series I preferred stock, which will have the same rights, preferences, privileges and Colonial common shares.voting powers as those of the Post Properties Series A preferred stock.
We anticipate that MAA will issue approximately 31.9 million37,991,387 shares of MAA common stock in connection with the parent merger, will reserve approximately 1.6 million109,989 shares of MAA common stock in respect of ColonialPost Properties equity awards that MAA will assume in connection with the parent merger, and will reserve
approximately 2.6 million80,276 shares of MAA common stock in respect of the potential conversion of limited partnership units issued by Mid-America Apartments, L.P., which we refer to as MAA LP, to former limited partners of Colonial Realty Limited Partnership,Post Apartment Homes, L.P., which we refer to as ColonialPost LP. Upon the completion of the parent merger, we estimate that continuing MAA equity holderscommon shareholders will own approximately 56%67.7% of the issued and outstanding shares of common stock of the Combined Corporation, assuming the conversion of all limited partnership units of MAA LP held by existing limited partners of MAA LP to shares of Combined Corporation common stock, and former Colonial equity holdersPost Properties common shareholders will own approximately 44%32.3% of the issued and outstanding shares of common stock of the Combined Corporation, assuming the conversion to shares of Combined Corporation common stock of all limited partnership units issued by MAA LP to former limited partners of ColonialPost LP. We also anticipate that MAA will issue 867,846 shares of MAA Series I preferred stock in connection with the parent merger in exchange for 867,846 shares of Post Properties Series A preferred stock that are currently outstanding.
MAA and ColonialPost Properties will each be holding a special meeting of their respective shareholders. At the MAA special meeting, MAA shareholders will be asked to vote on (i) a proposal to approve the merger agreement, the
parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to ColonialPost Properties shareholders, (ii) a proposal to approve an amendment to the MAA 2013 Stock Incentive Plan,charter to increase the number of authorized shares of MAA common stock from 100,000,000 shares to 145,000,000 shares, which we sometimes refer to as the MAA charter amendment, and (iii) a proposal to approve one or more adjournments of the MAA special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the proposalproposals to approve and adopt the merger agreement, the parent merger and the other transactions contemplated by the merger agreement.agreement and to approve the MAA charter amendment. At the ColonialPost Properties special meeting, ColonialPost Properties shareholders will be asked to vote on (i) a proposal to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger, dated as of June 3, 2013, between MAA and Colonial, and the other transactions contemplated by the merger agreement, (ii) an advisory (non-binding) proposal to approve compensation payable to certain executive officers of ColonialPost Properties in connection with the parent merger, and (iii) a proposal to approve one or more adjournments of the Post Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the proposal to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement.
The record date for determining the shareholders entitled to receive notice of, and to vote at, the MAA special meeting and the ColonialPost Properties special meeting is August 22, 2013.September 26, 2016. The parent merger cannot be completed unless the MAA shareholders and Colonial shareholders eachproposals to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement byrequire the affirmative vote of the holders of each of (i) a majority of the outstanding shares of MAA common stock entitled to vote on the parent mergerthereon and (ii) a majority of the outstanding Colonialshares of Post Properties common sharesstock entitled to vote onthereon. The parent merger cannot be completed without the approval by MAA shareholders and Post Properties shareholders of these proposals. In addition, the proposal to approve the MAA charter amendment requires the affirmative vote of a majority of the shares of MAA common stock present in person or by proxy at the MAA special meeting and entitled to vote thereon. The parent merger.merger cannot be completed without the approval by MAA shareholders of this proposal.
The MAA board of directors, which we refer to as the MAA Board, has unanimously (i) determined and declared that the merger agreement, the merger and the other transactions contemplated by the merger agreement, including the issuance of MAA common stock to ColonialPost Properties shareholders in connection with the parent merger, are advisable and in the best interests of MAA and its shareholders, and (ii) adopted and approved the merger agreement, the parent merger and the other transactions contemplated thereby.thereby, and (iii) determined and declared that, due to the transactions contemplated by the merger agreement, it is necessary, advisable, desirable and in the best interest of MAA to amend the MAA charter to increase the number of shares of MAA common stock authorized for issuance from 100,000,000 shares to 145,000,000 shares. The MAA Board unanimously recommends that MAA shareholders vote FOR the proposal to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance ofshares ofMAA commonstockto ColonialPost Properties shareholders, FOR the proposal to approve an amendment tothe MAA 2013 Stock Incentive Plancharter to increase the number of authorized shares of MAA common stock from 100,000,000shares to 145,000,000 shares, and FOR the proposal toapprove one or more adjournments of the MAA
specialmeeting, if necessary or appropriate,including adjournments to permit further solicitation ofproxies in favor of the proposalproposals to approve and adopt the merger agreement, the parent merger and the other transactions contemplated by the merger agreement.agreement and to approve the MAA charter amendment.
The ColonialPost Properties board of trustees,directors, which we refer to as the ColonialPost Properties Board, has unanimously (i) determined that the parent merger (including the plan of merger) and the other transactions contemplated by the merger agreement areapproved, adopted, declared advisable and in the best interests of Colonial and its shareholders, and (ii) approved and adoptedauthorized the merger agreement and the plantransactions contemplated thereby, including the parent merger and the merger, prior to the parent merger, of merger.Post LP with and into MAA LP, with MAA LP continuing as the surviving entity pursuant to the terms of the merger agreement, and (ii) recommended the approval of the merger agreement and the parent merger by Post Properties shareholders. The ColonialPost Properties Board unanimously recommends that ColonialPost Properties shareholders vote FOR the proposal to approve and adopt the merger agreement,the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement, FORthe advisory (non-binding) proposal to approve compensation payable to certain executive officers of ColonialPost Properties in connection with the mergers, parent merger,and FOR the proposal toapprove one or more adjournments of the ColonialPost Properties specialmeeting, if necessary or appropriate,including adjournments to permit further solicitation ofproxies in favor of the proposal to approve and adopt the merger agreement and the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement.agreement.
This joint proxy statement/prospectus contains important information about MAA, Colonial,Post Properties, the parent merger, the merger agreement and the special meetings. This document is also a prospectus for shares of MAA common stock and MAA Series I preferred stock that will be issued to Colonial shareholdersholders of Post Properties common stock and Post Properties Series A preferred stock, respectively, pursuant to the merger agreement.We encourage you to read this joint proxy statement/prospectus carefully before voting, including the section entitled“Risk Factors” beginning on page 32.36.
Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attendthe MAAspecial meeting orthe Colonial Post Propertiesspecial meeting, as applicable, please submit a proxy to vote your shares as promptly as possible to make sure that yourshares ofMAA commonstockand/or ColonialPost Properties common shares,stock, as applicable, are represented at the applicablespecialmeeting.Please review this
joint proxy statement/prospectus for more complete information regarding the parent merger and the MAA special meeting and the ColonialPost Properties special meeting, as applicable.
If you are a MAA shareholder and have any questions or need assistance voting your shares, please call MAA’s proxy solicitor, D.F. King & Co., Inc., at (866) 811-1442 (toll free) or (212) 269-5550 (call collect). If you are a Post Properties shareholder and have any questions or need assistance voting your shares, please call Post Properties’ proxy solicitor, Innisfree M&A Incorporated at (888) 750-5834 (toll free).
Sincerely,
H. Eric Bolton, Jr. | David P. Stockert | |
| Chairman and Chief Executive Officer | President and Chief Executive Officer | |
| Mid-America Apartment Communities, Inc. |
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Neither the Securities and Exchange Commission, nor any state securities regulatory authority has approved or disapproved of the parent merger or the other transactions contemplated by the merger agreement or the securities to be issued under this joint proxy statement/prospectus or has passed upon the adequacy or accuracy of the disclosure in this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated [—[●], 2013,2016, and is first being mailed to MAA and ColonialPost Properties shareholders on or about [—[●], 2013.2016.
MID-AMERICA APARTMENT COMMUNITIES, INC.
6584 Poplar Avenue
Memphis, Tennessee 38138
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 27, 2013NOVEMBER 10, 2016
To the Shareholders of Mid-America Apartment Communities, Inc.:
You are invited to attend a special meeting of shareholders of Mid-America Apartment Communities, Inc., a Tennessee corporation, which we refer to as MAA. The meeting will be held at 9:00at8:30 a.m., Central Daylight Time, on September 27, 2013,local time, onNovember 10, 2016, at MAA’s corporate headquarters, 6584 Poplar Avenue, Memphis, Tennessee 38138, to consider and vote upon the following matters:
a proposal to approve the Agreement and Plan of Merger, as it may be amended or modified from time-to-time, which we refer to as the merger agreement, by and among MAA, Mid-America Apartments, L.P., Martha Merger Sub, LP, Colonial Properties Trust, an Alabama real estate investment trust, which we refer to as Colonial, and Colonial Realty Limited Partnership, pursuant to which Colonial will merge with and into MAA, with MAA continuing as the surviving corporation, which we refer to as the parent merger, and the other transactions contemplated by the merger agreement, including the issuance of MAA common stock to Colonial shareholders in connection with the parent merger;
| 1. | a proposal to approve the Agreement and Plan of Merger, as it may be amended or modified from time to time, which we refer to as the merger agreement, by and among MAA, Mid-America Apartments, L.P., a Tennessee limited partnership, which we refer to as MAA LP, Post Properties, Inc., a Georgia corporation, which we refer to as Post Properties, Post GP Holdings, Inc., a Georgia corporation, and Post Apartment Homes, L.P., a Georgia limited partnership, pursuant to which Post Properties will merge with and into MAA, with MAA continuing as the surviving corporation, which we refer to as the parent merger, and the other transactions contemplated by the merger agreement, including the issuance of MAA common stock to Post Properties shareholders in connection with the parent merger; |
a proposal to approve the MAA 2013 Stock Incentive Plan; and
| 2. | a proposal to approve an amendment to the Amended and Restated Charter, as amended, of MAA, which we refer to as the MAA charter, to increase the number of authorized shares of common stock from 100,000,000 shares to 145,000,000 shares, which we refer to as the MAA charter amendment; and |
| 3. | a proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the merger proposal and the MAA charter amendment proposal, which we refer to as the MAA adjournment proposal. |
a proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the merger proposal.
THE MAA BOARD HAS UNANIMOUSLY ADOPTED AND APPROVED THE MERGER AGREEMENT, THE PARENT MERGER, AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND THE MAA CHARTER AMENDMENT, AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL PROPOSALS.
MAA does not expect to transact any other business at the MAA special meeting. MAA common shareholders of record at the close of business on August 22, 2013onSeptember 26, 2016 are entitled to receive this notice and vote at the MAA special meeting.
The proposal to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of MAA common stock.stock entitled to vote thereon. The proposal to approve the MAA charter amendment requires the affirmative vote of a majority of shares of MAA common stock present in person or by proxy and entitled to vote. The parent merger cannot be completed without the approval by MAA shareholders of this proposal.these proposals. The proposals to approve the MAA 2013 Stock Incentive Plan andproposal to adjourn the MAA special meeting requirerequires that the votes cast “FOR” eachthe proposal exceed the votes cast “AGAINST” eachthe proposal. Approval of the MAA 2013 Stock Incentive Plan is not a condition to the completion of the parent merger.
Please refer to the attachedaccompanying joint proxy statement/prospectus for further information with respect to the business to be transacted at the MAA special meeting.
Please refer to the proxy card and the accompanying joint proxy statement/prospectus for information regarding your voting options. Even if you plan to attend the MAA special meeting, please take advantage of one of the advance voting options to assure that your shares of MAA common stock are represented at the MAA special meeting. You may revoke your proxy at any time before it is voted by following the procedures described in the accompanying joint proxy statement/prospectus.
By Order of the Board of Directors
Leslie B.C. Wolfgang
Senior Vice President, Director of Investor RelationsChief Ethics and Compliance Officer
and Corporate Secretary
Memphis, Tennessee
[—●], 20132016
Your vote is important. Whether or not you expect to attend the MAA special meeting in person, we urge you to vote your shares of MAA common stock as promptly as possible by (1) accessing the internetInternet website specified on your proxy card, (2) calling the toll-free number specified on your proxy card, or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares of MAA common stock may be represented and voted at the MAA special meeting. If your shares of MAA common stock are held in the name of a bank, broker or other fiduciary,nominee, please follow the instructions on the voting instruction card furnished by the record holder of your shares of MAA common stock.
Colonial Properties Trust4401 Northside Parkway, Suite 800
2101 Sixth Avenue North, Suite 750Atlanta, Georgia 30327
Birmingham, Alabama 35203
(205) 250-8700(404) 846-5000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 27, 2013NOVEMBER 10, 2016
To the Shareholders of ColonialPost Properties, Trust:Inc.:
A special meeting of the shareholders of ColonialPost Properties, Trust, an Alabama real estate investment trust,Inc., a Georgia corporation, referred to in this joint proxy statement/prospectus as Colonial,Post Properties, will be held inat the conference center on the 1st flooroffices of the Colonial Brookwood Center, 569 Brookwood Village, Suite 131, Homewood, Alabama 35209 on September 27, 2013King & Spalding LLP located at 1180 Peachtree Street N.E., Atlanta, Georgia 30309, onNovember 10, 2016 commencing at 10:at9:30 a.m., local time, forto consider and vote upon the following purposes:matters:
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| 3. |
We do not expect to transact any other business at the ColonialPost Properties special meeting. ShareholdersPost Properties common shareholders of record at the close of business on August 22, 2013onSeptember 26, 2016 are entitled to notice of and to vote at the ColonialPost Properties special meeting and at any adjournment or postponement of the ColonialPost Properties special meeting.
The merger agreement and plan of merger and the compensation payable under existing arrangements that certain executive officers of ColonialPost Properties may receive in connection with the parent merger are more fully described in the accompanying joint proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. A copy of the merger agreement is included as Annex A to the accompanying joint proxy statement/prospectus, and a copy of the plan of merger is included as Annex B to the accompanying joint proxy statement/prospectus. The accompanying joint proxy statement/prospectus is a part of this notice.
All ColonialPost Properties shareholders of record are cordially invited to attend the ColonialPost Properties special meeting.Even if you plan to attend the ColonialPost Properties special meeting, we urge you to submit a valid proxy promptly.If your Colonial common shares are registered in your own name, you may submit your proxy by (1) filling out and signing the proxy card, and then mailing your signed proxy card in the enclosed postage-paid reply envelope, (2) authorizing the voting of your shares over the Internet atwww.proxyvoting.com/colonial, or (3) calling toll free(877) 215-9164 and following the instructions on the enclosed proxy card. If your Colonial common shares are held in “street name,” you should follow the enclosed instructions that your broker, bank, or other nominee has provided.
Your vote is very important regardless of the number of Colonialshares of Post Properties common sharesstock you own. We cannot complete the parent merger unless the Post Properties merger agreement and parent merger pursuant to the plan of merger areproposal is approved and adopted by the affirmative vote of the holders of at least a majority of the outstanding Colonialshares of Post Properties common sharesstock entitled to vote on such proposal. Accordingly, we urge you to review the enclosed materials and request that you complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying postage-paid reply envelope or submit your proxy over the Internet or by telephone.
Under Alabama law, ColonialPost Properties shareholders who do not vote in favor of the proposal to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement will have the right to dissent from the parent merger and obtain paymentseek appraisal of the fair value of their shares if the parent merger is consummated, but only if they submit a written noticecompleted. See the section entitled “No Dissenters’ Rights” beginning on page 171 of their intent to demand payment to Colonial prior to the Colonial special meeting and comply with the other requirements of Article 13 of the Alabama Business Corporation Law (the “ABCL”) explained in the joint proxy statement/prospectus accompanying this notice. A copy of the applicable ABCL statutory provisions is included as Annex H to the accompanying joint proxy statement/prospectus, and a summary of these provisions can be found under “Dissenters’ Rights” in the accompanying joint proxy statement/prospectus.
Colonial’s board of trustees unanimously recommends that you votePOST PROPERTIES’ BOARD OF DIRECTORS, WHICH WE REFER TO AS THE POST PROPERTIES BOARD, UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR approval and adoption APPROVAL OF THE MERGER AGREEMENT, THE PARENT MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AS DESCRIBED IN THE POST PROPERTIES MERGER PROPOSAL, FOR APPROVAL, ON AN ADVISORY (NON-BINDING) BASIS, OF THE COMPENSATION PAYABLE TO CERTAIN POST PROPERTIES EXECUTIVE OFFICERS DESCRIBED IN THE MERGER-RELATED COMPENSATION PROPOSAL AND FOR APPROVAL OF ONE OR MORE ADJOURNMENTS OF THE SPECIAL MEETING IN ACCORDANCE WITH THE POST PROPERTIES ADJOURNMENT PROPOSAL.
Approval of the Post Properties merger agreement,proposal, the parent merger pursuant to the plan of mergermerger-related compensation proposal and the other transactions contemplated by the merger agreement as described inPost Properties adjournment proposal 1,FOR approval, on an advisory (non-binding) basis, of the compensation payable to certain Colonial executive officers described in proposal 2 andFOR approval of one or more adjournments of the special meeting in accordance with proposal 3. Approval of proposals 1, 2 and 3 are subject to separate votes by Colonial’sPost Properties’ shareholders, and approval of the merger-related compensation arrangements in proposal 2 is not a condition to the completion of the parent merger. Since the approval and adoption of the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement in the Post Properties merger proposal 1 requires the affirmative vote of the holders of at least a majority of the outstanding Colonialshares of Post Properties common sharesstock entitled to vote on such proposal, 1, if you fail to vote, if you fail to authorize your broker, bank or other nominee to vote on your behalf, or if you abstain from voting, the effect will be the same as if you had voted against the approval of the ColonialPost Properties merger proposal.
By Order of the Board of Trustees of Colonial Properties TrustDirectors,
John P. Rigrish
Sherry W. Cohen
Chief Administrative OfficerExecutive Vice President and Corporate Secretary
Atlanta, Georgia
[—●], 20132016
Your vote is important. If your shares of Post Properties common stock are registered in your own name, you may submit your proxy by (1) filling out and signing the proxy card, and then mailing your signed proxy card in the enclosed postage-paid reply envelope or (2) calling toll free (888) 750-5834 and following the instructions on the enclosed proxy card. If your shares of Post Properties common stock are held in “street name,” you should follow the enclosed instructions that your broker, bank, or other nominee has provided.
ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates important business and financial information about MAA and ColonialPost Properties from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by requesting them from MAA’s or Colonial’sPost Properties’ proxy solicitor in writing or by telephone at the following addresses and telephone numbers:
| If you are a MAA shareholder: | If you are a | |
D.F. King & Co., Inc. 48 Wall Street, 22nd Floor New York, NY 10005
Banks and brokers: (212) 269-5550 (call collect)
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Banks and brokers:
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Investors may also consult MAA’s or Colonial’sPost Properties’ website for more information concerning the mergers described in this joint proxy statement/prospectus. MAA’s website iswww.maac.com. Colonial’sPost Properties’ website iswww.colonialprop.comwww.postproperties.com. Additional information is available atwww.sec.gov. Information included on these websites is not incorporated by reference into this joint proxy statement/prospectus.
If you would like to request copies of any documents, please do so by September 18, 2013November 1, 2016 in order to receive them before the special meetings.
For more information, see “Where You Can Find More Information” beginning on page 205.201.
ABOUT THIS DOCUMENTIndex to Financial Statements
This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed by MAA (File No. 333-190027)333-213591) with the Securities and Exchange Commission, which is referred to herein as the SEC, constitutes a prospectus of MAA for purposes of the Securities Act of 1933, as amended, which is referred to herein as the Securities Act, with respect to the shares of MAA common stock to be issued to ColonialPost Properties common shareholders in exchange for ColonialPost Properties common stock, and the shares of MAA Series I preferred stock to be issued to Post Properties preferred shareholders in exchange for Post Properties Series A preferred stock, in each case pursuant to the Agreement and Plan of Merger, dated as of June 3, 2013, by and among MAA, Mid-America Apartments, L.P., Martha Merger Sub, LP, Colonial and Colonial Realty Limited Partnership, as such agreement may be amended or modified from time-to-time and which we refer to as the merger agreement. This joint proxy statement/prospectus also constitutes a proxy statement for each of MAA and ColonialPost Properties for purposes of the Securities Exchange Act of 1934, as amended, which is referred to herein as the Exchange Act. In addition, it constitutesthis joint proxy statement/prospectus contains a notice of meeting with respect to the MAA special meeting and a notice of meeting with respect to the ColonialPost Properties special meeting.
You should rely only on the information contained or incorporated by reference in this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [—[●], 2013.2016. You should not assume that the information contained in, or incorporated by reference into, this joint proxy statement/prospectus is accurate as of any date other than that date. Neither ourthe mailing of this joint proxy statement/prospectus to MAA shareholders or ColonialPost Properties shareholders nor the issuance by MAA of shares of its common stock or shares of its Series I preferred stock to ColonialPost Properties shareholders pursuant to the merger agreement will create any implication to the contrary.
This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding MAA has been provided by MAA and information contained in this joint proxy statement/prospectus regarding ColonialPost Properties has been provided by Colonial.Post Properties.
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Recommendation of the MAA Board and Its Reasons for the Mergers | 84 | |||
Recommendation of the Post Properties Board and Its Reasons for the Mergers | 88 | |||
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Certain MAA Financial Projections Utilized by the Companies’ Boards and Financial Advisors | 109 | |||
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Interests of MAA’s Directors and Executive Officers in the Mergers | 115 | |||
Interests of Post Properties’ Directors and Executive Officers in the Mergers | 115 | |||
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Listing of MAA Common Stock and MAA Series I Preferred Stock | 147 | |||
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Merger Consideration; Effects of the Merger and the Partnership Merger | 149 | |||
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Power to Issue Additional Shares of Common and Preferred Stock | 177 | |||
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COMPARISON OF RIGHTS OF SHAREHOLDERS OF MAA AND SHAREHOLDERS OF POST PROPERTIES | 183 | |||
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION | F-1 | |||
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Annex A— | ||
Annex B— | ||
Annex C— | Designating and Fixing the Rights and Preferences of the MAA Series I Preferred Stock | |
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Annex E— | ||
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The following are answers to some questions that MAA shareholders and Colonial shareholdersyou may have regarding the proposed transaction between MAA and ColonialPost Properties and the other proposals being considered at the MAA special meeting and the ColonialPost Properties special meeting. MAA and ColonialPost Properties urge you to read carefully this entire joint proxy statement/prospectus, including the Annexes, and the documents incorporated by reference into this joint proxy statement/prospectus, because the information in this section does not provide all the information that might be important to you. See “Where You Can Find More Information.”
Unless stated otherwise indicated or as the context otherwise requires, all references in this joint proxy statement/prospectus to:
“MAA” are to Mid-America Apartment Communities, Inc., a Tennessee corporation; all references to
“OP Merger Sub”Post Properties” are to Martha Merger Sub, LP,Post Properties, Inc., a Delaware limited partnership and a subsidiary of MAA LP;
“Colonial”Post GP” are to Colonial Properties Trust, an Alabama real estate investment trust;
“ColonialPost LP” are to Colonial Realty Limited Partnership,Post Apartment Homes, L.P., a DelawareGeorgia limited partnership;
the “MAA“MAA Board” are to the board of directors of MAA;
the “Colonial“Post Properties Board” are to the board of trusteesdirectors of Colonial;
the “merger“merger agreement” are to the Agreement and Plan of Merger, dated as of June 3, 2013,August 15, 2016, by and among MAA, MAA LP, OP Merger Sub, Colonial,Post Properties, Post GP and ColonialPost LP, as it may be amended, modified or modifiedsupplemented fromtime-to-time, time to time, a copy of which is attached as Annex A to this joint proxy statement/prospectus and is incorporated herein by reference;
the “plan of merger” are to the Plan of Merger, dated as of June 3, 2013, by and between MAA and Colonial, as it may be amended from time-to-time, a copy of which is attached as Annex B to this joint proxy statement/prospectus and is incorporated herein by reference;
the “parent“parent merger” are to the merger of ColonialPost Properties with and into MAA, with MAA continuing as the surviving entity pursuant to the terms of the merger agreement;
the “partnership“partnership merger” are to the merger, prior to the parent merger, of OP Merger SubPost LP with and into ColonialMAA LP, with ColonialMAA LP continuing as the surviving entity and an indirect wholly-owned subsidiary of MAA LP pursuant to the terms of the merger agreement;
the “mergers”“mergers” are to the parent merger and the partnership merger;
| • | “Post Properties Series A preferred stock” are to Post Properties’ 8 1⁄2% Series A Cumulative Redeemable Preferred Shares, $0.01 par value per share; |
the “NYSE”“NYSE” are to the New York Stock Exchange.Exchange;
| Q: | What is the proposed transaction? |
| A: | MAA and |
Following the mergers, MAA will continue to be structured as a traditional umbrella partnership REIT, or UPREIT, and will hold all of its assets, including the assets formerly owned by Post LP, other than its general partner and limited partner interests in MAA LP and certain bank or other accounts, through MAA LP. The Combined Corporation will retain the name “Mid-America Apartment Communities, Inc.” and its common stock will continue to be listed and traded on the NYSE under the symbol “MAA.”
The merger agreement also provides for the merger of OP Merger Sub with and into Colonial LP, with Colonial LP continuing as the surviving entity as an indirect wholly-owned subsidiary of MAA LP.
| Q: | What will happen in the proposed transaction? |
| A: | As a result of the parent merger, each issued and outstanding |
As a result of the partnership merger, each issued and outstanding limited partnership interestPost LP unit (other than the general partner interests in ColonialPost LP owned by Post GP) will be converted automatically into 0.360the right to receive 0.71 MAA LP units, and each issued and outstanding Post LP preferred unit will be converted automatically into the right to receive one validly issued preferred unit in MAA LP. Each holder of MAA LP units will be admitted as a limited partner of MAA LP in accordance with the terms of the MAA LP limited partnership units in MAA LP.agreement.
| Q: | How will MAA shareholders be affected by the parent merger and the issuance of shares of MAA common stock and MAA Series I preferred stock to |
| A: | After the mergers, each MAA shareholder will continue to own the same number of shares of MAA common stock that the shareholder held immediately prior to the parent merger. |
In addition, because MAA will be issuing new shares of MAA Series I preferred stock in the parent merger, MAA common shareholders’ rights will rank junior to the holders of MAA Series I preferred stock with respect to dividends and the voluntary or involuntary liquidation, dissolution or winding up of the Combined Corporation’s affairs.
| Q: | What happens if the market price of shares of MAA common stock or |
| A: | No change will be made to the exchange ratio of |
| Q: | What will happen to outstanding Post Properties equity awards in the mergers? |
| A: | At the effective time of the parent merger, each outstanding Post Properties option will vest in full and be assumed by the Combined Corporation. Each outstanding Post Properties option so assumed by the Combined Corporation will continue to have, and be subject to, the same terms and conditions (other than vesting) as were applicable to the corresponding Post Properties option immediately prior to the effective time of the parent merger, except that (A) each Post Properties option will be exercisable for that number of whole shares of MAA common stock equal to the product of the number of shares of Post Properties common stock that were subject to such Post Properties option immediately prior to the parent merger multiplied by the exchange ratio of 0.71 (rounded down to the nearest whole number of shares of MAA common stock) and (B) the per share exercise price for the shares of MAA common stock issuable upon exercise of such assumed Post Properties option will be equal to the quotient determined by dividing the exercise price of each share of Post Properties common stock subject to such assumed Post Properties option by the exchange ratio of 0.71 (rounded up to the nearest whole cent). |
In addition, immediately prior to the effective time of the parent merger, all outstanding issuance and forfeiture conditions on any shares of Post Properties common stock subject to restricted share awards will be deemed satisfied in full and holders of such shares of Post Properties common stock will be entitled to receive 0.71 shares of MAA common stock for each share of Post Properties common stock, plus cash in lieu of any fractional share.
| Q: | Why am I receiving this joint proxy statement/prospectus? |
| A: | The MAA Board and the |
In addition, MAA is using this joint proxy statement/prospectus as a prospectus for Post Properties shareholders because shares of MAA common stock and MAA Series I preferred stock will be issued in exchange for shares of Post Properties common stock and Post Properties Series A preferred stock, respectively, in the parent merger. The parent merger cannot be completed unless:
the holders of MAA common stock vote to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to ColonialPost Properties common shareholders in the parent merger; and
the holders of ColonialMAA common sharesstock vote to approve the MAA charter amendment, as the number of shares of MAA common stock to be issued to the Post Properties shareholders in the parent merger, together with the number of shares of MAA common stock outstanding, currently reserved for issuance and adoptto be reserved for issuance following the parent merger, will exceed the current aggregate number of authorized shares of MAA common stock; and
Each of MAA and ColonialPost Properties will hold separate meetings of their respective common shareholders to obtain these approvals and to consider other proposals as described elsewhere in this joint proxy statement/prospectus.
This joint proxy statement/prospectus contains important information about the merger agreement, the parent merger and the other transactions contemplated by the merger agreement as well as information about the other proposals being voted on at the shareholderspecial meetings and you should read it carefully. The enclosed voting materials allow you to vote your shares of MAA common stock and/or ColonialPost Properties common shares,stock, as applicable, without attending your company’s shareholders’ meeting.the special meetings.
Your vote is important. You are encouraged to submit your proxy as promptly as possible.
| Q: | Am I being asked to vote on any other proposals at the |
| A: | MAA. At the MAA special meeting, MAA common shareholders will be asked to consider and vote upon the following additional proposals: |
A proposal to approve an amendment to the MAA 2013 Stock Incentive Plancharter to replaceincrease the Mid-America Apartment Communities, Inc. 2004 Stock Plan,number of authorized shares of MAA common stock from 100,000,000 shares to 145,000,000 shares, which expires by its terms on October 31, 2013; and
A proposalwe refer to adjournherein as the MAA special meeting, if necessarycharter amendment. The completion of the parent merger requires the approval of the MAA charter amendment as the number of shares of MAA common stock to be issued to the Post Properties shareholders in the parent merger, together with the number of shares of MAA common stock outstanding, currently reserved for issuance and to be reserved for issuance following the parent merger, will exceed the current aggregate number of authorized shares of MAA common stock.
ColonialPost Properties.. At the ColonialPost Properties special meeting, ColonialPost Properties common shareholders will be asked to consider and vote upon the following additional proposals:
An advisory (non-binding) proposal to approve compensation that may be paid or become payable to certain executive officers of ColonialPost Properties in connection with the mergers; and
A proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the proposal to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement.
| Q: | Why are MAA and |
| A: | Among other reasons, the MAA Board and the |
| Q: | Who will be the board of directors and management of the Combined Corporation, and the general partner of MAA LP, after the |
| A: | At the effective time of the parent merger, the number of directors that comprise the board of directors of the Combined Corporation will be |
| Corporation. In addition, |
H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman ofAfter the Board of Directors, will serve as Chief Executive Officer and Chairman of the Board of Directors of the Combined Corporation. Albert M. Campbell, III, MAA’s Chief Financial Officer, will serve as Chief Financial Officer ofmergers, the Combined Corporation will be the sole general partner of MAA LP with all management powers over the business and Thomas L. Grimes, Jr., MAA’s Chief Operating Officer, will serve as the Chief Operating Officeraffairs of the Combined Corporation.MAA LP.
| Q: | Will MAA and |
| A: | Yes. The merger agreement permits each of MAA and Post Properties to continue to pay a regular quarterly distribution at a rate not in excess of the regular quarterly cash dividend most recently declared prior to the date of the merger agreement (which is $0.82 per share per quarter for MAA common stock and $0.47 per share per quarter for Post Properties common stock). The merger agreement also permits Post Properties to pay a regular quarterly distribution in accordance with past practice at a rate not to exceed |
| Q: | When and where are the |
| A: | The MAA special meeting will be held at |
The ColonialPost Properties special meeting will be held at in the conference centeroffices of King & Spalding LLP located at 1180 Peachtree Street N.E., Atlanta, Georgia 30309, on the 1st floor of the Colonial Brookwood Center, 569 Brookwood Village, Suite 131, Homewood, Alabama 35209 on September 27, 2013November 10, 2016 commencing at 10:9:30 a.m., local time.
| Q: | Who can vote at the |
| A: | MAA. All MAA common shareholders of record as of the close of business on |
ColonialPost Properties.. All ColonialPost Properties common shareholders of record as of the close of business on August 22, 2013,September 26, 2016, the record date for determining shareholders entitled to notice of and to vote at the ColonialPost Properties special meeting, are entitled to receive notice of and to vote at the ColonialPost Properties special meeting. As of the record date, there were 88,828,342 Colonialwere53,508,995 shares of Post Properties common sharesstock outstanding and entitled to vote at the ColonialPost Properties special meeting, held by approximately 2,381approximately1,214 holders of record. Each Colonialshare of Post Properties common sharestock is entitled to one vote on each proposal presented at the ColonialPost Properties special meeting.
As of the record date, there were867,846 shares of Post Properties Series A preferred stock outstanding, held by5 holders of record. Holders of Post Properties Series A preferred stock at the close of business on the record date are not entitled to vote at the Post Properties special meeting.
| Q: | What constitutes a quorum? |
| A: | MAA. |
ColonialPost Properties.. Colonial’s bylaws provide that the The presence, in person or by proxy, of Post Properties common shareholders entitled to cast a majority of all the votes entitled to be cast at suchthe Post Properties special meeting will constitute a quorum.
Shares that are voted, 26,754,498 shares of Post Properties common stock must be represented by shareholders present in person or by proxy at the Post Properties special meeting to constitute a quorum for the Post Properties special meeting.
Abstentions and shares abstaining from voting are treated as presentbroker non-votes will be counted towards the quorum requirement at each of the MAA special meeting and the ColonialPost Properties special meeting, respectively, for purposes of determining whether a quorum is present.
| Q: | What vote by the MAA common shareholders and Post Properties common shareholders is required to approve the proposals? |
| A: | MAA. |
Approval of the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to ColonialPost Properties common shareholders in the parent merger, requires the affirmative vote of the holders of at least a majority of the outstanding shares of MAA common stock.
Approval of the MAA 2013 Stock Incentive Plancharter amendment requires the votes cast “FOR”affirmative vote of a majority of the proposal exceedshares of MAA common stock present in person or by proxy and entitled to vote on the votes cast “AGAINST” the proposal.
Approval of one or more adjournments of the MAA special meeting requires the votes cast “FOR” the proposal exceed the votes cast “AGAINST” the proposal.
ColonialPost Properties..
Approval and adoption of the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of at least a majority of the Colonialoutstanding shares of Post Properties common shares outstanding as ofstock entitled to vote on the record date for the special meeting.
Approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to certain executive officers of ColonialPost Properties in connection with the mergers will requirerequires the affirmative vote ofvotes cast “FOR” the holders of a majority ofproposal exceed the Colonial common shares present in person or represented by proxy atvotes cast “AGAINST” the Colonial special meeting and entitled to vote on the proposal.
Approval of one or more adjournments of the ColonialPost Properties special meeting if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption ofrequires the merger agreement andvote cast “FOR” the parent merger pursuant toproposal exceed the plan of merger, will requirevotes cast “AGAINST” the affirmative vote of the holders of a majority of the Colonial common shares present in person or represented by proxy at the Colonial special meeting and entitled to vote on this proposal.
| Q: | Is a vote of the holders of Post Properties’ Series A preferred stock required to complete the mergers? |
| A: | No, the holders of Post Properties Series A preferred stock are not entitled to vote on any of the proposals presented in this joint proxy statement/prospectus. |
| Q: | How does the MAA Board recommend that MAA common shareholders vote on the proposals? |
| A: | After careful consideration, the MAA Board has unanimously determined and declared that the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to |
For a more complete description of the recommendation of the MAA Board, see “The Parent Merger—Mergers—Recommendation of the MAA Board and Its Reasons for the Parent Merger”Mergers” beginning on page 88.84.
| Q: | How does the |
| A: |
For a more complete description of the recommendation of the ColonialPost Properties Board, see “The Parent Merger—Mergers—Recommendation of the ColonialPost Properties Board and Its Reasons for the Parent Merger”Mergers” beginning on page 92.88.
| Q: |
| A: |
| Q: | What vote by the holders of the partnership interests in Post LP is required to approve the partnership merger? |
| A: | Approval of the partnership merger requires the affirmative vote of Post GP, the general partner of Post LP (of which Post Properties is the sole shareholder), and the consent of the limited partners of |
Pursuant to separate voting agreements, certain trustees, officers and shareholders of Colonial, who together as of August 20, 2013 owned approximately 3.9% of the outstanding Colonial common shares, have agreed to vote in favor of the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement, subject to the terms and conditions of the respective voting agreements, as described under “Voting Agreements” beginning on page 172.
| Q: | Are there any conditions to closing of the mergers that must be satisfied for the mergers to be completed? |
| A: | Closing of the mergers is conditioned upon the approval of the parent merger by the affirmative vote of the holders of a majority of the outstanding shares of MAA common stock and Post Properties common stock entitled to vote and the approval of the MAA charter amendment by the affirmative vote of a majority of the shares of MAA common stock present in person or by proxy and entitled to vote on the proposal. In addition to the approvals of the shareholders of each of MAA and |
| Q: | Are there risks associated with the |
| A: | Yes. There are a number of risks related to the |
| Q: | If my shares of MAA common stock or my |
| A: | No. |
| Q: | What happens if I do not vote for a proposal? |
| A: | MAA. If you are a MAA common shareholder and |
with respect to the proposal to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to ColonialPost Properties common shareholders in the parent merger, itabstentions and broker non-votes will have the same effect as a vote “AGAINST” this proposal;
with respect to the MAA 2013 Stock Incentive Plancharter amendment proposal, if you abstain, fail toassuming a quorum is present, abstentions will have the same effect as a vote or fail to instruct your“AGAINST” this proposal but broker bank or nominee to vote, itnon-votes will have no effect on the outcome of the vote for this proposal; and
with respect to the MAA adjournment proposal, itabstentions and broker non-votes will have no effect on the outcome of the vote for this proposal.
ColonialPost Properties.. If you are a ColonialPost Properties shareholder and fail to vote,you fail to instruct your broker, bank or nominee to vote, or abstain from voting:
with respect to the proposal to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement, itabstentions and broker non-votes will have the same effect as a vote “AGAINST” this proposal;
with respect to the advisory (non-binding) proposal to approve compensation that may be paid or become payable to certain executive officers of ColonialPost Properties in connection with the mergers, an abstention from votingabstentions and broker non-votes will have no effect on the same effect as voting “AGAINST”outcome of the vote for this proposal; if you fail to vote or fail to instruct your broker, bank or nominee to vote, your Colonial common shares will not affect whether this proposal is approved; and
with respect to the Post Properties adjournment proposal, an abstention from votingabstentions and broker non-votes will have no effect on the same effect as voting “AGAINST”outcome of the vote for this proposal; if you failproposal.
| Q: | Why are Post Properties common shareholders being asked to approve, on a non-binding advisory basis, the compensation that may be payable to certain executive officers of Post Properties in connection with the completion of the parent merger? |
| The rules promulgated by the SEC under Section 14A of the Exchange Act require Post Properties to seek a non-binding, advisory vote with respect to the compensation that may be payable to certain executive officers of Post Properties in connection with the parent merger. For more information regarding such payments, see the section entitled “Proposals Submitted to Post Properties Shareholders—Advisory Vote on Executive Compensation” beginning on page 67. |
| Q: | Will my rights as a shareholder change as a result of the parent merger? |
| A: | The rights of the MAA common shareholders will be substantially unchanged as a result of the parent merger. |
The rights of the holders of Post Properties Series A preferred stock will remain substantially unchanged. MAA Series I preferred stock will have the same rights, preferences, privileges and voting powers as the Post Properties Series A preferred stock.
| Q: | When are the mergers expected to be completed? |
| A: | MAA and |
| Q: | Do I need to do anything with my share certificates or book-entry shares now? |
| A: | No. |
If you are a MAA shareholder, you are not required to take any action with respect to your shares of MAA shares.common stock. Such shares will continue to represent shares of the Combined Corporation after the parent merger.mergers.
| Q: | What are the anticipated U.S. federal income tax consequences to me of the |
| A: | It is intended that the parent merger will qualify as a reorganization within the meaning of Section 368(a) of the |
| Properties of an opinion from its respective counsel to the effect that the parent merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. Assuming that the parent merger qualifies as a reorganization, U.S. holders of |
| Q: | Are MAA |
| A: |
MAA shareholders are not entitled to exercise dissenters’ rights in connection with the parent merger. See “Dissenters’ Rights” beginning on page 177 for more information on the applicable provisions of the ABCL.
| Q: | What happens if the mergers are not completed? |
| A: | If the parent merger and the other transactions contemplated by the merger agreement are not approved by the MAA common shareholders and the Post Properties common shareholders, or if the mergers are not completed for any other reason, Post Properties shareholders and Post LP holders will not receive any form of consideration in connection with the mergers. Instead, each of MAA and Post Properties will remain an independent public company and its shares of common stock and Post Properties’ Series A preferred stock will continue to be listed and traded on the NYSE. See “Risk Factors—Risk Factor Relating to the Mergers—Failure to complete the mergers could negatively affect the stock prices and the future business and financial results of both MAA and Post Properties.” If the merger agreement is terminated because either party fails to obtain the approval of its shareholders, among other reasons, such party will be required to pay the other party’s reasonable documented out-of-pocket expenses incurred up to a maximum of $10.0 million. In certain other circumstances, MAA may be obligated to pay Post Properties a termination fee of either $122.5 million or $245.0 million, plus reasonable documented out-of-pocket expenses incurred up to a maximum of $10.0 million, and Post Properties may be required to pay MAA a termination fee of either $58.5 million or $117.0 million, plus reasonable documented out-of-pocket expenses incurred up to a maximum of $10.0 million. See “The Merger Agreement—Termination of the Merger Agreement—Termination Fee and Expenses Payable by Post Properties to MAA” beginning on page 168 and “The Merger Agreement—Termination of the Merger Agreement—Termination Fee and Expenses Payable by MAA to Post Properties” beginning on page 169. |
| Q: | What do I need to do now? |
| A: | After you have carefully read this joint proxy statement/prospectus, please respond by completing, signing and dating your proxy card or voting instruction card and returning it in the enclosed preaddressed postage-paid envelope or, if available, by submitting your proxy by one of the other methods specified in your proxy |
| card or voting instruction card as promptly as possible so that your shares of MAA common stock and/or your |
PleaseIf your shares of MAA common stock or Post Properties common stock are held in an account at a broker, bank or other nominee, please refer to your proxy card or voting instruction card forwarded by your broker, bank or other nominee to see which voting options are available to you.
The method by which you submit a proxy will in no way limit your right to vote at the MAA special meeting or the ColonialPost Properties special meeting, as applicable, if you later decide to attend the special
meeting in person. However, if your shares of MAA common stock or your ColonialPost Properties common sharesstock are held in the name of a broker, bank or other nominee, you must obtain a legal proxy, executed in your favor, from your broker, bank or other nominee, to be able to vote in person at the MAA special meeting or the ColonialPost Properties special meeting, as applicable.
| Q: | How will my proxy be voted? |
| A: | All shares of MAA common stock entitled to vote and represented by properly completed proxies received prior to the MAA special meeting, and not revoked, will be voted at the MAA special meeting as instructed on the proxies. If you properly sign, date and return a proxy card, but do not indicate how your shares of MAA common stock should be voted on a matter, the shares of MAA common stock represented by your proxy will be voted as the MAA Board recommends and thereforeFOR the proposal to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to |
All Colonialshares of Post Properties common sharesstock entitled to vote and represented by properly completed proxies received prior to the ColonialPost Properties special meeting, and not revoked, will be voted at the ColonialPost Properties special meeting as instructed on the proxies. If you properly sign, date and return a proxy card, but do not indicate how your Colonialshares of Post Properties common sharesstock should be voted on a matter, the Colonialshares of Post Properties common sharesstock represented by your proxy will be voted as the ColonialPost Properties Board recommends and thereforeFORthe proposal to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement,FORthe advisory (non-binding) proposal to approve compensation that may be paid or become payable to certain executive officers of ColonialPost Properties in connection with the mergers andFOR the proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate including adjournmentsin the view of the Post Properties Board, to permit further solicitation ofsolicit additional proxies in favor of approval and adoptionthe proposals if there are not sufficient votes at the time of the merger agreement, the parent merger pursuantadjournment to the plan of merger and the other transactions contemplated by the merger agreement.approve such proposals. If you do not provide voting instructions to your broker, bank or other nominee, your Colonialshares of Post Properties common sharesstock will NOT be voted at the ColonialPost Properties special meeting and will be considered broker non-votes.
| Q: | Can I revoke my proxy or change my vote after I have delivered my proxy? |
| A: | Yes. You may revoke your proxy or change your vote at any time before your proxy is voted at the MAA special meeting or the |
by sending a written notice to the corporate Secretary of MAA or the corporate Secretary of Colonial,Post Properties, as applicable, in time to be received before the MAA special meeting or the ColonialPost Properties special meeting, as applicable, stating that you would like to revoke your proxy;
by completing, signing and dating another proxy card and returning it by mail in time to be received before the MAA special meeting or the ColonialPost Properties special meeting, as applicable, or by submitting a later dated proxy by the Internet or telephone in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or
by attending the MAA special meeting or the ColonialPost Properties special meeting, as applicable, and voting in person. Simply attending the MAA special meeting or the ColonialPost Properties special meeting, as applicable, without voting will not revoke your proxy or change your vote.
If your shares of MAA common stock or your ColonialPost Properties common sharesstock are held in an account at a broker, bank or other nominee and you desire to change your vote or vote in person, you should contact your broker, bank or other nominee for instructions on how to do so.
| Q: | What happens if I sell my shares of MAA common stock or Post Properties common stock after the record date but before the applicable special meeting? |
| A: | The record dates for the MAA special meeting and the Post Properties special meeting are earlier than both the date of the special meetings and the date that the mergers are expected to be completed. If you sell or otherwise transfer your shares of MAA common stock or Post Properties common stock after the record date but before the date of the applicable special meeting, you will retain your right to vote at the applicable special meeting (unless otherwise agreed between you and the transferee). However, you will not have the right to receive the merger consideration to be received by Post Properties’ common shareholders. In order to receive the merger consideration, you must hold your shares of Post Properties common stock through the completion of the parent merger. |
| Q: | What does it mean if I receive more than one set of voting materials for the MAA special meeting or the |
| A: | You may receive more than one set of voting materials for the MAA special meeting and/or the |
| Q: | What happens if I am a shareholder of both MAA and |
| A: | You will receive separate proxy cards for each entity and must complete, sign and date each proxy card and return each proxy card in the appropriate |
| Q: | Do I need identification to attend the MAA or |
| A: | Yes. Please bring proper identification, together with proof that you are a record owner of shares of MAA common stock or |
| Q: | Will a proxy solicitor be used? |
| A: | Yes. MAA has engaged D.F. King & Co., Inc., referred to herein as D.F. King, to assist in the solicitation of proxies for the MAA special meeting, and MAA estimates it will pay D.F. King a fee |
ColonialPost Properties has engaged Morrow & Co., LLC,engagedInnisfree M&A Incorporated, referred to herein as Morrow & Co.,asInnisfree, to assist in the solicitation of proxies for the ColonialPost Properties special meeting and ColonialPost Properties estimates it will pay Morrow & Co.payInnisfree a fee of approximately $25,000. Colonial$20,000. Post Properties has also agreed to reimburse Morrow & Co.reimburseInnisfree for reasonable out-of-pocket
expenses and disbursements incurred in connection with the proxy solicitation and to indemnify Morrow & Co.indemnifyInnisfree against certain losses, costs and expenses. In addition to mailing proxy solicitation material, Colonial’s trustees,Post Properties’ directors, officers and employees may also solicit proxies in person, by telephone or by any other electronic means of communication deemed appropriate. No additional compensation will be paid to Colonial’s trustees,Post Properties’ directors, officers or employees for such services.
| Q: | How can I find out the results of the voting at the special meetings? |
| A: | Preliminary voting results will be announced at the MAA special meeting and the Post Properties special meeting. Final voting results will be published in a Current Report on Form 8-K filed by MAA and by Post Properties with the SEC within four business days after the MAA special meeting and the Post Properties special meeting, as applicable. |
| Q: | What happens if a special meeting is postponed or adjourned? |
| A: | If the MAA special meeting or the Post Properties special meeting is postponed or adjourned, your proxy will still be in effect and will be voted at such postponed or adjourned meeting. You will be able to change or revoke your proxy until it is exercised. |
| Q: | Who can answer my questions? |
| A: | If you have any questions about the parent merger or the other matters to be voted on at the special meetings or how to submit your proxy or need additional copies of this joint proxy statement/prospectus, the enclosed proxy card or voting instructions, you should contact: |
If you are a MAA shareholder: | ||
D.F. King & Co., Inc. 48 Wall Street, 22nd Floor New York, NY 10005
Banks and brokers: (212) 269-5550 (call collect)
|
Innisfree M&A Incorporated 501 Madison Avenue, 20th Floor
Banks and brokers:
| |
The following summary highlights some of the information contained in this joint proxy statement/prospectus. This summary may not contain all of the information that is important to you. For a more complete description of the merger agreement, the mergers and the other transactions contemplated by the merger agreement, MAA and ColonialPost Properties encourage you to read carefully this entire joint proxy statement/prospectus, including the attached Annexes and the other documents to which we have referred you because this section does not provide all the information that might be important to you with respect to the mergers and the other matters being considered at the applicable special meeting. See also the section entitled “Where You Can Find More Information” beginning on page 205.201. We have included page references to direct you to a more complete description of the topics presented in this summary.
Mid-America Apartment Communities, Inc. (See page 46)51)
MAA is a Tennessee corporation that has elected to be taxed as a REIT under the Code. MAA owns, acquires, renovates, develops and manages apartment communities in the Sunbelt region of the United States. As of June 30, 2013,2016, MAA owned or owned interests in a total of 163256 multifamily apartment communities comprising 49,017 apartments80,300 apartment units located in 13 states, including four communities comprising 1,156 apartments owned through MAA’s joint venture, Mid-America Multifamily Fund II, LLC.15 states. MAA also had twofour development communities under construction totaling 564628 units as of June 30, 2013. Four of MAA’s properties include retail components with approximately 107,000 square feet of gross leasable area.2016.
MAA’s most significant asset is its ownership interest in Mid-America Apartments, L.P., or MAA LP, a Tennessee limited partnership.LP. MAA conducts substantially all of its business and holds substantially all of its assets through MAA LP, and by virtue of its subsidiaries conduct the operations of a substantial majority of MAA’s business, hold a substantial majority of MAA’s consolidated assetsownership interest and generate a substantial majority of MAA’s revenues.being MAA is theLP’s sole general partner, MAA has the ability to control all of the day-to-day operations of MAA LP and, asLP. As of June 30, 2013,2016, MAA owned 40,141,19775,524,086 common units of partnership interest, or approximately 95.9%94.8% of the outstanding partnership interests ofin MAA LP. Prior to the effective times of the mergers, MAA will contribute all of its assets, with the exception of its ownership interest in MAA LP and certain bank accounts held by MAA, to MAA LP, and as a result, MAA will be structured as a traditional umbrella partnership REIT, or UPREIT.
MAA common stock is listed on the NYSE, trading under the symbol “MAA.”
MAA was incorporated in the state of Tennessee in 1993, and MAA LP was formed in the state of Tennessee in 1993. MAA’s principal executive offices are located at 6584 Poplar Avenue, Memphis, Tennessee 38138, and its telephone number is (901) 682-6600. MAA had 1,3841,949 full-time employees and 6240 part-time employees as of December 31, 2012.2015.
Martha Merger Sub, LP, or OP Merger Sub, an indirect wholly-owned subsidiary of MAA LP, is a Delaware limited partnership formed on May 30, 2013 for the purpose of effecting the partnership merger. Upon completion of the partnership merger, OP Merger Sub will be merged with and into Colonial LP, with Colonial LP surviving as an indirect wholly-owned subsidiary of MAA LP. OP Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement.
ColonialPost Properties, TrustInc. (See page 46)51)
Colonial, originally formed asPost Properties, a Maryland REIT on July 9, 1993 and reorganized as an Alabama REIT under the Alabama REIT statute on August 21, 1995,Georgia corporation, is a self-administered REIT that has elected to be taxed as a REIT under the Code. Colonial is a multifamily-focused self-administered and self-managed equity REIT, which
means that it is engaged in the acquisition, development, ownership, managementREIT. Post Properties and leasing ofits subsidiaries develop, own and manage upscale multifamily apartment communities in selected markets in the United States. Post Properties through its wholly-owned subsidiaries is the sole general partner, a limited partner and other commercial real estate properties.owns a majority interest in Post Apartment Homes, L.P., or Post LP, a Georgia limited partnership. Post LP, through its operating divisions and subsidiaries, conducts substantially all of the on-going operations of Post Properties. As of June 30, 2013, Colonial2016, Post Properties owned or maintained a partial ownershipowned interests in a total of 11561 multifamily apartment communities comprising 34,577 apartments24,162 apartment units located in 11six states plus Washington, D.C., including 1,471 apartment units in four communities held in unconsolidated entities and Colonial had2,630 apartment units in seven commercial properties with approximately 1,194,000 square feet of gross leasable area.communities under development or in lease-up.
Colonial’sPost Properties’ only material asset is its ownership of limited partnership interestsinterest in Colonial Realty Limited Partnership, or Colonial LP, a Delaware limited partnership formed in 1993. ColonialPost LP. Post LP and its subsidiaries conduct substantially all of Colonial’sPost Properties’ business, hold substantially all of Colonial’sPost Properties’ consolidated assets and
generate substantially all of Colonial’sPost Properties’ revenues. ColonialThrough its wholly-owned subsidiaries, Post Properties is the sole general partner of ColonialPost LP and, as of June 30, 2013,2016, owned approximately 92.5%99.8% of the outstanding partnership interests of Colonialin Post LP.
ColonialPost Properties common shares arestock is listed on the NYSE, trading under the symbol “CLP.“PPS.”
Colonial’sPost Properties’ principal executive offices are located at 2101 Sixth Avenue North,One Riverside, 4401 Northside Parkway, Suite 750, Birmingham, Alabama 35203,800, Atlanta, Georgia 30327, and its telephone number is (205) 250-8700. Colonial(404) 846-5000. Post Properties had 911619 employees as of December 31, 2012.2015.
The Combined Corporation (See page 47)52)
The Combined Corporation will be named “Mid-America Apartment Communities, Inc.” and will be a Tennessee corporation that is a self-administered REIT, which has elected to be taxed as a REIT under the Code. The Combined Corporation will be a Sunbelt-focused, publicly traded,publicly-traded, multifamily REIT with enhanced capabilities to deliver value for residents, shareholders and employees. The Combined Corporation is expected to have a pro forma equity market capitalization of approximately $5.4$11 billion, and a pro forma total market capitalization in excess of $8.7approximately $16 billion, each as of June 30, 2013.September 27, 2016, the latest practicable trading day before the date of this joint proxy statement/prospectus. The Combined Corporation’s asset base will consist primarily of approximately 85,000 multifamily105,008 apartment units in 285 properties.317 multifamily apartment communities. The Combined Corporation will maintain strategic diversity across urban and suburban locations in large and secondary markets within the high growthhigh-growth Sunbelt region of the United States. The Combined Corporation’s ten largest markets by unit count will be Dallas/Ft.Atlanta, Dallas, Austin, Charlotte, Raleigh, Orlando, Tampa, Fort Worth, Atlanta, Austin, Raleigh, Charlotte, Nashville, Jacksonville, Tampa, OrlandoHouston and Houston.Washington, D.C.
The business of the Combined Corporation will be operated through MAA LP and its subsidiaries and will be structured as a traditional UPREIT. On a pro forma basis giving effect to the mergers, the Combined Corporation will own an approximate 94.6%96.4% partnership interest in MAA LP and, as its sole general partner, the Combined Corporation will have the full, exclusive and complete responsibility for and discretion in theday-to-day management and control of MAA LP.
The common stock of the Combined Corporation will be listed on the NYSE, trading under the symbol “MAA.”
The Combined Corporation’s principal executive offices will be located at 6584 Poplar Avenue, Memphis, Tennessee 38138, and its telephone number will be (901) 682-6600.
The Merger Agreement (See page 151)148)
MAA, MAA LP, OP Merger Sub, ColonialPost Properties, Post GP and ColonialPost LP have entered into the merger agreement attached as Annex A to this joint proxy statement/prospectus, which is incorporated herein by reference. MAA and ColonialPost Properties encourage you to carefully read the merger agreement in its entirety because it is the principal document governing the merger and the other transactions contemplated by the merger agreement.
The Mergers (See page 68)70)
Subject to the terms and conditions of the merger agreement, at the effective time of the parent merger, ColonialPost Properties will merge with and into MAA, which is referred to herein as the parent merger, with MAA surviving the parent merger as the combined company, which is referred to herein as the Combined Corporation. The
shares of common stock of the Combined Corporation are expected to be listed and traded on the NYSE under the symbol “MAA.” The merger agreement also provides for the merger, prior to the parent merger, of OP Merger Sub, a subsidiary of MAAPost LP with and into ColonialMAA LP with ColonialMAA LP continuing as the surviving entity, and an indirectly wholly owned subsidiary of MAA LP, which is referred to herein as the partnership merger, and, together with the parent merger, are referred to herein as the mergers.
Upon completion of the parent merger,mergers, we estimate that continuing MAA equity holderscommon shareholders will own approximately 56%67.7% of the issued and outstanding shares of common sharesstock of the Combined Corporation, assuming the conversion of all limited partnership units of MAA LP held by existing limited partners of MAA LP to shares of Combined Corporation common stock, and former Colonial equity holdersPost Properties common shareholders will own approximately 44%32.3% of the issued and outstanding shares of common stock of the Combined Corporation, assuming the conversion to shares of Combined Corporation common stock of all limited partnership units issued by MAA LP to former limited partners of ColonialPost LP.
The Merger Consideration (See page 152)149)
In the parent merger, each Colonialshare of Post Properties common share (other than shares with respect to which dissenters’ rights have been properly exercised and not withdrawn under applicable law)stock issued and outstanding immediately prior to the effective time of the parent merger will be converted into the right to receive 0.3600.71 shares of MAA common stock. The exchange ratio is fixed and will not be adjusted for changes in the market value of MAA common stock or ColonialPost Properties common shares.stock. Because of this, the implied value of the consideration to be received by ColonialPost Properties common shareholders in the parent merger will fluctuate between now and the completion of the mergers. Based on MAA’s closing price of $67.97$102.15 per share on May 31, 2013,August 12, 2016, the last trading day before the announcement of the proposed merger,mergers, the exchange ratio represented approximately $24.47$72.53 in MAA common stock for each Colonialshare of Post Properties common share.stock. Based on MAA’s closing price of $62.26$95.95 per share on August 20, 2013,September 27, 2016, the latest practicable trading day before the date of this joint proxy statement/prospectus, the exchange ratio represented approximately $22.41$68.12 in MAA common stock for each Colonialshare of Post Properties common share.stock.
You are urged to obtain current market prices of shares of MAA common stock and ColonialPost Properties common shares.stock. You are cautioned that the trading price of the common stock of the Combined Corporation after the mergers may be affected by factors different from those currently affecting the trading prices of MAA common stock and ColonialPost Properties common shares,stock, and therefore, the historical trading prices of MAA and ColonialPost Properties may not be indicative of the trading price of the Combined Corporation. See the risks related to the mergers and the related transactions described under the section “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 32.36.
Voting AgreementsTreatment of Post Properties Preferred Stock (See page 172)150)
Concurrently withIn addition, in the executionparent merger, each outstanding share of Post Properties Series A preferred stock will be automatically converted into the right to receive one newly issued share of MAA Series I preferred stock, which will have the same rights, preferences, privileges and voting powers as those of the merger agreement, Colonial and Colonial LP entered into separate Voting Agreements with H. Eric Bolton, Jr., MAA’s Chairman and Chief Executive Officer, W. Reid Sanders, a member of the MAA Board, and another shareholder of MAA who is not a director or officer of MAA, and MAA and MAA LP entered into separate Voting Agreements with Thomas H. Lowder, James K. Lowder and Harold W. Ripps, each members of the Colonial Board. As of August 20, 2013, the MAA directors and shareholders who are a party to a Voting Agreement with Colonial and Colonial LP collectively owned approximately 0.36% of the outstanding shares of MAA common stock and approximately 37.37% of the outstanding limited partnership units in MAA LP, and the Colonial trustees who are a party to a Voting Agreement with MAA andPost Properties Series A preferred stock.
MAA LP collectively owned approximately 3.9% of the outstanding Colonial common shares and approximately 3.5% of the outstanding limited partnership units in Colonial LP (including the limited partnership units held by Colonial).
Pursuant to the terms of the Voting Agreements, each of the shareholder parties thereto has agreed, subject to the terms and conditions contained in each Voting Agreement, to among other things, vote all of his shares of MAA common stock, Colonial common shares, limited partnership units in MAA LP or, in the event of any vote by limited partners of Colonial LP, limited partnership units in Colonial LP, as applicable, whether currently owned or acquired at any time prior to the termination of the applicable Voting Agreement, in favor of the mergers and against any other Acquisition Proposal (as defined in the “The Merger Agreement—Covenants and Agreements—No Solicitation of Transactions” on page 160) for MAA or Colonial, as applicable, any action or agreement that would reasonably be expected to result in any condition to the consummation of the mergers not being fulfilled, and any action that could reasonably be expected to impede or materially adversely affect consummation of the transactions contemplated by the merger agreement.
Each of the shareholder parties to the Voting Agreements has also agreed to comply with certain restrictions on the transfer of his shares subject to the Voting Agreement. Each Voting Agreement entered into with MAA shareholders terminates upon the earliest to occur of: (1) the later to occur of (A) the approval and adoption of the merger agreement at the MAA special meeting, and (B) the approval of the merger agreement by the holders of limited partnership units in MAA LP; and (2) the termination of the merger agreement pursuant to its terms. Each Voting Agreement entered into with Colonial shareholders terminates upon the earliest to occur of: (1) the approval and adoption of the merger agreement at the Colonial special meeting; and (2) the termination of the merger agreement pursuant to its terms.
The foregoing summary of the Voting Agreements is subject to, and qualified in its entirety by reference to, the full text of each of the Voting Agreements. Copies of the Forms of Voting Agreement are attached as Annex C and Annex D to this joint proxy statement/prospectus and are incorporated herein by reference. For more information see “Voting Agreements” beginning on page 172.
Recommendation of the MAA Board (See page 88)84)
After careful consideration, the MAA Board has unanimously (i) determined and declared that the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to ColonialPost Properties shareholders in the parent merger, which is collectively referred to herein as the MAA merger proposal, are advisable and in the best interests of MAA and its shareholders, and unanimously(ii) adopted and approved the merger agreement, the parent merger and the other transactions contemplated by the merger agreement.agreement, and (iii) determined and declared that, due to the transactions contemplated by the merger agreement, it is necessary, advisable, desirable and in the best interest of MAA to amend the MAA charter to increase the number of shares of MAA common stock authorized
for issuance from 100,000,000 shares to 145,000,000 shares. The MAA Board unanimously recommends that MAA shareholders votevote:FORthe MAAproposal to approve the merger proposal,agreement, the parent merger and the other transactions contemplated by the merger agreement;FOR the proposal to approve an amendment to the MAA 2013 Stock Incentive Plancharter to increase the number of authorized shares of MAA common stock from 100,000,000 shares to 145,000,000 shares; andFORthe proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger.
Recommendation of the Colonial Board (See page 92)
After careful consideration, and based in part on the unanimous recommendation of the transaction committee of the Colonial Board, the Colonial Board unanimously (i) determined that the parent merger (including the plan of merger) and the other transactions contemplated by the merger agreement are advisable and in the best interests of Colonial and its shareholders, (ii) approved and adopted the merger agreement and the plan of merger, (iii) directed that a proposal to approve and adopt the merger agreement and the parent merger pursuant to the plan of merger be submitted for consideration at a meeting of Colonial’s shareholders and (iv) recommended the approval and adoption of the merger agreement and the parent merger pursuant toand approval of the planMAA charter amendment.
After careful consideration, the Post Properties Board has unanimously, (i) approved, adopted, declared advisable and authorized the merger agreement and the transactions contemplated thereby, including the parent merger and the partnership merger, and (ii) recommended the approval of the merger agreement and the parent merger by Colonial’sPost Properties shareholders. The ColonialPost Properties Board unanimously recommends that ColonialPost Properties shareholders votevote:FOR the proposal to approve and adopt the merger agreement, the parent merger pursuant to plan of merger and the other transactions contemplated by the merger agreement,agreement;FOR the proposal to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of ColonialPost Properties in connection with the mergers,parent merger; andFOR the proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement.merger.
Summary of Risk Factors Related to the Merger (See page 32)36)
You should carefully consider carefully all of the risk factors together with all of the other information included in this joint proxy statement/prospectus before deciding how to vote. The risks related to the mergers and the related transactions are described under the section “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 32.36.
The exchange ratio is fixed and will not be adjusted in the event of any change in the share prices of either MAA or Colonial.
The parent merger and related transactions are subject to approval by the common shareholders of both MAA and Colonial and the partnership merger and the amendment and restatement of the limited partnership agreement of MAA LP are subject to approval by holders of limited partnership interests of MAA LP.
MAA and ColonialPost Properties shareholders will be diluted by the parent merger.
If the mergers do not occur, one of the companies may incur payment obligations to the other.
Failure to complete the mergers could negatively affect the stock prices and future business and financial results of both MAA and Colonial.
The pendency of the mergers could adversely affect the business and operations of MAA and Colonial.
The merger agreement contains provisions that could discourage a potential competing acquirer of either MAA or ColonialPost Properties or could result in any competing Acquisition Proposal being at a lower price than it might otherwise be.
If the mergers are not consummated by December 31, 2013,February 28, 2017, either MAA or ColonialPost Properties may terminate the merger agreement.
If the parent merger does not qualify as a tax-free reorganization, ColonialPost Properties or MAA shareholders may recognize a taxable gain.
Some of the directors and executive officers of MAA and trustees and executive officers of ColonialPost Properties have interests in seeing the mergers completed that are different from, or in addition to, those of the other MAA shareholders and ColonialPost Properties shareholders.
The MAA Special Meeting (See page The MAA special meeting will be held at At the MAA special meeting, MAA shareholders will be asked to consider and vote upon the following matters: a proposal to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to Post Properties shareholders in the parent merger, which is collectively referred to herein as the MAA merger proposal; a proposal to approve an amendment to the MAA Index to Financial Statements
Following the mergers, the Combined Corporation may be unable to integrate the businesses of MAA and Post Properties successfully and realize the anticipated synergies and other benefits of the mergers or do so within the anticipated timeframe.The Combined Corporation’s operating results after the mergers may differ materially from the unaudited pro forma condensed consolidated information included elsewhere in this joint proxy statement/prospectus.48)53)MAAMAA’s corporate headquarters, 6584 Poplar Avenue, Memphis, Tennessee 38138, on September 27, 2013,November 10, 2016, at 9:008:30 a.m., Central Daylight Time.local time.2013 Stock Incentive Plan;charter to increase the number of authorized shares of MAA common stock from 100,000,000 shares to 145,000,000 shares; and
a proposal to approve one or more adjournments of the MAA special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the MAA merger agreementproposal and approval of the parent merger.
Approval of the MAA merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of MAA common stock.
Approval of the MAA 2013 Stock Incentive Plan requires the votes cast “FOR” the proposal exceed the votes cast “AGAINST”stock entitled to vote on the proposal.
Approval of the adjournmentMAA charter amendment proposal requires the affirmative vote of a majority of shares of MAA common stock present in person or by proxy at the MAA special meeting and entitled to vote on the proposal.
Approval of the MAA adjournment proposal requires that the votes cast “FOR” the proposal exceed the votes cast “AGAINST” the proposal.
At the close of business on the record date, directors and executive officers of MAA and their affiliates were entitled to vote 302,780482,516 shares of MAA common stock, or approximately 0.71%0.6% of the shares of MAA common stock issued and outstanding on that date. Messrs. Bolton and Sanders have entered into voting agreements that obligate them to vote “FOR” the MAA merger proposal. Additionally, MAA currently expects that the other MAA directors and executive officers will vote their shares of MAA common stock in favor of the MAA merger proposal as well as the other proposals to be considered at the MAA special meeting, although none of them is obligated to do so.
Your vote as a MAA shareholder is very important. Accordingly, please sign and return the enclosed proxy card whether or not you plan to attend the MAA special meeting in person.
The ColonialPost Properties Special Meeting (See page 60)61)
The ColonialPost Properties special meeting will be held inat the conference center on the 1st flooroffices of the Colonial Brookwood Center, 569 Brookwood Village, Suite 131, Homewood, Alabama 35209 on September 27, 2013King & Spalding LLP located at 10:1180 Peachtree Street N.E., Atlanta, Georgia 30309, onNovember 10, 2016, at9:30 a.m., Central Daylight Time.local time.
At the ColonialPost Properties special meeting, ColonialPost Properties shareholders will be asked to consider and vote upon the following matters:
a proposal to approve and adopt the merger agreement, and the parent merger pursuant toand the plan ofother transactions contemplated by the merger agreement, which we sometimes refer to as the ColonialPost Properties merger proposal;
a proposal to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of ColonialPost Properties in connection with the mergers;parent merger, which we refer to as the merger-related compensation proposal; and
a proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger, pursuantwhich we refer to as the plan of merger.
Approval and adoption of the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement, will require the affirmative vote of the holders of at least a majority of the Colonialshares of Post Properties common shares outstanding asstock entitled to vote on the proposal. Approval of the record date forPost Properties merger proposal is a condition to the Colonial special meeting.closing of the parent merger.
Approval, on an advisory (non-binding) basis, of the compensation payable to certain executive officers of ColonialPost Properties in connection with the mergersparent merger will require that the affirmative votenumber of votes cast in favor of the holders of a majority ofproposal exceeds the Colonial common shares present in person or represented by proxy atvotes cast opposing the Colonial special meeting and entitled to vote on this proposal. An abstention from voting on this proposal will have no effect on the same effect as voting againstoutcome of this proposal.
ApprovalAssuming a quorum is present, approval of one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger, pursuant towill require that the plannumber of merger, will requirevotes cast in favor of the proposal exceeds the votes cast opposing the proposal. If a quorum is not present, the Post Properties special meeting may be adjourned by the affirmative vote of the holders of a majority of the Colonialshares of Post Properties common sharesstock present in person or represented by proxy at the Colonial special meeting and entitled to vote on this proposal.proxy.
At the close of business on the Post Properties record date, trusteesdirectors and executive officers of ColonialPost Properties and their affiliates were entitled to vote 5,909,185 Colonialvote983,919 shares of Post Properties common shares,stock, or approximately 6.7%approximately1.84% of the Colonialthe53,508,995 Post Properties common sharesstock issued and outstanding on that date. Messrs. T. Lowder, J. Lowder and Ripps have entered into voting agreements that obligate them to vote “FOR” the Colonial merger proposal. Additionally, ColonialPost Properties currently expects that the other Colonial trusteesPost Properties directors and executive officers will vote their Colonialshares of Post Properties common sharesstock in favor of the ColonialPost Properties merger proposal as well as the other proposals to be considered at the ColonialPost Properties special meeting, although none of them is obligated to do so.
Your vote as a ColonialPost Properties shareholder is very important. Accordingly, please sign and return the enclosed proxy card whether or not you plan to attend the ColonialPost Properties special meeting in person.
Opinions of Financial Advisors
Opinion of MAA’s Financial Advisor (See page 98)93)
MAA has retained Citigroup Global Markets Inc., which we refer to as Citi, as its financial advisor in connection with the mergers. In connection with this engagement, MAA requested that Citi evaluate the fairness, from a financial point of view, of the exchange ratio of 0.71x provided for in the parent merger as of the date of Citi’s opinion. On August 12, 2016, at a meeting of the MAA Board, Citi rendered to the MAA Board an oral opinion, which was subsequently confirmed by delivery of a written opinion, dated August 14, 2016, to the effect that, as of that date and based on and subject to the matters, considerations and limitations set forth in the opinion, Citi’s work and other factors it deemed relevant, each as described in greater detail in the section titled “The Mergers—Opinion of MAA’s Financial Advisor,” the exchange ratio of 0.71x provided for in the parent
merger was fair, from a financial point of view, to MAA. Citi’s opinion, the issuance of which was authorized by Citi’s fairness opinion committee, was provided to the MAA Board (in its capacity as such) in connection with its evaluation of the mergers and was limited to the fairness, from a financial point of view, as of the date of the opinion, to MAA of the exchange ratio of 0.71x provided for in the parent merger. Citi’s opinion does not address any other aspects or implications of the mergers and does not constitute a recommendation to anyshareholder as to how such shareholder should vote or act on any matters relating to the mergers.The summary of Citi’s opinion is qualified in its entirety by reference to the full text of the opinion.We encourage you to read the full text of Citi’s written opinion, which is attached to this joint proxy statement/prospectus as AnnexD and is incorporated into this joint proxy statement/prospectus by reference in its entirety, and sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications on the scope of review undertaken.
See “The Mergers—Opinion of MAA’s Financial Advisor” beginning on page 93.
Opinion of Post Properties’ Financial Advisor (See page 100)
On August 14, 2016, at the meeting of the Post Properties Board at which the parent merger was approved, J.P. Morgan Securities LLC, which we refer to herein as J.P. Morgan, the financial advisor of Post Properties in connection with the proposed parent merger, rendered itsto the Post Properties Board an oral opinion, subsequently confirmed in writing,by delivery of a written opinion, dated August 14, 2016, to the MAA Boardeffect that, as of June 1, 2013,such date and based upon and subject to the factors, assumptions, qualifications and assumptionsany limitations set forth in its written opinion, the exchange ratio of 0.360 provided for in the proposed parent merger was fair, from a financial point of view, to MAA. the holders of Post Properties common stock.
The full text of theJ.P. Morgan’s written opinion, dated as of J.P. Morgan dated June 1, 2013, which sets forth the assumptions made, matters considered and limits on the review undertaken,August 14, 2016, is attached as Annex FE to this joint proxy statement/prospectus and is incorporated herein by reference.You are urged to read The full text of the opinion contains a discussion of, among other things, the assumptions made, matters considered, and qualifications and any limitations on the opinion and the review undertaken by J.P. Morgan in connection with rendering its entirety. J.P. Morgan’s written opinion is addressed to the MAA Board, is directed only to the exchange ratio in the parent merger and does not constitute a recommendation to any shareholder of MAA as to how such shareholder should vote at the MAA special meeting. opinion.The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion.
See “The Parent Merger—Opinion of MAA’s Financial Advisor” beginning on page 98.
Opinion of Colonial’s Financial Advisor (See page 104)
Colonial’s financial advisor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, referred Post Properties shareholders are urged to as BofA Merrill Lynch, delivered aread the opinion carefully and in its entirety.J.P. Morgan’s written opinion dated June 2, 2013,was addressed to the Colonial Board as to the fairness, from a financial point of view and as of such date, to the holders of Colonial common shares of the exchange ratio provided for in the parent merger. The full text of BofA Merrill Lynch’s written opinion, dated June 2, 2013, is attached as Annex G to this joint proxy statement/prospectus and sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken by BofA Merrill Lynch in rendering its opinion.BofA Merrill Lynch delivered its opinion to the Colonial Board for the benefit and use of the ColonialPost Properties Board (in its capacity as such) in connection with and for the purposes of its evaluation of the exchangeratio provided for inproposed parent merger, was directed only to the parent mergerfairness, from a financial point of view. BofA Merrill Lynch’s opinionview, to the holders of Post Properties common stock of the exchange ratio in the proposed parent merger and did not address any other aspect of the mergers andparent merger or the other transactions contemplated by the merger agreement. J.P. Morgan expressed no opinion or view was expressed as to the relative meritsfairness of the mergers in comparisonexchange ratio to the holders of any other strategiesclass of securities, creditors or transactions that might be available to Colonial or in which Colonial might engageother constituencies of Post Properties or as to the underlying business decision by Post Properties to engage in the parent merger. The opinion does not constitute a recommendation to any shareholder of Colonial to proceed with or effect the mergers. BofA Merrill Lynch also expressed no opinion or recommendationPost Properties as to how anysuch shareholder should vote or act in connection with respect to the mergersproposed parent merger or any other matter.
SeeFor a description of the opinion that the Post Properties Board received from J.P. Morgan, see “The Parent Merger—Mergers—Opinion of Colonial’sPost Properties’ Financial Advisor” beginning on page 104.100.
Treatment of the Colonial Equity Incentive PlansPost Properties Series A Preferred Stock (See page 153)150)
At the effective time of the parent merger, each share of the Combined Corporation will assume allPost Properties Series A preferred stock issued and outstanding options, whether or not exercisable, and restricted share awards subject to their current terms under the Colonial equity incentive plans, as adjusted for the exchange ratio. Each option so assumed by the Combined Corporation will continue to have the same terms and conditions (including vesting schedule) as were applicable under the Colonial equity incentive plansof immediately prior to the effective time of the parent merger will be automatically converted into the right to receive one newly issued share of MAA Series I preferred stock, which will have the same rights, preferences, privileges and voting powers as those of the Post Properties Series A preferred stock, subject to any applicable withholding tax.
As
Treatment of the Post Properties Equity Incentive Plans (See page 150)
At the effective time of the parent merger, all Colonial common shares subjecteach outstanding option to vesting and other restrictions under the Colonial equity incentive plans will convert into the right to receivepurchase shares of Combined CorporationPost Properties common stock, thatwhich are referred to herein as Post Properties options, will vest in full and be assumed by MAA. Each Post Properties option assumed by MAA will continue to have, and be subject to, the same vesting conditions and other terms and conditions (other than vesting) as arewere applicable to such shares of Colonial restricted sharesthe corresponding Post Properties option immediately prior to the effective time of the parent merger, as adjustedbut will be exercisable for a number of shares of MAA common stock and at an exercise price calculated based on the exchange ratio.
In addition, immediately prior to the effective time of the parent merger, all outstanding issuance and forfeiture conditions on any shares of Post Properties common stock subject to restricted stock awards will be deemed satisfied in full and entitled to receive the merger consideration.
See “The Merger Agreement—Merger Consideration; Effects of the Parent Merger and the Partnership Merger—Assumption of ColonialPost Properties Equity Incentive Plans by MAA” beginning on page 153.150.
Directors and Management of MAA After the Mergers (See page 152)149)
Immediately following the effective time of the parent merger, the MAA Board will be increased to 1213 members, with the seventen current MAA directors, H. Eric Bolton, Jr., Alan B. Graf, Jr., Ralph Horn,James K. Lowder, Thomas H. Lowder, Monica McGurk, Claude B. Nielsen, Philip W. Norwood, W. Reid Sanders, William B. Sansom and Gary Shorb, continuing as directors of the Combined Corporation. H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman of the Board of Directors, will serve as Chief Executive Officer and Chairman of the Board of Directors of the Combined Corporation. Alan B. Graf, Jr. and Ralph Horn, Co-Lead, Lead Independent DirectorsDirector for MAA, will serve as Co-LeadLead Independent DirectorsDirector for the Combined Corporation. The MAA Board will fill the fivethree newly created vacancies by immediately appointing to the MAA Board the fivethree members designated by the ColonialPost Properties Board. The Post Properties Board Thomas H. Lowder, James K. Lowder, Claude B. Nielsen, Harold W. Rippshas designated Russell R. French, Toni Jennings and John W. Spiegel,David P. Stockert, which members are referred to herein as the ColonialPost Properties designees, to serve until the 20142017 annual meeting of MAA’s shareholders (and until their successors have been duly elected and qualified). The ColonialPost Properties designees will be nominated by the MAA Board for reelection at the 2014 and 20152017 annual meetingsmeeting of MAA’s shareholders, in all cases subject to the satisfaction and compliance of such ColonialPost Properties designees with MAA’s then-current corporate governance guidelines and code of business conduct and ethics.
Certain of theThe executive officers of MAA immediately prior to the effective time of the mergers will continue as the executive officers of the Combined Corporation following the effective time of the mergers.
Interests of MAA’s Directors and Executive Officers in the Mergers (See page 117)114)
In considering the recommendation of the MAA Board to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, MAA shareholders should be aware that certain executive officers and directors of MAA have certain interests in the mergers that may be different from, or in addition to, the interests of MAA shareholders generally. These interests may create potential conflicts of interest. The MAA Board was aware of those interests and considered them, among other matters, in reaching its decision to approve the merger agreement, the parent merger and the transactions contemplated thereby.
Interests of Colonial’s TrusteesPost Properties’ Directors and Executive Officers in the MergersMerger (See page 118)115)
In considering the recommendation of the ColonialPost Properties Board to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement, ColonialPost Properties shareholders should be aware that executive officers and trusteesdirectors of ColonialPost Properties have certain interests in
the mergers that may be different from, or in addition to, the interests of ColonialPost Properties shareholders generally.
These interests may create potential conflicts of interest. The ColonialPost Properties Board was aware of those interests and considered them, among other matters, in reaching its decision to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the transactions contemplated by the merger agreement.
Listing of Shares of the Combined Corporation Common Stock and MAA Series I Preferred Stock; Delisting and Deregistration of ColonialPost Properties Common SharesStock and Post Properties Series A Preferred Stock (See page 148)147)
It is a condition to the completion of the mergers that the shares of MAA common stock and MAA Series I preferred stock issuable in connection with the parent merger be approved for listing on the NYSE, subject to official notice of issuance. After the parent merger is completed, the ColonialPost Properties common sharesstock and Post Properties Series A preferred stock currently listed on the NYSE will cease to be listed on the NYSE and will be deregistered under the Exchange Act.
No Shareholder Dissenters’ Rights in the Parent Merger (See page 177)171)
Each shareholder of an Alabama real estate investment trust has the sameNo dissenters’ or appraisal rights, as a shareholderor rights of an Alabama business corporation underobjecting shareholders, will be available with respect to the Alabama Business Corporation Law,parent merger or the ABCL, holders of Colonial common shares are entitled to dissent and demand payment for their shares at “fair value” plus accrued interest. See “Dissenters’ Rights” beginning on page 177. MAA’s obligation to closeother transactions contemplated by the mergers will be conditioned on holders of no more than 15% of Colonial common shares properly perfecting their right to dissent and demand cash payment for their shares.merger agreement.
Conditions to Completion of the Mergers (See page 165)164)
A number of conditions must be satisfied or waived, where legally permissible, before the mergers can be consummated. These include, among others:
approval of the merger agreement, the parent merger and the other transactions contemplated by the merger agreement by MAA shareholders and ColonialPost Properties shareholders;
approval of the partnership merger and the amendment and restatement of the MAA LP limited partnership agreement by the holders of at least 66 2/3rds of the outstanding limited partnership interests of MAA LP, excluding for purposes of the approval all limited partnership interests held by MAA;
a Form S-4 will have been declared effective and no stop order suspending the effectiveness of such Form S-4 will have been issued and remain in effect and no proceeding to that effect shallwill have been commenced or threatened by the SEC and not withdrawn;
the absence of any order or injunction issued by any governmental authority or other legal restraint or prohibition preventing the consummation of the mergers or the other transactions contemplated by the merger agreement;
the shares of MAA common stock and MAA Series I preferred stock to be issued in connection with the parent merger will have been approved for listing on the NYSE, subject to official notice of issuance at or prior to the closing of the mergers;
and
the transferreceipt of certain assets held directly by MAAtax opinions relating to MAA LP will have occurred;REIT status and
certain third party consents and approvals being obtained and remaining in full force and effect, except where the failure to obtain the consent or approval would not be reasonably likely to have a material adverse effect on Colonial or MAA.
Asnature of the date of this joint proxy statement/prospectus, all of the third party consents and approvals required as a condition to the obligation of the parties to complete the mergers as described in the final bullet point above had been obtained and not rescinded.
Neither MAA nor ColonialPost Properties can give any assurance as to when or if all of the conditions to the consummation of the mergers will be satisfied or waived or that the mergers will occur.
For more information regarding the conditions to the consummation of the mergers and a complete list of such conditions, see “The Merger Agreement—Conditions to Completion of the Mergers”Merger” beginning on page 165.164.
Regulatory Approvals Required for the Mergers (See page 124)121)
MAA and ColonialPost Properties are not aware of any material federal or state regulatory requirements that must be complied with, or approvals that must be obtained, in connection with the mergers or the other transactions contemplated by the merger agreement. See “The Parent Merger—Mergers—Regulatory Approvals Required for the Mergers” beginning on page 124.121.
No Solicitation and Change in Recommendation (See page 160)158)
Under the merger agreement, each of MAA and ColonialPost Properties has agreed it will not, nor will it permit any of its subsidiaries to, authorize or permit any of its officers, trustees, directors or employees to, and will use its reasonable best efforts to cause its and its subsidiaries’ other representatives not to, directly or indirectly, (i) initiate, solicit or knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer by or with a third party with respect to an Acquisition Proposal (as defined below in “The Merger Agreement—Covenants and Agreements—No Solicitation of Transactions”), (ii) engage in any negotiations concerning, or provide any confidential information or data to any person relating to an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal, (iii) approve or execute or enter into any letter of intent, agreement in principle, merger agreement, asset purchase or share exchange agreement, option agreement or other similar agreement related toproviding for any Acquisition Proposal, or (iv) publicly propose publicly or agree to do any of the foregoing.
However, prior to the approval of the parent merger and the other transactions contemplated by the merger agreement by their respective shareholders, each of MAA and ColonialPost Properties may, under certain specified circumstances, engage in discussions or negotiations with and provide nonpublic information regarding itself to a third party making an unsolicited, bona fide written competing Acquisition Proposal. Under the merger agreement, ColonialPost Properties is required to notify MAA promptly, and MAA is required to notify ColonialPost Properties promptly, if it receives any Acquisition Proposal or inquiry or any request for nonpublic information in connection with an Acquisition Proposal.
Before the approval of the mergersparent merger and the other transactions contemplated by the merger agreement by their respective shareholders, each of the MAA Board and the ColonialPost Properties Board may, under certain specified circumstances, withdraw its recommendation to its shareholders with respect to the parent merger if it determines in good faith, after consultation with outside legal counsel, that failure to take such action would be inconsistent with the directors’ or trustees’, as applicable,fiduciary duties under applicable law. For more information regarding the limitations on MAA, the MAA Board, ColonialPost Properties and the ColonialPost Properties Board to consider other Acquisition Proposals, see “The Merger Agreement—Covenants and Agreements—No Solicitation of Transactions” beginning on page 160.158.
Termination of the Merger Agreement (See page 168)166)
The merger agreement may be terminated at any time before the effective time of the partnershipparent merger by the mutual consent of MAA and ColonialPost Properties in a written instrument, which action must be taken or authorized by the MAA Board and the ColonialPost Properties Board.
In addition, either MAA or Colonial (so long as they are not at fault)Post Properties may decide to terminate the merger agreement if (provided such action must be taken or authorized byprior to the MAA Board oreffective time of the Colonial Board, as applicable):parent merger if:
a governmental authority of competent jurisdiction has issued an order, decree or ruling or taken any other action permanently enjoining or otherwise prohibiting the mergers, and such order, decree, ruling or other action has become final and nonappealable (provided that this termination right will not be available to a party whose failure to comply with any provision of the merger agreement was the cause of, or resulted in, such action);
the mergers have not been consummated on or before 5:00 p.m. (New York time) December 31, 2013February 28, 2017 (provided that this termination right will not be available to a party whose failure to comply with any provision of the merger agreement has been the cause of, or resulted in, the failure of the mergers to occur on or before such date);
there has been a breach by the other party of any of the covenants or agreements or any of the representations or warranties set forth in the merger agreement on the part of such other party, which breach, either individually or in the aggregate, would result in, if occurring or continuing on the closing date, the failure to be satisfied of certain closing conditions, unless such breach is reasonably capable of being cured, and the other party continues to use its reasonable best efforts to cure such breach prior to December 31, 2013 (provided that this termination right will not be available to a party that is in breach of any of its own respective representations, warranties, covenants or agreements set forth in the merger agreement such that certain closing conditions are not satisfied);
breach, either individually or in the aggregate, would result in, if occurring or continuing on the closing date, the failure of certain closing conditions to be satisfied, unless such breach is reasonably capable of being cured, and the other party continues to use its reasonable best efforts to cure such breach prior to February 28, 2017 (provided that this termination right will not be available to a party that is in breach of any of its own respective representations, warranties, covenants or agreements set forth in the merger agreement such that certain closing conditions are not satisfied); or |
holders of at least 66 2/3rds of the outstanding limited partnership interests of MAA LP, excluding for purposes of the approval all limited partnership interests held by MAA, fail to approve the partnership merger, the other transactions contemplated by the merger agreement and the amendment and restatement of the MAA LP limited partnership agreement prior to, or contemporaneously with, the MAA special meeting (provided that this termination right will not be available to MAA where a failure to obtain the approval of holders of limited partnership units in MAA LP was primarily caused by any action or failure to act of a MAA party that constitutes a material breach of the merger agreement).
MAAPost Properties may also decide to terminate the merger agreement if:agreement:
at any time prior to the approval of the parent merger and the other transactions contemplated by the merger agreement by the MAAPost Properties shareholders, in order to enter into any alternative acquisition agreement with respect to a Superior Proposal (as defined below in “The Merger Agreement—Covenants and Agreements—No Solicitation of Transactions”); provided, that such termination will be null and void unless MAAPost Properties concurrently pays the termination fee plus the expense reimbursement described below under “—Termination Fee and Expenses Payable by MAAPost Properties to Colonial”MAA”; or
(i)if the ColonialMAA Board has made a Colonial board change in recommendation and MAAPost Properties terminates the merger agreement within 10 business days of the date MAAPost Properties receives notice of the change, or (ii) the Colonial parties have materially breached any of their obligations under the provisions of the merger agreement regarding no solicitation of transactions by the Colonial parties (other than any immaterial or inadvertent breaches thereof not intended to result in an Acquisition Proposal).
ColonialMAA has reciprocal termination rights with respect to the merger agreement as MAAthose of Post Properties described above.
For more information regarding the rights of MAA and ColonialPost Properties to terminate the merger agreement, see “The Merger Agreement—Termination of the Merger Agreement” beginning on page 168.166.
Termination Fee and Expenses (See page 169)168)
Generally, all fees and expenses incurred in connection with the mergers and the transactions contemplated by the merger agreement will be paid by the party incurring those fees and expenses. However, if the merger agreement is terminated because either party fails to obtain the approval of its shareholders, among other reasons, such party will be required to pay the other partyparty’s reasonable documented out-of-pocket expenses actually incurred up to a maximum of $10 million. In certain other circumstances, either MAA or Colonial may be obligated to pay the otherPost Properties a termination fee of $75either $122.5 million or $245 million plus reasonable documented out-of-pocket expenses actuallyincurred up to a maximum of $10 million, or Post Properties may be obligated to pay MAA a termination fee of either $58.5 million or $117 million plus reasonable documented out-of-pocket expenses incurred up to a maximum of $10 million.
For more information regarding the termination fee and expense reimbursement, see “The Merger Agreement—Termination of the Merger Agreement—Termination Fee and Expenses Payable by ColonialPost Properties to MAA” beginning on page 169168 and “The Merger Agreement—Termination of the Merger Agreement—Termination Fee and Expenses Payable by MAA to Colonial”Post Properties” beginning on page 170.169.
Litigation Relating to the Mergers (See page 149)
On June 19, 2013, a putative class action lawsuit was filed in the Circuit Court for Jefferson County, Alabama against Colonial and purportedly on behalf of a proposed class of all Colonial shareholders captionedWilliams v. Colonial Properties Trust, et al. (the “State Litigation”). A derivative claim purportedly on behalf of Colonial was also asserted in the State Litigation. The complaint names as defendants Colonial, the members of the Colonial board of trustees, Colonial LP, MAA, MAA LP and OP Merger Sub and alleges that the Colonial trustees breached their fiduciary duties by engaging in an unfair process leading to the merger agreement, failing to secure and obtain the best price reasonable for Colonial shareholders, allowing preclusive deal protection devices in the merger agreement, and by engaging in conflicted actions. The complaint alleges that Colonial LP, MAA, MAA LP and OP Merger Sub aided and abetted those breaches of fiduciary duties. The complaint seeks a declaration that the defendants have breached their fiduciary duties or aided and abetted such breaches and that the merger agreement is unlawful and unenforceable, an order enjoining the consummation of the mergers, direction of the Colonial trustees to exercise their fiduciary duties to obtain a transaction that is in the best interests of Colonial, rescission of the mergers in the event they are consummated, an award of costs and disbursements, including reasonable attorneys’ and experts’ fees, and other relief.
On July 2, 2013, plaintiff moved for expedited fact discovery and for an expedited schedule for filing and hearing a preliminary motion to enjoin the mergers; on July 11, 2013, defendants opposed those motions and moved to stay fact discovery. On July 11, 2013, defendants also moved to dismiss the complaint for failure to state a claim upon which relief can be granted on the grounds that: (1) the claims against the Colonial trustees are derivative and not direct, and plaintiff did not comply with Alabama law on serving notice of the claims on Colonial prior to filing; and (2) Alabama law does not recognize a cause of action in aiding and abetting a breach of fiduciary duty and, even if it did, such claims would also be derivative and not direct. The Court scheduled a motions hearing for August 8, 2013, which was continued on the request of the parties to the State Litigation to August 14, 2013 to facilitate settlement discussions. In the meantime, on August 2, 2013, plaintiff filed an amended complaint that re-asserted plaintiff’s earlier claims and added a new claim that the Colonial trustees breached their alleged duty of candor by not providing Colonial shareholders full and complete disclosures regarding the merger.
On August 14, 2013, prior to the Court’s scheduled hearing, the parties to the State Litigation reached an agreement in principle to settle the State Litigation, in which (a) defendants agreed to make certain additional
disclosures in this joint proxy statement/prospectus, and (b) the parties agreed that they would use their best efforts to agree upon, execute and present to the Court a stipulation of settlement which would, among other things, (i) provide for the conditional certification of a non-opt out settlement class pursuant to Alabama Rules of Civil Procedure 23(b)(1) and (b)(2) consisting generally of all record and beneficial holders of the common stock of Colonial from June 3, 2013 through and including the date of the closing of the parent merger (the “Settlement Class”); (ii) release all claims that members of the Settlement Class may have that were alleged in the State Litigation or otherwise arising out of or relating in any manner to the parent merger (except Colonial shareholders’ statutory dissenters’ rights, see “Dissenters’ Rights” beginning on page 177), and (iii) dismiss the State Litigation with prejudice. The proposed settlement also provides that the defendants will not oppose a request to the Court by plaintiff’s counsel for attorney’s fees up to an immaterial amount agreed to by the parties and is subject to, among other things, confirmatory discovery, agreement to a stipulation of settlement, and final court approval following notice to the Settlement Class. The parties reported the proposed settlement to the Court on August 14, 2013, and the Court ordered a stay of all proceedings (except those related to settlement). Colonial and MAA management believe that the allegations in the amended complaint are without merit and that the disclosures made prior to the settlement are adequate under the law but wish to settle the State Litigation in order to avoid the cost and distraction of further litigation. In the event that the stipulation of settlement is not approved by the Court, the defendants intend to vigorously defend the State Litigation.
On August 20, 2013, a purported Colonial shareholder filed an individual lawsuit in the United States District Court for the Northern District of Alabama against Colonial captionedKempen v. Colonial Properties Trust, et al. (the “Federal Litigation”). The complaint names as defendants Colonial, the members of the Colonial board of trustees, Colonial LP, MAA, MAA LP and OP Merger Sub, and alleges that all defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder because the joint proxy statement/prospectus included in the registration statement on Form S-4 filed with the SEC on July 19, 2013 is allegedly materially misleading, depriving plaintiff of making a fully informed decision regarding his vote on the parent merger. The complaint alleges that defendants misrepresented or omitted material facts concerning Colonial’s projections, the financial analyses of Colonial’s financial advisor, conflicts of interest affecting defendants and Colonial’s financial advisor, and the process employed by the Colonial trustees leading up to the decision to approve and recommend the parent merger. Plaintiff seeks an order enjoining the consummation of the mergers, rescission of the mergers in the event they are consummated or awarding Plaintiff rescissory damages, and an award of costs and disbursements, including reasonable attorneys’ and experts’ fees. Colonial and MAA management believe that the allegations in the complaint are without merit and intend to vigorously defend the Federal Litigation.
Material U.S. Federal Income Tax Consequences of the Parent Merger and Ownership of Combined Corporation Common Stock and MAA Series I Preferred Stock (See page 125)121)
ColonialPost Properties and MAA intend that the parent merger of Colonial with and into MAA will qualify as a reorganization within the meaning of Section 368(a) of the Code. The closing of the parent merger is conditioned on the receipt by each of MAA
and ColonialPost Properties of an opinion from its respective counsel to the effect that the parent merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. Assuming that the parent merger qualifies as a reorganization, U.S. holders of ColonialPost Properties common sharesstock and Post Properties Series A preferred stock generally will not recognize gain or loss for U.S. federal income tax purposes upon the receipt of Combined Corporation common stock or MAA Series I preferred stock in exchange for ColonialPost Properties common sharesstock or Post Properties Series A preferred stock, as applicable, in connection with the parent merger, except with respect to cash received in lieu of fractional shares of Combined Corporation common stock.
For further discussion of the material U.S. federal income tax consequences of the parent merger and the ownership of Combined Corporation common stock of the Combined Corporation,or MAA Series I preferred stock, see “The Parent Merger—Mergers—Material U.S. Federal Income Tax Consequences of the Parent Merger”Merger and Combined Corporation Common Stock and MAA Series I Preferred Stock” beginning on page 125.121.
Holders of ColonialPost Properties common sharesstock and Post Properties Series A preferred stock should consult their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or non-U.S. income and other tax laws) of the parent merger.
Accounting Treatment of the Mergers (See page 147)145)
MAA prepares its financial statements in accordance with accounting principles generally accepted in the United States, which we refer to as GAAP. The parent merger will be accounted for by applying the acquisition method. See “The Parent Merger—Mergers—Accounting Treatment.”
Comparison of Rights of Shareholders of MAA and Shareholders of ColonialPost Properties (See page 186)183)
If the parent merger is consummated, shareholders of ColonialPost Properties will become shareholders of MAA. The rights of ColonialPost Properties shareholders are currently governed by and subject to the provisions of the Alabama Real Estate Investment Trust Law,Georgia Business Corporation Code, or the AREITL,GBCC, and the declarationarticles of trustincorporation and bylaws of Colonial.Post Properties. Upon consummation of the parent merger, the rights of the former ColonialPost Properties shareholders who receive MAA common stock or MAA Series I preferred stock will be governed by the Tennessee Business Corporation Act, or the TBCA, and the MAA charter and MAA bylaws, rather than the declarationGBCC and the articles of trustincorporation and bylaws of Colonial.Post Properties.
For a summary of certain differences between the rights of MAA shareholders and ColonialPost Properties shareholders, see “Comparison of Rights of Shareholders of MAA and Shareholders of Colonial”Post Properties” beginning on page 186.183.
Selected Historical Financial Information of MAA
The following table sets forth selected consolidated financial information for MAA. The selected statement of income datahistorical financial information for each of the fiscal years in the five-year period ended December 31, 20122015, 2014 and 2013 and the selected balance sheet data as of December 31, for each of the years in the five-year period ended December 31, 20122015 and 2014 have been derived from MAA’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which has been incorporated herein by reference.reference into this joint proxy statement/prospectus. The selected statementhistorical financial information for each of incomethe fiscal years ended December 31, 2012 and 2011 and the selected balance sheet data as of December 31, 2013, 2012 and 2011 have been derived from MAA’s historical audited financial statements for such years, which have not been incorporated by reference into this joint proxy statement/prospectus. The consolidated assets, liabilities, and results of operations of Colonial Properties Trust are included in MAA’s selected historical financial information from October 1, 2013, the closing date of the merger between MAA and Colonial Properties Trust.
The selected historical financial information for the six months ended June 30, 20132016 and 20122015 and the selected balance sheet data as of June 30, 20132016 have been derived from MAA’s unaudited condensed consolidated financial statements incorporated herein by reference. The following information should be read together with MAA’s Annual Report on Form 10-K for the year ended December 31, 2012, MAA’scontained in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2013,2016, which has been incorporated by reference into this joint proxy statement/prospectus. The selected balance sheet data as of June 30, 2015 has been derived from MAA’s historical unaudited condensed consolidated financial statements for such quarter, which has not been incorporated by reference into this joint proxy statement/prospectus. In MAA’s opinion, such unaudited financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim June 30, 2016 and 2015 financial information. Interim results for the othersix months ended and as of June 30, 2016 are not necessarily indicative of, and are not projections for, the results to be expected for the fiscal year ending December 31, 2016.
You should read this selected historical financial information that MAA has filedtogether with the SECfinancial statements included in reports that are incorporated by reference in this joint proxy statement/prospectus and incorporated herein by reference. See “Where You Can Find More Information” beginning on page 205.their accompanying notes and management’s discussion and analysis of operations and financial condition of MAA contained in such reports.
| As of and for the Six Months Ended June 30, | As of and for the Year Ended December 31, | As of and for the Six Months Ended June 30, | As of and for the Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2013 | 2012 | 2012 | 2011 | 2010 | 2009 | 2008 | 2016 | 2015 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | (Amounts in thousands, except per share, properties and apartment unit data) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total operating revenues | $ | 264,356 | $ | 232,315 | $ | 497,165 | $ | 430,806 | $ | 380,138 | $ | 357,093 | $ | 348,644 | $ | 541,252 | $ | 517,443 | $ | 1,042,779 | $ | 992,332 | $ | 635,490 | $ | 475,888 | $ | 409,782 | ||||||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property operating expenses | 105,149 | 95,702 | 203,326 | 182,577 | 163,588 | 149,516 | 144,866 | 203,836 | 201,505 | 400,645 | 393,348 | 253,633 | 194,149 | 173,563 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 65,406 | 59,228 | 126,136 | 110,870 | 98,384 | 90,464 | 84,706 | 150,870 | 147,508 | 294,520 | 301,812 | 186,979 | 121,211 | 106,009 | ||||||||||||||||||||||||||||||||||||||||||
Acquisition expenses | 499 | 231 | 1,581 | 3,319 | 2,512 | 950 | — | 1,134 | 1,499 | 2,777 | 2,388 | 1,393 | 1,581 | 3,319 | ||||||||||||||||||||||||||||||||||||||||||
Merger Related expenses | 5,737 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property management and general and administrative expenses | 17,405 | 17,933 | 35,846 | 38,823 | 30,389 | 28,540 | 28,636 | 30,909 | 28,702 | 56,706 | 53,004 | 38,652 | 35,043 | 38,096 | ||||||||||||||||||||||||||||||||||||||||||
Merger related expenses | — | — | — | 3,152 | 32,403 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Integration related expenses | — | — | — | 8,395 | 5,102 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
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Income from continuing operations before non-operating items | 70,160 | 59,221 | 130,276 | 95,217 | 85,265 | 87,623 | 90,436 | 154,503 | 138,229 | 288,131 | 230,233 | 117,328 | 123,904 | 88,795 | ||||||||||||||||||||||||||||||||||||||||||
Interest and other non-property income | 70 | 254 | 430 | 802 | 903 | 385 | 509 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest and other non-property income (expense) | 94 | (180 | ) | (368 | ) | 770 | 466 | 430 | 802 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (30,906 | ) | (28,058 | ) | (58,751 | ) | (57,415 | ) | (54,632 | ) | (55,412 | ) | (58,497 | ) | (64,250 | ) | (61,281 | ) | (122,344 | ) | (123,953 | ) | (78,978 | ) | (61,489 | ) | (59,285 | ) | ||||||||||||||||||||||||||||
(Loss) gain on debt extinguishment | (169 | ) | 5 | (654 | ) | (755 | ) | — | (140 | ) | (116 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Amortization of deferred financing costs | (1,607 | ) | (1,640 | ) | (3,552 | ) | (2,902 | ) | (2,627 | ) | (2,374 | ) | (2,307 | ) | ||||||||||||||||||||||||||||||||||||||||||
Net casualty gains (loss) and other settlement proceeds | 455 | (2 | ) | (6 | ) | (619 | ) | 314 | 34 | (117 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Gains on sale of non-depreciable and non-real estate assets | — | (3 | ) | 45 | 1,084 | — | 15 | (3 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Gains on properties contributed to joint ventures | — | — | — | — | 752 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Gain (loss) on debt extinguishment | 3 | (3,379 | ) | (3,602 | ) | (2,586 | ) | (426 | ) | (654 | ) | (755 | ) | |||||||||||||||||||||||||||||||||||||||||||
Net casualty gain (loss) after insurance and other settlement proceeds | 813 | 490 | 473 | (476 | ) | (143 | ) | (6 | ) | (619 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of depreciable real estate assets excluded from discontinued operations | 823 | 135,410 | 189,958 | 42,649 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of non-depreciable real estate assets | 2,170 | 172 | 172 | 350 | — | 45 | 1,084 | |||||||||||||||||||||||||||||||||||||||||||||||||
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Income from continuing operations before investments in real estate joint ventures | 38,003 | 29,777 | 67,788 | 35,412 | 29,975 | 30,131 | 29,905 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income before income tax expense | 94,156 | 209,461 | 352,420 | 146,987 | 38,247 | 62,230 | 30,022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (745 | ) | (907 | ) | (1,673 | ) | (2,050 | ) | (893 | ) | (803 | ) | (727 | ) | ||||||||||||||||||||||||||||||||||||||||||
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Income from continuing operations before joint venture activity | 93,411 | 208,554 | 350,747 | 144,937 | 37,354 | 61,427 | 29,295 | |||||||||||||||||||||||||||||||||||||||||||||||||
Gain (loss) from real estate joint ventures | 101 | (98 | ) | (223 | ) | (593 | ) | (1,149 | ) | (816 | ) | (844 | ) | 27 | (4 | ) | (2 | ) | 6,009 | 338 | (223 | ) | (593 | ) | ||||||||||||||||||||||||||||||||
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Income from continuing operations | 38,104 | 29,679 | 67,565 | 34,819 | 28,826 | 29,315 | 29,061 | 93,438 | 208,550 | 350,745 | 150,946 | 37,692 | 61,204 | 28,702 | ||||||||||||||||||||||||||||||||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from discontinued operations before gain (loss) on sale | 1,808 | 2,479 | 625 | 3,613 | 2,051 | 5,257 | 3,130 | |||||||||||||||||||||||||||||||||||||||||||||||||
Gains (loss) on sale of discontinued operations | 43,121 | 22,382 | 41,635 | 12,799 | (2 | ) | 4,649 | (120 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Income from discontinued operations before (loss) gain on sale | — | — | — | (63 | ) | 4,743 | 6,986 | 9,730 | ||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of discontinued operations | — | — | — | 5,394 | 76,844 | 41,635 | 12,799 | |||||||||||||||||||||||||||||||||||||||||||||||||
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Consolidated net income | 83,033 | 54,540 | 109,825 | 51,231 | 30,875 | 39,221 | 32,071 | 93,438 | 208,550 | 350,745 | 156,277 | 119,279 | 109,825 | 51,231 | ||||||||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | (2,764 | ) | (2,490 | ) | (4,602 | ) | (2,410 | ) | (1,114 | ) | (2,010 | ) | (1,822 | ) | 4,881 | 10,984 | 18,458 | 8,297 | 3,998 | 4,602 | 2,410 | |||||||||||||||||||||||||||||||||||
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Net income attributable to Mid-America Apartment Communities, Inc.(1) | 80,269 | 52,050 | 105,223 | 48,821 | 29,761 | 37,211 | 30,249 | |||||||||||||||||||||||||||||||||||||||||||||||||
Preferred dividend distributions | — | — | — | 6,549 | 12,865 | 12,865 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Premiums and original issuance costs associated with the redemption of preferred stock | — | — | — | 5,149 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income available for MAA common shareholders | $ | 88,557 | $ | 197,566 | $ | 332,287 | $ | 147,980 | $ | 115,281 | $ | 105,223 | $ | 48,821 | ||||||||||||||||||||||||||||||||||||||||||
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Net income available for common shareholders | $ | 80,269 | $ | 52,050 | $ | 105,223 | $ | 48,821 | $ | 18,063 | $ | 24,346 | $ | 17,384 | ||||||||||||||||||||||||||||||||||||||||||
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| As of and for the Six Months Ended June 30, | As of and for the Year Ended December 31, | As of and for the Six Months Ended June 30, | As of and for the Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2013 | 2012 | 2012 | 2011 | 2010 | 2009 | 2008 | 2016 | 2015 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | (Amounts in thousands, except per share, properties and apartment unit data) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per Share Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding (in thousands): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic | 42,523 | 40,243 | 41,039 | 36,995 | 31,856 | 28,341 | 26,943 | 75,263 | 75,157 | 75,176 | 74,982 | 50,677 | 41,039 | 36,995 | ||||||||||||||||||||||||||||||||||||||||||
Effect of dilutive stock options and partnership units | 1,771 | 1,982 | 1,898 | 2,092 | 121 | 76 | 141 | 239 | — | — | — | 2,439 | 1,898 | 2,092 | ||||||||||||||||||||||||||||||||||||||||||
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Diluted | 44,294 | 42,225 | 42,937 | 39,087 | 31,977 | 28,417 | 27,084 | 75,502 | 75,157 | 75,176 | 74,982 | 53,116 | 42,937 | 39,087 | ||||||||||||||||||||||||||||||||||||||||||
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Calculation of Earnings per share—basic: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations, adjusted | $ | 36,661 | $ | 28,324 | $ | 64,761 | $ | 33,059 | $ | 15,754 | $ | 14,641 | $ | 14,556 | $ | 88,320 | $ | 197,120 | $ | 331,515 | $ | 142,655 | $ | 36,504 | $ | 58,737 | $ | 27,413 | ||||||||||||||||||||||||||||
Income from discontinued operations, adjusted | 43,534 | 23,675 | 40,437 | 15,521 | 2,301 | 9,504 | 2,646 | — | — | — | 5,037 | 78,669 | 46,392 | 21,375 | ||||||||||||||||||||||||||||||||||||||||||
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Net income attributable to common shareholders, adjusted | $ | 80,195 | $ | 51,999 | $ | 105,198 | $ | 48,580 | $ | 18,055 | $ | 24,145 | $ | 17,202 | $ | 88,320 | $ | 197,120 | $ | 331,515 | $ | 147,692 | $ | 115,173 | $ | 105,129 | $ | 48,788 | ||||||||||||||||||||||||||||
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Earnings per share—basic: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations available for common shareholders | $ | 0.86 | $ | 0.70 | $ | 1.58 | $ | 0.90 | $ | 0.50 | $ | 0.51 | $ | 0.54 | $ | 1.17 | $ | 2.62 | $ | 4.41 | $ | 1.90 | $ | 0.72 | $ | 1.43 | $ | 0.74 | ||||||||||||||||||||||||||||
Discontinued property operations | 1.02 | 0.59 | 0.98 | 0.42 | 0.07 | 0.34 | 0.10 | — | — | — | 0.07 | 1.55 | 1.13 | 0.58 | ||||||||||||||||||||||||||||||||||||||||||
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Net income available for common shareholders | $ | 1.88 | $ | 1.29 | $ | 2.56 | $ | 1.32 | $ | 0.57 | $ | 0.85 | $ | 0.64 | $ | 1.17 | $ | 2.62 | $ | 4.41 | $ | 1.97 | $ | 2.27 | $ | 2.56 | $ | 1.32 | ||||||||||||||||||||||||||||
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Calculation of Earnings per share—diluted: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations, adjusted | $ | 88,557 | $ | 197,117 | $ | 331,515 | $ | 142,655 | $ | 37,692 | $ | 61,204 | $ | 28,702 | ||||||||||||||||||||||||||||||||||||||||||
Income from discontinued operations, adjusted | — | — | — | 5,037 | 81,587 | 48,621 | 22,529 | |||||||||||||||||||||||||||||||||||||||||||||||||
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Net income attributable to common shareholders, adjusted | $ | 88,557 | $ | 197,117 | $ | 331,515 | $ | 147,692 | $ | 119,279 | $ | 109,825 | $ | 51,231 | ||||||||||||||||||||||||||||||||||||||||||
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Earnings per share—diluted: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations available for common shareholders | $ | 0.86 | $ | 0.70 | $ | 1.57 | $ | 0.89 | $ | 0.49 | $ | 0.52 | $ | 0.54 | $ | 1.17 | $ | 2.62 | $ | 4.41 | $ | 1.90 | $ | 0.71 | $ | 1.43 | $ | 0.73 | ||||||||||||||||||||||||||||
Discontinued property operations | 1.01 | 0.59 | 0.99 | 0.42 | 0.07 | 0.33 | 0.10 | — | — | — | 0.07 | 1.54 | 1.13 | 0.58 | ||||||||||||||||||||||||||||||||||||||||||
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Net income available for common shareholders | $ | 1.87 | $ | 1.29 | $ | 2.56 | $ | 1.31 | $ | 0.56 | $ | 0.85 | $ | 0.64 | $ | 1.17 | $ | 2.62 | $ | 4.41 | $ | 1.97 | $ | 2.25 | $ | 2.56 | $ | 1.31 | ||||||||||||||||||||||||||||
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Dividends declared(1) | $ | 1.3900 | $ | 1.3200 | $ | 2.6750 | $ | 2.5425 | $ | 2.4725 | $ | 2.4600 | $ | 2.4600 | ||||||||||||||||||||||||||||||||||||||||||
Dividends declared(2) | $ | 1.6400 | $ | 1.5400 | $ | 3.1300 | $ | 2.9600 | $ | 2.8150 | $ | 2.6750 | $ | 2.5425 | ||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate owned, at cost | $ | 3,812,195 | $ | 3,522,783 | $ | 3,734,544 | $ | 3,396,934 | $ | 2,958,765 | $ | 2,707,300 | $ | 2,529,522 | $ | 8,406,424 | $ | 8,038,205 | $ | 8,217,579 | $ | 8,071,187 | $ | 7,694,618 | $ | 3,734,544 | $ | 3,396,934 | ||||||||||||||||||||||||||||
Real estate assets, net | $ | 2,746,897 | $ | 2,519,706 | $ | 2,694,071 | $ | 2,423,808 | $ | 2,084,863 | $ | 1,933,863 | $ | 1,850,175 | 6,759,790 | 6,683,457 | 6,718,366 | 6,697,508 | 6,556,303 | 2,694,071 | 2,423,808 | |||||||||||||||||||||||||||||||||||
Total assets | $ | 2,834,217 | $ | 2,599,088 | $ | 2,751,068 | $ | 2,530,468 | $ | 2,176,048 | $ | 1,986,826 | $ | 1,921,955 | 6,869,381 | 6,833,179 | 6,847,781 | 6,821,778 | 6,835,012 | 2,745,292 | 2,526,128 | |||||||||||||||||||||||||||||||||||
Total debt | $ | 1,691,541 | $ | 1,589,421 | $ | 1,673,848 | $ | 1,649,755 | $ | 1,500,193 | $ | 1,399,596 | $ | 1,323,056 | 3,489,425 | 3,432,010 | 3,427,568 | 3,512,699 | 3,463,239 | 1,668,072 | 1,645,415 | |||||||||||||||||||||||||||||||||||
Noncontrolling interest | $ | 31,500 | $ | 26,576 | $ | 31,058 | $ | 25,131 | $ | 22,125 | $ | 22,660 | $ | 25,648 | 163,575 | 165,669 | 165,726 | 161,287 | 166,726 | 31,058 | 25,131 | |||||||||||||||||||||||||||||||||||
Total Mid-America Apartment Communities, Inc. shareholders’ equity and redeemable stock | $ | 985,818 | $ | 844,084 | $ | 918,765 | $ | 722,368 | $ | 522,267 | $ | 433,368 | $ | 418,774 | ||||||||||||||||||||||||||||||||||||||||||
Total MAA shareholders’ equity and redeemable stock | 2,966,113 | 2,982,914 | 3,000,347 | 2,896,435 | 2,951,861 | 918,765 | 722,368 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other Data (at end of period): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Market capitalization (shares and units)(2) | $ | 3,011,956 | $ | 2,926,516 | $ | 2,852,113 | $ | 2,558,107 | $ | 2,353,115 | $ | 1,671,036 | $ | 1,293,145 | ||||||||||||||||||||||||||||||||||||||||||
Ratio of total debt to total capitalization(3) | 36.0 | % | 35.2 | % | 37.0 | % | 39.2 | % | 38.9 | % | 45.6 | % | 50.6 | % | ||||||||||||||||||||||||||||||||||||||||||
Number of properties, including joint venture ownership interest(4) | 164 | 168 | 166 | 167 | 157 | 147 | 145 | |||||||||||||||||||||||||||||||||||||||||||||||||
Number of apartment units, including joint venture ownership interest(4) | 49,113 | 49,002 | 49,591 | 49,133 | 46,310 | 43,604 | 42,554 | |||||||||||||||||||||||||||||||||||||||||||||||||
Market capitalization (shares and units)(3) | $ | 8,478,281 | $ | 5,792,865 | $ | 7,225,894 | $ | 5,933,985 | $ | 4,801,990 | $ | 2,852,113 | $ | 2,558,107 | ||||||||||||||||||||||||||||||||||||||||||
Ratio of total debt to total capitalization(4) | 29.2 | % | 37.2 | % | 32.2 | % | 37.3 | % | 42.0 | % | 37.0 | % | 39.2 | % | ||||||||||||||||||||||||||||||||||||||||||
Number of properties, including joint venture ownership | 256 | 254 | 254 | 268 | 275 | 166 | 167 | |||||||||||||||||||||||||||||||||||||||||||||||||
Number of apartment units, including joint venture ownership interest(5) | 80,300 | 79,977 | 79,496 | 82,316 | 83,641 | 49,591 | 49,133 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | See Note 3—Earnings per Common Share of MAA to MAA’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, incorporated herein by reference. |
| (2) | Beginning in 2006, at |
Market capitalization includes all |
Total capitalization is market capitalization plus total debt. |
Property and apartment unit totals have not been adjusted to exclude properties held for sale. |
|
Selected Historical Financial Information of ColonialPost Properties
The following table sets forth selected consolidated financial information for Colonial.Post Properties. The selected income statementhistorical financial information for each of the fiscal years ended December 31, 2015, 2014 and 2013 and the selected balance sheet data as of December 31, 2015 and 2014 have been derived from Post Properties’ audited consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which has been incorporated by reference into this joint proxy statement/prospectus. The selected historical financial information for each of the fiscal years ended December 31, 2012 2011 and 20102011 and the selected balance sheet data as of December 31, 2013, 2012 and 2011 have been derived from Colonial’s audited consolidated financial statements incorporated herein by reference. The selected income statement data for each of the fiscal years ended December 31, 2009 and 2008 and the selected balance sheet data as of December 31, 2010, 2009 and 2008 have been derived from Colonial’sPost Properties’ historical audited financial statements for such years, which arehave not included inbeen incorporated by reference into this joint proxy/solicitation. proxy statement/prospectus.
The selected statement of income datahistorical financial information for the six months ended June 30, 20132016 and 20122015 and the selected balance sheet data as of June 30, 20132016 have been derived from Colonial’sPost Properties’ unaudited consolidated financial statements incorporated herein by reference. The following information should be read together with Colonial’s Current Report on Form 8-K filed with the SEC on August 21, 2013, Colonial’scontained in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2013,2016, which has been incorporated by reference into this joint proxy statement/prospectus. The selected balance sheet data as of June 30, 2015 has been derived from Post Properties’ historical unaudited consolidated financial statements for such quarter, which has not been incorporated by reference into this joint proxy statement/prospectus. In Post Properties’ opinion, such unaudited financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim June 30, 2016 and 2015 financial information. Interim results for the othersix months ended and as of June 30, 2016 are not necessarily indicative of, and are not projections for, the results to be expected for the fiscal year ending December 31, 2016.
You should read this selected historical financial information that Colonial has filedtogether with the SECfinancial statements included in reports that are incorporated by reference in this joint proxy statement/prospectus and incorporated herein by reference. See “Where You Can Find More Information” beginning on page 205.their accompanying notes and management’s discussion and analysis of operations and financial condition of Post Properties contained in such reports.
| As of and for the Six Months Ended June 30, | As of and for the Year Ended December 31, | |||||||||||||||||||||||||||
| 2013 | 2012 | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||||
| (dollars in thousands, except where indicated and except per share data) | ||||||||||||||||||||||||||||
OPERATING DATA(1) | ||||||||||||||||||||||||||||
Total revenues | $ | 200,162 | $ | 178,599 | $ | 368,847 | $ | 329,626 | $ | 301,707 | $ | 296,866 | $ | 309,043 | ||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Depreciation and amortization | 62,653 | 57,696 | 117,004 | 111,776 | 102,993 | 100,798 | 92,835 | |||||||||||||||||||||
Impairment, legal contingencies and other losses(2) | 1,002 | 895 | 22,762 | 5,736 | 1,308 | 10,324 | 93,116 | |||||||||||||||||||||
Other operating | 98,748 | 90,397 | 188,392 | 169,262 | 158,890 | 159,222 | 169,245 | |||||||||||||||||||||
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Income (loss) from operations | 37,759 | 29,611 | 40,689 | 42,852 | 38,516 | 26,522 | (46,153 | ) | ||||||||||||||||||||
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Interest expense | 43,194 | 46,330 | 92,085 | 86,573 | 83,091 | 86,177 | 72,531 | |||||||||||||||||||||
Debt cost amortization | 2,759 | 2,835 | 5,697 | 4,767 | 4,618 | 4,941 | 5,019 | |||||||||||||||||||||
Interest income | 930 | 1,550 | 2,468 | 1,337 | 1,289 | 1,424 | 2,774 | |||||||||||||||||||||
Gain (loss) on sale of property | 25 | (235 | ) | (4,305 | ) | 115 | (1,504 | ) | 10,103 | 6,467 | ||||||||||||||||||
Gain on retirement of debt | — | — | — | — | 1,044 | 56,427 | 15,951 | |||||||||||||||||||||
Other income, net(5) | 2,543 | 21,557 | 30,955 | 16,625 | 1,969 | 7,176 | 12,080 | |||||||||||||||||||||
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(Loss) income from continuing operations | (4,696 | ) | 3,318 | (27,975 | ) | (30,411 | ) | (46,395 | ) | 10,534 | (86,431 | ) | ||||||||||||||||
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| |||||||||||||||
Income from discontinued operations(2) | 28,677 | 7,948 | 36,840 | 36,590 | 7,852 | 4,644 | 35,908 | |||||||||||||||||||||
Dividends to preferred shareholders | — | — | — | — | 5,649 | 8,142 | 8,773 | |||||||||||||||||||||
Preferred unit repurchase gains | — | — | — | 2,500 | 3,000 | — | — | |||||||||||||||||||||
Preferred share/unit issuance costs write-off | — | — | — | (1,319 | ) | (4,868 | ) | 25 | (27 | ) | ||||||||||||||||||
Distributions to preferred unitholders | — | — | — | 3,586 | 7,161 | 7,250 | 7,251 | |||||||||||||||||||||
Net income (loss) available to common shareholders | $ | 21,685 | $ | 10,401 | $ | 8,160 | $ | 3,428 | $ | (48,054 | ) | $ | (509 | ) | $ | (55,429 | ) | |||||||||||
Income (loss) per share—basic: | ||||||||||||||||||||||||||||
Continuing Operations | $ | (0.06 | ) | $ | 0.03 | $ | (0.30 | ) | $ | (0.36 | ) | $ | (0.77 | ) | $ | (0.14 | ) | $ | (1.83 | ) | ||||||||
Discontinued Operations | 0.30 | 0.09 | 0.39 | 0.40 | 0.10 | 0.13 | 0.64 | |||||||||||||||||||||
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Net income (loss) per share—basic(3) | $ | 0.24 | $ | 0.12 | $ | 0.09 | $ | 0.04 | $ | (0.67 | ) | $ | (0.01 | ) | $ | (1.19 | ) | |||||||||||
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Income (loss) per share—diluted: | ||||||||||||||||||||||||||||
Continuing Operations | $ | (0.06 | ) | $ | 0.03 | $ | (0.30 | ) | $ | (0.36 | ) | $ | (0.77 | ) | $ | (0.14 | ) | $ | (1.83 | ) | ||||||||
Discontinued Operations | 0.30 | 0.09 | 0.39 | 0.40 | 0.10 | 0.13 | 0.64 | |||||||||||||||||||||
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Net income (loss) per share—diluted(3) | $ | 0.24 | $ | 0.12 | $ | 0.09 | $ | 0.04 | $ | (0.67 | ) | $ | (0.01 | ) | $ | (1.19 | ) | |||||||||||
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Dividends declared per common share | $ | 0.42 | $ | 0.36 | $ | 0.72 | $ | 0.60 | $ | 0.60 | $ | 0.70 | $ | 1.75 | ||||||||||||||
BALANCE SHEET DATA | ||||||||||||||||||||||||||||
Land, buildings and equipment, net | $ | 2,930,654 | $ | 3,102,257 | $ | 2,777,810 | $ | 2,724,104 | $ | 2,706,988 | $ | 2,755,644 | $ | 2,665,700 | ||||||||||||||
Total assets | 3,082,994 | 3,302,663 | 3,286,208 | 3,258,605 | 3,171,134 | 3,172,632 | 3,155,169 | |||||||||||||||||||||
Total long-term liabilities | 1,647,326 | 1,842,032 | 1,831,992 | 1,759,727 | 1,761,571 | 1,704,343 | 1,762,019 | |||||||||||||||||||||
Redeemable preferred stock | — | — | — | — | — | 4 | 4 | |||||||||||||||||||||
OTHER DATA | ||||||||||||||||||||||||||||
Funds from operations(4)* | $ | 61,289 | $ | 58,415 | $ | 92,461 | $ | 104,712 | $ | 81,310 | $ | 129,808 | $ | 920 | ||||||||||||||
Cash flow provided by (used in) | ||||||||||||||||||||||||||||
Operating activities | 67,975 | 70,461 | 137,108 | 118,086 | 109,707 | 108,594 | 117,659 | |||||||||||||||||||||
Investing activities | 172,522 | (110,410 | ) | (143,612 | ) | (175,639 | ) | (102,287 | ) | (166,466 | ) | (167,497 | ) | |||||||||||||||
Financing activities | (231,227 | ) | 40,506 | 11,726 | 59,051 | (7,056 | ) | 53,277 | (34,010 | ) | ||||||||||||||||||
Total properties (at end of year) | 122 | 136 | 125 | 153 | 156 | 156 | 192 | |||||||||||||||||||||
| As of and for the Six Months ended June 30, | As of and for the Year ended December 31, | |||||||||||||||||||||||||||
| 2016 | 2015 | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||||
| (Amounts in thousands, except per share, communities and apartment unit data) | ||||||||||||||||||||||||||||
Statement Of Operations Data: | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Rental | $ | 185,968 | $ | 177,029 | $ | 360,615 | $ | 355,583 | $ | 341,902 | $ | 311,021 | $ | 282,584 | ||||||||||||||
Other | 12,220 | 11,833 | 23,391 | 22,229 | 20,835 | 19,313 | 18,419 | |||||||||||||||||||||
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Total revenues | $ | 198,188 | $ | 188,862 | $ | 384,006 | $ | 377,812 | $ | 362,737 | $ | 330,334 | $ | 301,003 | ||||||||||||||
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| |||||||||||||||
Income from continuing operations(1) | $ | 42,204 | $ | 39,636 | $ | 80,793 | $ | 238,183 | $ | 81,122 | $ | 82,786 | $ | 24,717 | ||||||||||||||
Income from discontinued operations(2) | — | — | — | — | 29,798 | 1,505 | 878 | |||||||||||||||||||||
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Net income | 42,204 | 39,636 | 80,793 | 238,183 | 110,920 | 84,291 | 25,595 | |||||||||||||||||||||
Noncontrolling interests, net | (89 | ) | (83 | ) | (170 | ) | (23,063 | ) | (386 | ) | (352 | ) | (129 | ) | ||||||||||||||
Dividends to preferred shareholders and redemption costs | (1,844 | ) | (1,844 | ) | (3,688 | ) | (3,688 | ) | (3,688 | ) | (3,688 | ) | (6,212 | ) | ||||||||||||||
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Net income available to common shareholders | $ | 40,271 | $ | 37,709 | $ | 76,935 | $ | 211,432 | $ | 106,846 | $ | 80,251 | $ | 19,254 | ||||||||||||||
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Per Common Share Data: | ||||||||||||||||||||||||||||
Income from continuing operations (net of preferred dividends)—basic | $ | 0.75 | $ | 0.69 | $ | 1.41 | $ | 3.89 | $ | 1.42 | $ | 1.46 | $ | 0.36 | ||||||||||||||
Income from discontinued operations—basic | — | — | — | — | 0.55 | 0.03 | 0.02 | |||||||||||||||||||||
Net income available to common shareholders—basic | 0.75 | 0.69 | 1.41 | 3.89 | 1.96 | 1.49 | 0.38 | |||||||||||||||||||||
Income from continuing operations (net of preferred dividends)—diluted | $ | 0.75 | $ | 0.69 | $ | 1.41 | $ | 3.88 | $ | 1.41 | $ | 1.45 | $ | 0.36 | ||||||||||||||
Income from discontinued operations—diluted | — | — | — | — | 0.54 | 0.03 | 0.02 | |||||||||||||||||||||
Net income available to common shareholders—diluted | 0.75 | 0.69 | 1.41 | 3.88 | 1.96 | 1.48 | 0.38 | |||||||||||||||||||||
Dividends declared | 0.94 | 0.84 | 1.72 | 1.56 | 1.24 | 0.97 | 0.84 | |||||||||||||||||||||
Weighted average common shares outstanding—basic | 53,470 | 54,452 | 54,290 | 54,262 | 54,336 | 53,821 | 50,420 | |||||||||||||||||||||
Weighted average common shares outstanding—diluted | 53,486 | 54,467 | 54,306 | 54,353 | 54,508 | 54,131 | 50,808 | |||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||
Real estate, before accumulated depreciation | $ | 3,315,639 | $ | 3,130,616 | $ | 3,226,845 | $ | 3,066,284 | $ | 3,164,157 | $ | 3,034,633 | $ | 2,842,534 | ||||||||||||||
Real estate, net of accumulated depreciation | 2,246,848 | 2,151,111 | 2,203,193 | 2,128,767 | 2,251,139 | 2,191,708 | 2,075,517 | |||||||||||||||||||||
Total assets(3) | 2,288,448 | 2,308,880 | 2,267,249 | 2,307,799 | 2,375,310 | 2,355,653 | 2,135,167 | |||||||||||||||||||||
Total indebtedness(3) | 931,836 | 885,852 | 884,954 | 888,460 | 1,092,367 | 1,094,753 | 966,546 | |||||||||||||||||||||
Total redeemable common units | 7,360 | 6,555 | 7,133 | �� | 7,086 | 6,121 | 7,159 | 6,840 | ||||||||||||||||||||
Total equity | 1,200,272 | 1,280,236 | 1,243,027 | 1,285,960 | 1,152,731 | 1,119,620 | 1,047,523 | |||||||||||||||||||||
Other Data: | ||||||||||||||||||||||||||||
Cash flow provided by (used in): | ||||||||||||||||||||||||||||
Operating activities | $ | 93,541 | $ | 87,875 | $ | 173,205 | $ | 163,339 | $ | 150,374 | $ | 134,189 | $ | 102,384 | ||||||||||||||
Investing activities | (81,897 | ) | (57,400 | ) | (150,270 | ) | 221,402 | (95,738 | ) | (145,015 | ) | (94,940 | ) | |||||||||||||||
Financing activities | (36,380 | ) | (51,930 | ) | (134,836 | ) | (326,339 | ) | (91,224 | ) | 116,440 | (16,449 | ) | |||||||||||||||
Total stabilized communities (at end of period) | 57 | 57 | 57 | 56 | 57 | 56 | 56 | |||||||||||||||||||||
Total stabilized apartment units (at end of period) | 21,532 | 21,532 | 21,532 | 21,289 | 20,896 | 20,172 | 20,090 | |||||||||||||||||||||
Average economic occupancy (fully stabilized communities)(4) | 96.2 | % | 95.5 | % | 96.1 | % | 96.1 | % | 95.7 | % | 96.0 | % | 95.9 | % | ||||||||||||||
| (1) |
| (2) | Reflects gains and operating results of communities held for sale and sold in years prior to 2014 under the applicable accounting guidance in those years (see note 1 to the consolidated financial statements in Post Properties’ Annual Report on Form 10-K for the fiscal year ended December 31, |
| (4) |
Selected Unaudited Pro Forma Consolidated Financial Information (See page F-1)
The following table showstables show summary unaudited pro forma condensed consolidated financial information about the combined financial condition and operating results of MAA and ColonialPost Properties after giving effect to the mergers. The unaudited pro forma financial information assumes that the mergers are accounted for by applying the acquisition method.method and based on MAA’s preliminary estimates, assumptions and pro forma adjustments as described below and in the accompanying notes to the unaudited pro forma condensed consolidated financial information. The unaudited pro forma condensed consolidated balance sheet data gives effect to the mergers as if they had occurred on June 30, 2013.2016. The unaudited pro forma condensed consolidated statement of income data gives effect to the mergers as if they had occurred on January 1, 2012,2015, in each case based on the most recent valuation data available. The summary unaudited pro forma condensed consolidated financial information listed below has been derived from and should be read in conjunction with (1) the more detailed unaudited pro forma condensed consolidated financial information, including the notes thereto, appearing elsewhere in this joint proxy statement/prospectus and (2) the historical consolidated financial statements and related notes of both MAA and Colonial,Post Properties, incorporated herein by reference. See “Unaudited Pro Forma Condensed Consolidated Financial Statements” beginning on page F-1 and “Where You Can Find More Information” beginning on page 205.201.
| For the Six Months Ended June 30, 2013 | ||||||||||||||||
| (Dollars in thousands except per share data) | ||||||||||||||||
| MAA | Colonial | Pro forma adjustments | MAA Pro forma | |||||||||||||
Operating Data | ||||||||||||||||
Total Operating Revenues | $ | 264,356 | $ | 200,162 | $ | (165 | ) | $ | 464,353 | |||||||
Property Operating Expenses | 105,149 | 78,873 | — | 184,022 | ||||||||||||
Depreciation and Amortization | 65,406 | 62,653 | 4,987 | 133,046 | ||||||||||||
Interest Expense | 30,906 | 43,194 | (8,153 | ) | 65,947 | |||||||||||
Net income from continuing operations available for common shareholders | 36,695 | (4,850 | ) | 5,233 | 37,078 | |||||||||||
Per Share Data | ||||||||||||||||
Net income (loss) from continuing operations per share attributable to common shares—basic | $ | 0.86 | $ | (0.06 | ) | $ | 0.50 | |||||||||
Net income (loss) from continuing operations per share attributable to common shares—diluted | $ | 0.86 | $ | (0.06 | ) | $ | 0.49 | |||||||||
Weighted average common shares outstanding—basic | 42,523 | 87,958 | 74,391 | |||||||||||||
Weighted average common shares outstanding—diluted | 44,294 | 87,958 | 79,286 | |||||||||||||
Balance Sheet Data | ||||||||||||||||
Real estate assets, net | $ | 2,746,897 | $ | 2,893,755 | $ | 804,726 | $ | 6,445,378 | ||||||||
Total assets | 2,834,217 | 3,082,994 | 890,230 |
| 6,807,441 |
| ||||||||||
Total debt | 1,691,541 | 1,647,327 | 97,243 | 3,436,111 | ||||||||||||
Total equity | 1,011,797 | 1,136,535 | 946,955 | 3,095,287 | ||||||||||||
The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transactions had been consummated at the beginning of the earliest period presented, nor is it necessarily indicative of future operating results or financial position. The pro forma adjustments are estimates based upon information and assumptions available at the time of the filing of this joint proxy statement/prospectus.
| For the Year Ended December 31, 2012 | For the Six Months Ended June 30, 2016 | |||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | (Amounts in thousands except per share data) | |||||||||||||||||||||||||||||||
| MAA | Colonial | Pro forma adjustments | MAA Pro forma | MAA | Post Properties | Pro forma adjustments | MAA Pro forma | |||||||||||||||||||||||||
Operating Data | ||||||||||||||||||||||||||||||||
Total Operating Revenues | $ | 497,165 | $ | 368,847 | $ | (329 | ) | $ | 865,683 | |||||||||||||||||||||||
Total Revenues | $ | 541,252 | $ | 198,188 | $ | — | $ | 739,440 | ||||||||||||||||||||||||
Property Operating Expenses | 203,326 | 152,540 | — | 355,866 | 203,836 | 80,599 | — | 284,435 | ||||||||||||||||||||||||
Depreciation and Amortization | 126,136 | 117,004 | 85,328 | 328,468 | 150,870 | 45,503 | 20,763 | 217,136 | ||||||||||||||||||||||||
Interest Expense | 58,751 | 92,085 | (15,514 | ) | 135,322 | 64,250 | 15,687 | (4,022 | ) | 75,915 | ||||||||||||||||||||||
Net income from continuing operations available for common shareholders | 64,821 | (25,910 | ) | (62,254 | ) | (23,343 | ) | |||||||||||||||||||||||||
Net income available for common shareholders | 88,557 | 40,271 | (16,069 | ) | 112,759 | |||||||||||||||||||||||||||
Per Share Data | ||||||||||||||||||||||||||||||||
Net income available for common shareholders per common share, basic | $ | 1.17 | $ | 0.75 | $ | 0.99 | ||||||||||||||||||||||||||
Net income available for common shareholders per common share, diluted | $ | 1.17 | $ | 0.75 | $ | 0.99 | ||||||||||||||||||||||||||
Weighted average common shares outstanding, basic | 75,263 | 53,470 | 113,227 | |||||||||||||||||||||||||||||
Weighted average common shares outstanding, diluted | 75,502 | 53,486 | 113,477 | |||||||||||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||||||||||||||
Real estate assets, net | $ | 6,759,790 | $ | 2,250,543 | $ | 2,479,326 | $ | 11,489,659 | ||||||||||||||||||||||||
Total assets | 6,869,381 | 2,288,448 | 2,517,210 | 11,675,039 | ||||||||||||||||||||||||||||
Total debt | 3,489,425 | 931,836 | 26,033 | 4,447,294 | ||||||||||||||||||||||||||||
Total equity | 3,119,319 | 1,200,272 | 2,466,320 | 6,785,911 | ||||||||||||||||||||||||||||
| For the Year Ended December 31, 2015 | ||||||||||||||||
| (Amounts in thousands except per share data) | ||||||||||||||||
| MAA | Post Properties | Pro forma adjustments | MAA Pro forma | |||||||||||||
Operating Data | ||||||||||||||||
Total Revenues | $ | 1,042,779 | $ | 384,006 | $ | — | $ | 1,426,785 | ||||||||
Property Operating Expenses | 400,645 | 153,129 | — | 553,774 | ||||||||||||
Depreciation and Amortization | 294,520 | 87,458 | 75,733 | 457,711 | ||||||||||||
Interest Expense | 122,344 | 33,577 | (8,155 | ) | 147,766 | |||||||||||
Net income available for common shareholders | 332,287 | 76,935 | (62,123 | ) | 347,099 | |||||||||||
Per Share Data | ||||||||||||||||
Net income available for common shareholders per common share, basic | $ | 4.41 | $ | 1.41 | $ | 3.04 | ||||||||||
Net income available for common shareholders per common share, diluted | $ | 4.41 | $ | 1.41 | $ | 3.04 | ||||||||||
Weighted average common shares outstanding, basic | 75,176 | 54,290 | 113,722 | |||||||||||||
Weighted average common shares outstanding, diluted | 75,176 | 54,306 | 113,733 | |||||||||||||
| For the Year Ended December 31, 2012 | ||||||||||||||
| (Dollars in thousands except per share data) | ||||||||||||||
| MAA | Colonial | Pro forma adjustments | MAA Pro forma | |||||||||||
Per Share Data | ||||||||||||||
Net income (loss) from continuing operations per share attributable to common shares—basic | $ | 1.58 | $ | (0.30 | ) | $ | (0.32 | ) | ||||||
Net income (loss) from continuing operations per share attributable to common shares—diluted | $ | 1.57 | $ | (0.30 | ) | $ | (0.32 | ) | ||||||
Weighted average common shares outstanding—basic | 41,039 | 87,251 | 72,450 | |||||||||||
Weighted average common shares outstanding—diluted | 42,937 | 87,251 | 72,450 | |||||||||||
Unaudited Comparative Per Share Information
The following table sets forth for the six months ended June 30, 20132016 and the year ended December 31, 20122015 selected per share information for MAA common stock on a historical and pro forma combined basis and for ColonialPost Properties common sharesstock on a historical and pro forma equivalent basis.basis after giving effect to the mergers using the acquisition purchase method of accounting. Except for the historical information as of and for the year ended December 31, 2012,2015, the information in the table is unaudited. You should read the table below together with the historical consolidated financial statements and related notes of MAA and ColonialPost Properties contained in their respective Quarterly Reports on Form 10-Q for the six months ended June 30, 2013,2016 and in MAA’stheir respective Annual ReportReports on Form 10-K for the fiscal year ended December 31, 2012 and in Colonial’s Current Report on Form 8-K filed with the SEC on August 21, 2013,2015, which are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205.201.
The Colonial pro forma consolidated Post Properties equivalent perinformation shows the effect of the mergers from the perspective of an owner of Post Properties common share amounts were calculatedstock and the information was computed by multiplying the MAA pro forma combined information by the exchange ratio of 0.71.
The unaudited pro forma consolidated per share data is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transactions had been consummated at the beginning of the earliest period presented, nor is it necessarily indicative of future operating results or financial position. The pro forma adjustments are estimates based upon information and assumptions available at the time of the filing of this joint proxy statement/prospectus. This pro forma information is subject to risks and uncertainties, including those discussed in “Risk Factors” beginning on page 36.
The pro forma net income available for common shareholders per common share includes the combined net income available for common shareholders of MAA and Post Properties on a pro forma basis as if the transactions were consummated on January 1, 2015.
| MAA | Post Properties | |||||||||||||||
| Historical | Pro Forma Combined | Historical | Pro Forma Equivalent | |||||||||||||
For the Six Months Ended June 30, 2016 | ||||||||||||||||
Net income available for common shareholders per common share, basic | $ | 1.17 | $ | 0.99 | $ | 0.75 | $ | 0.71 | ||||||||
Net income available for common shareholders per common share, diluted | $ | 1.17 | $ | 0.99 | $ | 0.75 | $ | 0.71 | ||||||||
Cash dividends declared per common share | $ | 1.64 | $ | 1.64 | $ | 0.94 | $ | 1.16 | ||||||||
As of June 30, 2016 | ||||||||||||||||
Book value per share | $ | 39.14 | $ | 57.62 | $ | 22.40 | $ | 40.91 | ||||||||
For the Year Ended December 31, 2015 | ||||||||||||||||
Net income available for common shareholders per common share, basic | $ | 4.41 | $ | 3.04 | $ | 1.41 | $ | 2.16 | ||||||||
Net income available for common shareholders per common share, diluted | $ | 4.41 | $ | 3.04 | $ | 1.41 | $ | 2.16 | ||||||||
Cash dividends declared per common share | $ | 3.13 | $ | 3.13 | $ | 1.72 | $ | 2.22 | ||||||||
Comparative Stock Prices And Dividends
Historical Market Prices and Dividend Data
Shares of MAA common stock and shares of Post Properties common stock are traded on the NYSE under the symbols “MAA” and “PPS”, respectively. The following tables set forth the high and low sales prices of MAA common stock and Post Properties common stock as reported on the NYSE, and the quarterly cash dividends declared per share, for each of the quarterly periods indicated.
MAA
| High | Low | Dividend | ||||||||||
2014 | ||||||||||||
First Quarter | $ | 69.32 | $ | 60.47 | $ | 0.73 | ||||||
Second Quarter | 73.49 | 67.10 | 0.73 | |||||||||
Third Quarter | 75.09 | 65.05 | 0.73 | |||||||||
Fourth Quarter | 76.83 | 65.54 | 0.77 | |||||||||
2015 | ||||||||||||
First Quarter | $ | 83.50 | $ | 70.67 | $ | 0.77 | ||||||
Second Quarter | 78.99 | 72.72 | 0.77 | |||||||||
Third Quarter | 84.42 | 72.51 | 0.77 | |||||||||
Fourth Quarter | 92.80 | 81.72 | 0.82 | |||||||||
2016 | ||||||||||||
First Quarter | $ | 102.42 | $ | 82.91 | $ | 0.82 | ||||||
Second Quarter | 106.68 | 94.57 | 0.82 | |||||||||
Third Quarter (through September 27, 2016) | 109.19 | 91.77 | 0.82 | |||||||||
Post Properties
| High | Low | Dividend | ||||||||||
2014 | ||||||||||||
First Quarter | $ | 50.00 | $ | 44.05 | $ | 0.36 | ||||||
Second Quarter | 53.90 | 48.61 | 0.40 | |||||||||
Third Quarter | 55.91 | 50.34 | 0.40 | |||||||||
Fourth Quarter | 60.18 | 50.93 | 0.40 | |||||||||
2015 | ||||||||||||
First Quarter | $ | 63.78 | $ | 54.75 | $ | 0.40 | ||||||
Second Quarter | 59.58 | 53.18 | 0.44 | |||||||||
Third Quarter | 60.60 | 53.71 | 0.44 | |||||||||
Fourth Quarter | 62.55 | 55.48 | 0.44 | |||||||||
2016 | ||||||||||||
First Quarter | $ | 60.44 | $ | 52.08 | $ | 0.47 | ||||||
Second Quarter | 62.18 | 55.83 | 0.47 | |||||||||
Third Quarter (through September 27, 2016) | 69.39 | 60.49 | 0.47 | |||||||||
Recent Trading Information
The following table presents trading information for MAA common stock and Post Properties common stock on August 12, 2016, the last trading day before the public announcement of the mergers, and September 27, 2016, the latest practicable trading day before the date of this joint proxy statement/prospectus.
| MAA Common Stock | Post Properties Common Stock | |||||||||||||||||||||||
Date | High | Low | Close | High | Low | Close | ||||||||||||||||||
August 12, 2016 | $ | 102.95 | $ | 101.03 | $ | 102.15 | $ | 62.84 | $ | 61.90 | $ | 62.22 | ||||||||||||
September 27, 2016 | $ | 97.62 | $ | 95.80 | $ | 95.95 | $ | 69.09 | $ | 67.72 | $ | 67.80 | ||||||||||||
For illustrative purposes, the following table provides Post Properties equivalent per share information on each of the specified dates. Post Properties equivalent per share amounts are calculated by multiplying MAA per share amounts by the exchange ratio of 0.360.0.71.
| MAA | Colonial | |||||||||||||||
| Historical | Pro Forma Combined | Historical | Pro Forma Equivalent | |||||||||||||
For the Six Months Ended June 30, 2013 | ||||||||||||||||
Income (loss) from continuing operations available for common shareholders per common share, basic | $ | 0.86 | $ | 0.50 | $ | (0.06 | ) | $ | 0.18 | |||||||
Income (loss) from continuing operations available for common shareholders per common share, diluted | $ | 0.86 | $ | 0.49 | $ | (0.06 | ) | $ | 0.18 | |||||||
Cash dividends declared per common share | $ | 1.39 | $ | 1.39 | $ | 0.42 | $ | 0.50 | ||||||||
As of June 30, 2013 | ||||||||||||||||
Book value per share | $ | 23.68 | $ | 41.45 | $ | 12.81 | $ | 14.92 | ||||||||
For the Year Ended December 31, 2012 | ||||||||||||||||
Income (loss) from continuing operations available for common shareholders per common share, basic | $ | 1.58 | $ | (0.32 | ) | $ | (0.30 | ) | $ | (0.12 | ) | |||||
Income (loss) from continuing operations available for common shareholders per common share, diluted | $ | 1.57 | $ | (0.32 | ) | $ | (0.30 | ) | $ | (0.12 | ) | |||||
Cash dividends declared per common share | $ | 2.675 | $ | 2.6750 | $ | 0.72 | $ | 0.96 | ||||||||
| MAA Common Stock | Post Properties Equivalent Per Share | |||||||||||||||||||||||
Date | High | Low | Close | High | Low | Close | ||||||||||||||||||
August 12, 2016 | $ | 102.95 | $ | 101.03 | $ | 102.15 | $ | 73.09 | $ | 71.73 | $ | 72.53 | ||||||||||||
September 27, 2016 | $ | 97.62 | $ | 95.80 | $ | 95.95 | $ | 69.31 | $ | 68.02 | $ | 68.12 | ||||||||||||
The market price of MAA common stock and Post Properties common stock will fluctuate between the date of this joint proxy statement/prospectus and the effective time of the parent merger. Because the number of shares of MAA common stock to be issued in the parent merger for each share of Post Properties common stock is fixed in the merger agreement, the market value of MAA common stock to be received by Post Properties stockholders at the effective time of the parent merger may vary significantly from the prices shown in the table above. As a result, you should obtain recent market prices of shares of MAA common stock and Post Properties common stock prior to voting your shares. See “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 36.
Following the transaction, MAA common stock will continue to be listed on the NYSE and, until the completion of the parent merger, Post Properties common stock will continue to be listed on the NYSE.
In addition to the other information included in this joint proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Concerning Forward-Looking Statements,” whether you are aan MAA shareholder or ColonialPost Properties shareholder, you should carefully consider the following risks before deciding how to vote. In addition, you should read and consider the risks associated with each of the businesses of MAA and ColonialPost Properties because these risks will also affect the Combined Corporation. These risks can be found in the respective Annual Reports on Form 10-K for the fiscal year ended December 31, 20122015 and subsequent Quarterly Reports on Form 10-Q of MAA and Colonial,Post Properties, each of which is filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205.201.
Risk Factors Relating to the Mergers
The exchange ratio is fixed and will not be adjusted in the event of any change in the share prices of either MAA or Colonial.Post Properties.
Upon the consummation of the parent merger, each Colonialshare of Post Properties common sharestock (other than shares with respect to which dissenters’ rights have been properly exercised and not withdrawn under the ABCL)held by any wholly-owned subsidiary of Post Properties or by MAA or any of its subsidiaries) will be converted into the right to receive 0.3600.71 shares of MAA common stock, with cash paid in lieu of any fractional shares.share. This exchange ratio was fixed in the merger agreement and, except for certain adjustments on account of changes in the capitalization of MAA or Post Properties, will not be adjusted for changes in the market prices of either shares of MAA common stock or ColonialPost Properties common shares. stock. The same exchange ratio will also be used to determine the number of MAA LP units that will be issued to Post LP unitholders upon the consummation of the partnership merger.
Changes in the market price of shares of MAA common stock prior to the parent mergermergers will affect the market value of the merger consideration that ColonialPost Properties common shareholders or Post LP unitholders will receive on the closing date of the parent merger.mergers. Stock price changes may result from a variety of factors (many of which are beyond the control of MAA and Colonial)Post Properties), including the following factors:
market reaction to the announcement of the mergers;
changes in the respective businesses, operations, assets, liabilities and prospects of MAA and Colonial;
changes in market assessments of the business, operations, financial position and prospects of either companyMAA, Post Properties or the Combined Corporation;
market assessments of the likelihood that the mergers will be completed;
interest rates, general market and economic conditions and other factors generally affecting the market prices of shares of MAA common stock and ColonialPost Properties common shares;
federal, state and local legislation, governmental regulation and legal developments in the businesses in which MAA and ColonialPost Properties operate; and
other factors beyond the control of MAA and Colonial,Post Properties, including those described or referred to elsewhere in this “Risk Factors” section.
The market price of shares of MAA common stock at the closing of the parent mergermergers may vary from its price on the date the merger agreement was executed, on the date of this joint proxy statement/prospectus and on the date of the special meetings of ColonialPost Properties and MAA. As a result, the market value of the merger consideration to be received by Post Properties common shareholders and Post LP unitholders represented by the exchange ratio will also vary. For example, based on the range of trading prices of shares of MAA common stock during the
period after May 31, 2013,August 12, 2016, the last trading day before ColonialPost Properties and MAA announced the mergers, through August 20, 2013,September 27, 2016, the latest practicable datetrading day before the date of this joint proxy statement/prospectus, the exchange ratio of 0.3600.71 represented a market value ranging from a low of $21.86$65.16 to a high of $25.20.$70.08.
Because the parent mergermergers will be completed after the date of the MAA and ColonialPost Properties special meetings, at the time of your special meeting, you will not know the exact market value of the shares of MAA common stock that ColonialPost Properties common shareholders or Post LP unitholders will receive upon completion of the parent merger.mergers. You should consider the following two risks:
If the market price of shares of MAA common stock increases between the date the merger agreement was signed or the date of the MAA and ColonialPost Properties special meetings and the closing of the parent merger, Colonialmergers, Post Properties common shareholders and Post LP unitholders will receive shares of MAA common stock that have a market value upon completion of the parent mergermergers that is greater than the market value of such shares calculated pursuant to the exchange ratio on the date the merger agreement was signed or on the date of the special meetings, respectively.
If the market price of shares of MAA common stock declines between the date the merger agreement was signed or the date of the MAA and ColonialPost Properties special meetings and the closing of the parent merger, Colonialmergers, Post Properties common shareholders and Post LP unitholders will receive shares of MAA common stock that have a market value upon completion of the parent mergermergers that is less than the market value of such shares calculated pursuant to the exchange ratio on the date the merger agreement was signed or on the date of the special meetings, respectively.
Therefore, while the number of shares of MAA common stock to be issued per share of ColonialPost Properties common sharesstock is fixed, (1) MAA shareholders cannot be sure of the market value of the consideration that will be paid to ColonialPost Properties common shareholders and Post LP unitholders upon completion of the parent mergermergers and (2) ColonialPost Properties common shareholders and Post LP unitholders cannot be sure of the market value of the consideration they will receive upon completion of the mergers.
Post Properties shareholders who receive shares of MAA Series I preferred stock cannot be sure of the market price of shares of MAA Series I preferred stock that they will receive as consideration in the parent merger.
Upon the consummation of the parent merger, Post Properties shareholders who hold Post Properties Series A preferred stock will receive newly issued shares of MAA Series I preferred stock. Prior to the parent merger, there will not be an established public trading market for MAA Series I preferred stock. The market price of MAA Series I preferred stock will be unknown until the commencement of trading upon completion of the mergers.
The parent merger and related transactions are subject to approval by shareholders of both MAA and Colonial and the partnership merger and the amendment and restatement of the limited partnership agreement of MAA LP are subject to approval by holders of limited partnership interests of MAA LP.
In order for the parent merger to be completed, both MAAcommon shareholders and ColonialPost Properties common shareholders.
Both MAA common shareholders and Post Properties common shareholders must approve the parent merger and the other transactions contemplated by the merger agreement and holders of limited partnership interests of MAA LP must approvein order for the partnershipparent merger and the amendment and restatement of the limited partnership agreement of MAA LLP.to be completed. Approval of the parent merger requires (i) the affirmative vote of the holders of each of (i) a majority of the outstanding shares of MAA common stock entitled to vote on the proposal and (ii) a majority of the outstanding shares of Post Properties common stock entitled to vote on the proposal. In addition, the affirmative vote of the holders of a majority of the shares of MAA common stock outstandingpresent at the MAA special meeting in person or by proxy and entitled to vote onis required to approve the proposal; and (ii)MAA charter amendment, which is necessary to complete the affirmative vote of a majorityparent merger.
The voting power of the Colonial common shares outstanding as of the record date for the Colonial special meeting. Approval of the partnership merger and the amendment and restatement of the limited partnership agreement of MAA requires the approval of holders of at least 66 2/3rds of the outstanding limited partnership interests of MAA LP, excluding for purposes of the approval all limited partnership interests held by MAA.
MAA and ColonialPost Properties common shareholders will be diluted by the parent merger.mergers.
The parent merger will dilute the ownership position of the MAA common shareholders and result in ColonialPost Properties common shareholders having an ownership stake in the Combined Corporation that is smaller than
their current stake in Colonial.Post Properties. In addition, MAA LP units to be received by Post LP unitholders in the partnership merger may further dilute the ownership position of the MAA common shareholders. MAA LP units are subject to a redemption right at the option of the holder and, upon exercise by the unitholder of its redemption right, such unitholder may receive MAA common stock (in lieu of cash) at MAA’s sole and absolute discretion. Upon completion of the parent merger,mergers, based on the number of shares of MAA common stock and Post Properties common stock outstanding on September 27, 2016, the latest practicable trading day before the date of this joint proxy statement/prospectus, we estimate that continuing MAA equity holderscommon shareholders will own approximately 56%67.7% of the issued and outstanding shares of the Combined Corporation common stock, assuming the conversion of all limited partnership units of MAA LP units held by existing limited partners of MAA LP tointo shares of the Combined Corporation common stock, and former Colonial equity holdersPost Properties common shareholders will own approximately 44%32.3% of the issued and outstanding shares of common stock of the Combined Corporation, assuming the conversion to shares of Combined Corporation common stock, assuming the conversion of all limited partnershipMAA LP units issued by MAA LP to former limited partners of Colonial LP.Post LP into shares of the Combined Corporation common stock. Consequently, MAA common shareholders and ColonialPost Properties common shareholders, as a general matter, will have less influence over the management and policies of the Combined Corporation after the effective time of the parent mergermergers than each currently exercise over the management and policies of MAA and Colonial,Post Properties, as applicable.
If the mergers do not occur, one of the companies may incur payment obligations to the other.
If the merger agreement is terminated under certain circumstances, MAA or Colonial may be obligatedrequired to pay the other partyPost Properties a termination fee of $75$245.0 million and Post Properties may be required to pay MAA a termination fee of $117.0 million and/or up to $10$10.0 million in expense reimbursement.reimbursement to the other party. The termination fee payable by MAA to Post Properties will be $122.5 million and the termination fee payable by Post Properties to MAA will be $58.5 million if the merger agreement is terminated under certain circumstances during the period beginning on August 15, 2016 and ending on the later of (i) September 14, 2016 and (ii) one business day after the end of certain notice periods and “matching rights” as described in the merger agreement. See “The Merger Agreement—Termination of the Merger Agreement—Termination Fee and Expenses Payable by ColonialPost Properties to MAA” beginning on page 169page168 and “The Merger Agreement—Termination of the Merger Agreement—Termination Fee and Expenses Payable by MAA to Colonial”Post Properties” beginning on page 170.page169.
Failure to complete the mergers could negatively affect the stock prices and the future business and financial results of both MAA and Colonial.Post Properties.
If the mergers are not completed, the ongoing businesses of MAA and ColonialPost Properties could be adversely affected and each of MAA and ColonialPost Properties will be subject to a variety of risks associated with the failure to complete the mergers, including the following:
MAA or ColonialPost Properties being required, under certain circumstances, to pay to the other party a substantial termination fee of $75 million and/or reimburse the other party’s reasonable expenses up to $10 million in expense reimbursement;
having to pay certainincurrence of substantial costs relating toby both companies in connection with the proposed mergers,parent merger, such as legal, accounting, financial advisor, filing, printing and mailing fees; and
diversion of management focus and resources from operational matters and other strategic opportunities while working to implement the mergers; and
If the mergers are not completed, these risks could materially affect the business, financial results and stock prices of both MAA and Colonial.Post Properties.
The pendency of the mergers could adversely affect the business and operations of MAA and Colonial.Post Properties.
Prior to the effective time of the mergers, some tenants or vendors of each of MAA and ColonialPost Properties may delay or defer decisions, which could negatively affect the revenues, earnings, cash flows and expenses of MAA
and Colonial,Post Properties, regardless of whether the mergers are completed. Similarly, current and prospective employees of MAA and ColonialPost Properties may experience uncertainty about their future roles with the Combined Corporation following the mergers, which may materially adversely affect the ability of each of MAA and ColonialPost Properties to attract and retain key personnel during the pendency of the mergers. In addition, due to operating restrictions in the merger agreement, each of MAA and ColonialPost Properties may be unable, during the pendency of the mergers, to pursue strategic transactions, undertake significantcertain capital projects, undertake certain significantinvestments or financing transactions and otherwise pursue other actions, even if such actions would prove beneficial.
The merger agreement contains provisions that could discourage a potential competing acquirer of either MAA or ColonialPost Properties or could result in any competing acquisition proposal being at a lower price than it might otherwise be.
The merger agreement contains provisions that, subject to limited exceptions necessary to comply with the fiduciary duties of the MAA Board or the Post Properties Board, restrict the ability of each of MAA and ColonialPost Properties to initiate, solicit, knowingly encourage or knowingly facilitate any third-party proposals to acquire all or a significant part of MAA or Colonial,Post Properties, respectively. With respectPrior to anyreceipt of MAA or Post Properties shareholder approval of the parent merger and the other transactions contemplated by the merger agreement, MAA or Post Properties may negotiate with a third party after receiving an unsolicited bona fide written “Acquisition Proposal” (as defined in “The Merger Agreement—Covenants and Agreements—No Solicitation of Transactions” below) if the MAA Board or the Post Properties Board, as applicable, concludes in good faith that the unsolicited proposal either constitutes or would likely lead to a “Superior Proposal” (as defined in “The Merger Agreement—Covenants and Agreements—No Solicitation of Transactions” below) and the MAA Board or the Post Properties Board, as applicable, concludes in good faith that failure to negotiate would be inconsistent with its fiduciary duties. Once a third-party Acquisition Proposal, eitherproposal is received by MAA or Colonial, as applicable, generally hasPost Properties, the other party will have an opportunity to offer to modifymatch or exceed the terms of the merger agreement in response to suchcompeting proposal before the MAA Board or the ColonialPost Properties Board, as the case may be, may withdraw or modify its recommendation to theirits respective shareholders in response to such Acquisition Proposal. Upon termination ofIn the event that the MAA Board or the Post Properties Board, as the case may be, withdraws or modifies its recommendation to its respective shareholders in response to such Acquisition Proposal, the other party may terminate the merger agreement, in certain circumstances, one of the parties may be required to paywhich case a substantial termination fee and/orand an expense reimbursement would be payable by the party whose board withdrew or modified its recommendation. Similarly, a substantial termination fee and an expense reimbursement may be payable in certain circumstances if the merger agreement is terminated so that MAA or Post Properties can enter into an alternative acquisition agreement with respect to the other party.a Superior Proposal or MAA or Post Properties consummates a transaction regarding, or enters into a definitive agreement which is later consummated with respect to, an Acquisition Proposal. See “The Merger Agreement—Covenants and Agreements—No Solicitation of Transactions” beginning on page 160,page168, “The Merger Agreement—Termination of the Merger Agreement—Termination Fee and Expenses Payable by ColonialPost Properties to MAA” beginning on page 169,page168, and “The Merger Agreement—Termination of the Merger Agreement—Termination Fee and Expenses Payable by MAA to Colonial”Post Properties” beginning on page 170.page169.
These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of MAA or ColonialPost Properties from considering or proposingmaking a competing acquisition proposal, even if the potential competing acquirer was prepared to pay consideration with a higher per share cash value than that market value proposed to be received or realized in the mergers, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee and expense reimbursement that may become payable in certain circumstances under the merger agreement.
The mergers are subject to a number of conditions which, if not satisfied or waived in a timely manner, would delay the mergers or adversely impact the companies’ ability to complete the transactions.
The completion of the mergers is subject to certain conditions, including, among others, the receipt of the requisite approvals of MAA and Post Properties shareholders and other customary closing conditions set
forth in the merger agreement. While it is currently anticipated that the mergers will be completed during the fourth quarter of 2016, there can be no assurance that such conditions will be satisfied in a timely manner or at all, or that an event, development or change will not transpire that could delay or prevent these conditions from being satisfied. Accordingly, there can be no guarantee with respect to the timing of the closing of the mergers, whether the mergers will be completed at all and when Post Properties shareholders and Post LP unitholders will receive the merger consideration, if at all.
If the mergers are not consummated by December 31, 2013,February 28, 2017, either MAA or ColonialPost Properties may terminate the merger agreement.
Either MAA or ColonialPost Properties may terminate the merger agreement if the mergers have not been consummated by December 31, 2013.5:00 p.m. (New York time) on February 28, 2017. However, this termination right will not be available to a party if that party failed to fulfill its obligations under the merger agreement and that failure was the cause of, or resulted in, the failure to consummate the mergers. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page 168.page166.
If the parent merger does not qualify as a tax-free reorganization, ColonialPost Properties shareholders or MAA shareholders may recognize a taxable gain.
The parent merger is intended to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code. As a result, ColonialPost Properties shareholders that are U.S. holders (as defined below) are not expected to recognize gain or loss as a result of the parent merger (except with respect to the receipt of cash in lieu of fractional shares of the Combined Corporation common stock). The closing of the parent merger is conditioned on the receipt by each of MAA and ColonialPost Properties of an opinion from its respective counsel to the effect that the parent merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. However, these legal opinions will not be binding on the Internal Revenue Service, or the IRS or on the courts. If for any reason the parent merger does not qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code, then each ColonialPost Properties shareholder generally would recognize gain or loss, for U.S. federal income tax purposes, equal to the difference between the sum of the fair market value of the Combined Corporation common stock, MAA Series I preferred stock and cash in lieu of any fractional sharesshare of the Combined Corporation common stock received by the shareholder in the parent merger and the shareholder’s adjusted tax basis in the Colonialshares of Post Properties common sharesstock and/or Post Properties Series A preferred stock exchanged therefor. Moreover, under the “investment company” rules under Section 368 of the Code, if both MAA and ColonialPost Properties are “investment companies” under such rules, the failure of either ColonialPost Properties or MAA to qualify as a REIT could cause the parent merger to be taxable to ColonialPost Properties or MAA, respectively, and its shareholders. See “The Parent Merger—Mergers—Material U.S. Federal Income Tax Consequences of the Parent Merger”Merger and Ownership of Combined Corporation Common Stock and MAA Series I Preferred Stock” beginning on page 125.page121.
Some of the directors and executive officers of MAA and trustees and executive officers of ColonialPost Properties have interests in seeing the mergers completed that are different from, or in addition to, those of the other MAA shareholders and ColonialPost Properties shareholders.
Some of the directors and executive officers of MAA and trustees and executive officers of ColonialPost Properties have arrangements that provide them with interests in the mergers that are different from, or in addition to, those of the shareholders of MAA or the shareholders of ColonialPost Properties generally. These interests include, among other things, the continued service as a director or an executive officer of the Combined Corporation, or, in the alternative, a sizeable severance payment if terminated upon, or following, consummation of the mergers and the ownership of limited partnership interests of either MAA LP or Colonial LP, as applicable.mergers. These interests, among other things, may influence or may have influenced the directors and executive officers of MAA and trustees and executive officers of ColonialPost Properties to support or approve the mergers. See “The Parent Merger—Mergers—Interests of MAA’s Directors and Executive Officers in the Mergers” beginning on page 117page114 and “The Parent Merger—Mergers—Interests of Colonial’s TrusteesPost Properties’ Directors and Executive Officers in the Mergers” beginning on page 118.page115.
Risk Factors Relating to the Combined Corporation Following the Mergers
Risks Related to the Combined Corporation’s Operations
The Combined Corporation expects to incur substantial expenses related to the mergers.
The Combined Corporation expects to incur substantial expenses in connection with completing the mergers and integrating the business, operations, networks, systems, technologies, policies and procedures of the two companies. There are a large number of systems that must be integrated, including property management, revenue management, resident payment, credit screening, lease administration, website content management, purchasing, accounting, payroll, fixed assets and financial reporting. AlthoughWhile MAA and Colonial have assumed thatPost Properties expect to incur a certain level of transaction and integration expenses, would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. As a result, the transaction and integration expenses associated with the mergers could, particularly in the near term, exceed the savings that the Combined Corporation expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses following the completion of the mergers.
Following the mergers, the Combined Corporation may be unable to integrate the businesses of MAA and ColonialPost Properties successfully and realize the anticipated synergies and other benefits of the mergers or do so within the anticipated timeframe.
The mergers involve the combination of two companies that currently operate as independent public companies. MAA and Colonial estimateestimates that the transaction will generate approximately $25$20 million of annual gross savings in general and administrative and other operating expenses. The Combined Corporation is expected to benefit from the elimination of duplicative costs associated with supporting a public company platform and the leveraging of state of the art technology and systems.operating efficiencies derived from its increased scale. These savings are expected to be realized upon full integration, which is expected to occur over the 18-month12-month period following the closing of the mergers. However, the Combined Corporation will be required to devote significant management attention and resources to integrating the business practices and operations of MAA and Colonial.Post Properties. Potential difficulties the Combined Corporation may encounter in the integration process include the following:
the inability to successfully combine the businesses of MAA and ColonialPost Properties in a manner that permits the Combined Corporation to achieve the cost savings anticipated to result from the mergers, which would result in the anticipated benefits of the mergers not being realized in the timeframe currently anticipated or at all;
the complexities associated with managing the combined businesses out of several different locations and integrating personnel from the two companies;
the additional complexities of combining two companies with different histories, cultures, regulatory restrictions, markets and customer bases;
potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the mergers; and
performance shortfalls as a result of the diversion of management’s attention caused by completing the mergers and integrating the companies’ operations.
For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of the Combined Corporation’s management, the disruption of the Combined Corporation’s ongoing business or inconsistencies in the Combined Corporation’s operations, services, standards, controls, procedures and policies, any of which could adversely affect the ability of the Combined Corporation to maintain relationships with tenants, vendors and employees or to achieve the anticipated benefits of the mergers, or could otherwise adversely affect the business and financial results of the Combined Corporation.
Following the mergers, the Combined Corporation may be unable to retain key employees.
The success of the Combined Corporation after the mergers will depend in part upon its ability to retain key MAA and ColonialPost Properties employees. Key employees may depart either before or after the mergers because of
issues relating to the uncertainty and difficulty of integration or a desire not to remain with the Combined Corporation following the mergers. Accordingly, no assurance can be given that MAA, ColonialPost Properties or, following the mergers, the Combined Corporation will be able to retain key employees to the same extent as in the past.
The mergers will result in changes to the board of directors and management of the Combined Corporation that may affect the strategy of the Combined Corporation as compared to that of MAA and ColonialPost Properties independently.
If the parties complete the mergers, the composition of the board of directors of the Combined Corporation and management team will change from the respective boards and management teams of MAA and Colonial.change. The board of directors of the Combined Corporation will consist of twelvethirteen members, with all seventen directors from the current MAA Board and five directorsRussell R. French, Toni Jennings and David P. Stockert from the current Colonial Board constituting the members of the Combined Corporation’s board of directors. Alan B. Graf, Jr. and Ralph Horn, Co-Lead Independent Directors for MAA, will serve as Co-Lead Independent Directors for the Combined Corporation.Post Properties Board. H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman of the Board of Directors, will serve as Chief Executive Officer and Chairman of the Board of Directors of the Combined Corporation. Alan B. Graf, Jr., the Lead Independent Director for MAA, will serve as the Lead Independent Director for the Combined Corporation. In addition, Albert M. Campbell, III, MAA’s Chief Financial Officer, will serve as Chief Financial Officer of the Combined Corporation, and Thomas L. Grimes, Jr., MAA’s Chief Operating Officer, and Robert J. DelPriore, MAA’s General Counsel, will serve as theChief Financial Officer, Chief Operating Officer and General Counsel, respectively, of the Combined Corporation. This new composition of the board of directors and the management team of the Combined Corporation may affect the business strategy and operating decisions of the Combined Corporation upon the completion of the mergers.
The future results of the Combined Corporation will suffer if the Combined Corporation does not effectively manage the expansion of its expanded operations following the mergers.
Following the mergers, the Combined Corporation expects to continue to expand its operations through additional acquisitions and development of properties, some of which may involve complex challenges. The future success of the Combined Corporation will depend, in part, upon the ability of the Combined Corporation to manage its expansion opportunities, which may pose substantial challenges for the Combined Corporation to integrate new operations into its existing business in an efficient and timely manner, and upon its ability to successfully monitor its operations, costs, regulatory compliance and service quality, and to maintain other necessary internal controls. There is no assurance that the Combined Corporation’s expansion or acquisition and development opportunities will be successful, or that the Combined Corporation will realize its expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.
If counterparties to certain agreements with MAA or Post Properties do not consent to the mergers, change of control rights under those agreements may be triggered, which could cause the Combined Corporation to lose the benefit of such agreements and incur liabilities or replacement costs.
MAA and Post Properties are each party to one or more agreements that will require MAA or Post Properties, as applicable, to obtain consents from third parties in connection with the mergers. Although these consents are not a condition to closing the mergers, if such consents cannot be obtained, the counterparties to these contracts and other third parties with whom MAA or Post Properties currently have relationships may have the ability to terminate, reduce the scope of or otherwise materially adversely alter their relationships with MAA or Post Properties, or with the Combined Corporation following the mergers. The pursuit of such rights by the counterparties may result in MAA, Post Properties or the Combined Corporation suffering a loss of potential future revenue or incurring liabilities and may result in the loss of rights that are material to the Combined Corporation’s business. Any such disruptions could limit the Combined Corporation’s ability to achieve the anticipated benefits of the mergers.
The Combined Corporation’s joint ventures could be adversely affected by the Combined Corporation’s lack of sole decision-making authority, its reliance on its joint venture partner’s financial condition and disputes between the Combined Corporation and its joint venture partner.
Both MAA and Post Properties currently have joint venture investments that will constitute a portion of the Combined Corporation’s assets upon consummation of the mergers. In addition, the Combined Corporation may enter into additional joint ventures after consummation of the mergers. These joint venture investments involve risks not present with a property wholly owned by the Combined Corporation, including that: (i) one or more joint venture partners might become bankrupt or fail to fund a share of required capital contributions; (ii) one or more joint venture partners may have economic or other business interests or goals that are inconsistent with the Combined Corporation’s business interests or goals; or (iii) disputes between the Combined Corporation and one or more of its joint venture partners may result in litigation or arbitration that would increase the operating expenses of the Combined Corporation and divert management time and attention away from the business. The occurrence of one or more of the events described above could cause unanticipated disruption to the operations of the Combined Corporation or unanticipated costs and liabilities to the Combined Corporation, which could in turn adversely affect the financial condition, results of operations and cash flows of the Combined Corporation and limit its ability to make distributions to its shareholders.
At the closing of the mergers, MAA LP will assume liabilities and obligations of Post LP.
Following and by virtue of completion of the mergers, MAA LP will have assumed the liabilities and obligations of Post LP, including Post LP’s liabilities under its unsecured revolving lines of credit, unsecured term loans and mortgage notes payable as well as Post LP’s obligations under its $150,000,000 aggregate principal amount of 4.75% senior notes due October 15, 2017 and $250,000,000 aggregate principal amount of 3.375% senior notes due December 1, 2022. These liabilities could have a material adverse effect on the Combined Corporation’s business to the extent that MAA LP or Post LP has not identified such liabilities or have underestimated the nature, amount or significance, based on amount or otherwise, of such liabilities.
The Combined Corporation’s operating results after the mergers may differ materially from the unaudited pro forma condensed consolidated financial information included elsewhere in this joint proxy statement/prospectus.
The unaudited pro forma condensed consolidated financial information included elsewhere in this joint proxy statement/prospectus has been presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that actually would have occurred had the mergers been completed as of the date indicated, nor is it indicative of the future operating results or financial position of the Combined Corporation. The unaudited pro forma condensed consolidated financial information does not reflect future events that may occur after the mergers, including the costs related to the planned integration of the two companies and any future nonrecurring charges resulting from the mergers, and does not consider potential impacts of current market conditions on revenues or expense efficiencies. The unaudited pro forma condensed consolidated financial information presented elsewhere in this joint proxy statement/prospectus is based in part on certain assumptions regarding the mergers that MAA and Post Properties believe are reasonable under the circumstances. MAA and Post Properties cannot assure you that the assumptions will prove to be accurate over time.
Risks Related to an Investment in the Combined Corporation’s Common Stock
The market price of shares of the common stock of the Combined Corporation may be affected by factors different from those affecting the price of shares of MAA common stock or ColonialPost Properties common sharesstock before the mergers.
Upon completion of the parent merger, we estimate that continuing MAA equity holders will own approximately 56% of the issued and outstanding shares of Combined Corporation common stock, assuming the conversion of all limited partnership units of MAA LP held by existing limited partners of MAA LP to shares of Combined Corporation common stock, and former Colonial equity holders will own approximately 44% of the issued and outstanding shares of common stock of the Combined Corporation, assuming the conversion to shares of Combined Corporation common stock of all limited partnership units issued by MAA LP to former limited partners of Colonial LP. The results of operations of the Combined Corporation, as well as the market price of the common stock of the Combined Corporation, after the parent mergermergers may be affected by other factors in
addition to those currently
affecting MAA’s or Colonial’sPost Properties’ results of operations and the market prices of MAA common stock and ColonialPost Properties common shares.stock. These factors include:
a greater number of shares of the Combined Corporation outstanding as compared to the number of currently outstanding shares of MAA;
different shareholders;
and
different markets; and
different assets and capitalizations
Accordingly, the historical market prices and financial results of MAA and ColonialPost Properties may not be indicative of these matters for the Combined Corporation after the parent merger.mergers. For a discussion of the businesses of MAA and ColonialPost Properties and certain risks to consider in connection with investing in those businesses, see the documents incorporated by reference by MAA and ColonialPost Properties into this joint proxy statement/prospectus referred to under “Where You Can Find More Information.”
The market price of the Combined Corporation’s common stock may decline as a result of the mergers.
The market price of the Combined Corporation’s common stock may decline as a result of the mergers for a number of reasons, including if the Combined Corporation does not achieve the perceived benefits of the mergers as rapidly or to the extent anticipated by financial or industry analysts, or the effect of the mergers on the Combined Corporation’s financial results is not consistent with the expectations of financial or industry analysts.
In addition, upon consummation of the parent merger,mergers, MAA shareholders and ColonialPost Properties shareholders will own interests in a Combined Corporation operating an expanded business with a different mix of properties, risks and liabilities. Current shareholders of MAA and ColonialPost Properties may not wish to continue to invest in the Combined Corporation, or for other reasons may wish to dispose of some or all of their shares of the Combined Corporation’s common stock. If, following the effective time of the parent merger,mergers, large amounts of the Combined Corporation’s common stock are sold, the price of the Combined Corporation’s common stock could decline.
General market conditions and unpredictable factors, including conditions and factors different from those affecting Post Properties Series A preferred stock currently, could adversely affect the market prices of MAA Series I preferred stock.
There can be no assurance about the market prices of MAA Series I preferred stock that will be issued in exchange for Post Properties Series A preferred stock in the parent merger. Several factors, many of which are beyond the control of MAA, could influence the market prices of MAA Series I preferred stock, including:
After the parent merger ismergers are completed, ColonialPost Properties shareholders who receive shares of the Combined Corporation common stock or MAA Series I preferred stock in the parent merger will have different rights that may be less favorable than their current rights as ColonialPost Properties shareholders.
AfterIf the closingparent merger is consummated, shareholders of Post Properties will become shareholders of MAA. The rights of Post Properties shareholders are currently governed by and subject to the provisions of the Georgia Business Corporation Code, or the GBCC, and the articles of incorporation and bylaws of Post Properties. Upon consummation of the parent merger, Colonialthe rights of the former Post Properties shareholders who receive shares of the Combined CorporationMAA common stock inor MAA Series I preferred stock will be governed by the parent merger will have different rightsTennessee Business Corporation Act, or the TBCA, and the MAA charter and MAA bylaws, rather than they currently have as Colonial shareholders. the GBCC and the articles of incorporation and bylaws of Post Properties.
For a detailed discussionsummary of the significantcertain differences between the current rights as a shareholder of ColonialMAA shareholders and the rights as a shareholder of the Combined Corporation following the parent merger,Post Properties shareholders, see “Comparison of Rights of Shareholders of MAA and Shareholders of Colonial”Post Properties” beginning on page 186.183.
The Combined Corporation cannot assure you that it will be able to continue paying dividends at or above the rate currently paid by MAA and Colonial.Post Properties.
TheFollowing the mergers, the common shareholders of the Combined Corporation may not receive dividends at the same rate they received dividends as common shareholders of MAA and Colonial following the parent mergerPost Properties for various reasons, including the following:
decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of the Combined Corporation’s board of directors, which reserves the right to change MAA’s currentthe Combined Corporation’s dividend practices at any time and for any reason;
the Combined Corporation may desire to retain cash to maintain or improve its credit ratings; and
the amount of dividends that the Combined Corporation’s subsidiaries may distribute to the Combined Corporation may be subject to restrictions imposed by state law, restrictions that may be imposed by state regulators, and restrictions imposed by the terms of any current or future indebtedness that thesethe Combined Corporation or its subsidiaries may incur.
ShareholdersCommon shareholders of the Combined Corporation will have no contractual or other legal right to dividends that have not been declared by the Combined Corporation’s board of directors.
In connection with the announcementaddition, MAA will issue newly-issued shares of the merger agreement, two lawsuits have been filed, seeking, among other things,MAA Series I preferred stock to enjoin the mergers, and an adverse judgment in either of these lawsuits may prevent the mergers from being effective or from becoming effective within the expected timeframe.
On June 19, 2013, a putative class action lawsuit was filed in the Circuit Court for Jefferson County, Alabama against Colonial and purportedly on behalf of a proposed class of all Colonial shareholders captionedWilliams v. Colonial Properties Trust,et al. (the “State Litigation”). A derivative claim purportedly on behalf of Colonial was also asserted in the State Litigation. The complaint names as defendants Colonial, the members of the Colonial board of trustees, Colonial, LP, MAA, MAA LP and OP Merger Sub and alleges that the Colonial trustees breached their fiduciary duties by engaging in an unfair process leading to the merger agreement, failing to secure and obtain the best price reasonable for Colonial shareholders, allowing preclusive deal protection devices in the merger agreement, and by engaging in conflicted actions. The complaint alleges that Colonial LP, MAA, MAA LP and OP Merger Sub aided and abetted those breaches of fiduciary duties. The complaint seeks a declaration that the defendants have breached their fiduciary duties or aided and abetted such breaches and that the merger agreement is unlawful and unenforceable, an order enjoining the consummation of the mergers, direction of the Colonial trustees to exercise their fiduciary duties to obtain a transaction that is in the best interests of Colonial, rescission of the mergers in the event they are consummated, an award of costs and disbursements, including reasonable attorneys’ and experts’ fees, and other relief.
On July 2, 2013, plaintiff moved for expedited fact discovery and for an expedited schedule for filing and hearing a preliminary motion to enjoin the mergers; on July 11, 2013, defendants opposed those motions and moved to stay fact discovery. On July 11, 2013, defendants also moved to dismiss the complaint for failure to state a claim upon which relief can be granted on the grounds that: (1) the claims against the Colonial trustees are derivative and not direct, and plaintiff did not comply with Alabama law on serving notice of the claims on Colonial prior to filing; and (2) Alabama law does not recognize a cause of action in aiding and abetting a breach of fiduciary duty and, even if it did, such claims would also be derivative and not direct. The Court scheduled a motions hearing for August 8, 2013, which was continued on the request of the parties to the State Litigation to August 14, 2013 to facilitate settlement discussions. In the meantime, on August 2, 2013, plaintiff filed an amended complaint that re-asserted plaintiff’s earlier claims and added a new claim that the Colonial trustees breached their alleged duty of candor by not providing Colonial shareholders full and complete disclosures regarding the merger.
On August 14, 2013, prior to the Court’s scheduled hearing, the parties to the State Litigation reached an agreement in principle to settle the State Litigation, in which (a) defendants agreed to make certain additional disclosures in this joint proxy statement/prospectus, and (b) the parties agreed that they would use their best efforts to agree upon, execute and present to the Court a stipulation of settlement which would, among other things, (i) provide for the conditional certification of a non-opt out settlement class pursuant to Alabama Rules of Civil Procedure 23(b)(1) and (b)(2) consisting generally of all record and beneficial holders of the commonPost Properties Series A preferred stock of Colonial from June 3, 2013 through and including the date of the closing of the parent merger (the “Settlement Class”); (ii) release all claims that members of the Settlement Class may have that were alleged in the State Litigation or otherwise arising out of or relating in any manner to the parent merger (except Colonial shareholders’ statutory dissenters’ rights, see “Dissenters’ Rights” beginning on page 177), and (iii) dismiss the State Litigation with prejudice. The proposed settlement also provides that the defendants will not oppose a request to the Court by plaintiff’s counsel for attorney’s fees up to an immaterial amount agreed to by the parties and is subject to, among other things, confirmatory discovery, agreement to a stipulation of settlement, and final court approval following notice to the Settlement Class. The parties reported the proposed settlement to the Court
on August 14, 2013, and the Court ordered a stay of all proceedings (except those related to settlement). Colonial and MAA management believe that the allegations in the amended complaint are without merit and that the disclosures made prior to the settlement are adequate under the law but wish to settle the State Litigation in order to avoid the cost and distraction of further litigation. In the event that the stipulation of settlement is not approved by the Court, the defendants intend to vigorously defend the State Litigation.
On August 20, 2013, a purported Colonial shareholder filed an individual lawsuit in the United States District Court for the Northern District of Alabama against Colonial captionedKempen v. Colonial Properties Trust, et al. (the “Federal Litigation”). The complaint names as defendants Colonial, the members of the Colonial board of trustees, Colonial LP, MAA, MAA LP and OP Merger Sub, and alleges that all defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder because the joint proxy statement/prospectus included in the registration statement on Form S-4 filed with the SEC on July 19, 2013 is allegedly materially misleading, depriving plaintiff of making a fully informed decision regarding his vote on the parent merger. The complaint alleges that defendants misrepresented or omitted material facts concerning Colonial’s projections, the financial analyses of Colonial’s financial advisor, conflicts of interest affecting defendants and Colonial’s financial advisor, and the process employed by the Colonial trustees leading up to the decision to approve and recommend the parent merger. Plaintiff seeks an order enjoining the consummation of the mergers, rescission of the mergers in the event they are consummated or awarding Plaintiff rescissory damages, and an award of costs and disbursements, including reasonable attorneys’ and experts’ fees. Colonial and MAA management believe that the allegations in the complaint are without merit and intend to vigorously defend the Federal Litigation.
Colonial and MAA cannot assure you as to the outcome of the State Litigation, the Federal Litigation, or any similar future lawsuits, including the costs associated with defending these claims or any other liabilities that may be incurred in connection with the State Litigation, Federal Litigation or settlement of these claims. Neither Colonial nor MAA is able to reliably estimate the likelihood or amount of potential loss. If any plaintiff is successful in obtaining an injunction prohibiting the parties from completing the mergers on the agreed-upon terms, such an injunction may prevent the completion of the mergers in the expected time frame, or may prevent them from being completed altogether. Regardless of whether either plaintiffs’ claims are successful, this type of litigation is often expensive and diverts management’s attention and resources, which could adversely affect the operation of the businessesHolders of MAA and Colonial. For more information about litigation related to the mergers, see “The Parent Merger—Litigation Relating to the Mergers” beginning on page 149.
Counterparties to certain significant agreements with MAA or Colonial may exercise contractual rights under such agreements in connection with the mergers.
MAA and Colonial are each party to certain agreements that give the counterparty certain rights following a “change in control,” including in some cases the right to terminate the agreement. Under some such agreements, the mergers will constitute a change in control and therefore the counterparty may exercise certain rights under the agreementSeries I preferred stock would receive, upon the closing of the mergers. Certain MAA and Colonial joint ventures, management and service contracts, and debt obligations have agreements subjectCombined Corporation’s voluntary or involuntary liquidation, dissolution or winding up, before any payment is made to such provisions. Any such counterparty may request modifications of their respective agreements as a condition to granting a waiver or consent under their agreement. There can be no assurances that such counterparties will not exercise their rights under these agreements, including termination rights where available, or that the exercise of any such rights under, or modification of, these agreements will not adversely affect the business or operations of the Combined Corporation.
The historical and unaudited pro forma combined condensed financial information included elsewhere in this joint proxy statement/prospectus may not be representativeholders of the Combined Corporation’s results aftercommon stock, their respective liquidation preferences as well as any accrued and unpaid dividends. These payments would reduce the mergers, and accordingly, you have limited financial information on which to evaluate the Combined Corporation.
The unaudited pro forma combined condensed financial information included elsewhere in this joint proxy statement/prospectus has been presented for informational purposes only and is not necessarily indicative of the
financial position or results of operations that actually would have occurred had the mergers been completed asamount of the date indicated, nor is it indicative of the future operating results or financial positionremaining assets of the Combined Corporation. The unaudited pro forma combined condensed financial information does not reflect future events thatCorporation, if any, available for distribution to holders of its common stock.
Future offerings of debt or equity securities, which may occur after the mergers, including the costs relatedrank senior to the planned integrationCombined Corporation’s common stock, may adversely affect the market price of MAA common stock.
If the Combined Corporation decides to issue additional debt securities in the future, which would rank senior to the Combined Corporation’s common stock, it is likely that they will be governed by an indenture or other instrument containing covenants restricting the Combined Corporation’s operating flexibility. Additionally,
any equity securities or convertible or exchangeable securities that the Combined Corporation issues in the future may have rights, preferences and privileges more favorable than those of the two companiesCombined Corporation’s common stock and may result in dilution to owners of the Combined Corporation’s common stock. The Combined Corporation and, indirectly, the Combined Corporation’s shareholders, will bear the cost of issuing and servicing such securities. Because the Combined Corporation’s decision to issue debt or equity securities in any future nonrecurring charges resulting from the mergers, and does not consider potential impacts of currentoffering will depend on market conditions on revenuesand other factors beyond the Combined Corporation’s control, the Combined Corporation cannot predict or expense efficiencies. The unaudited pro forma combined condensed financial information presented elsewhereestimate the amount, timing or nature of its future offerings. Thus, holders of Combined Corporation’s common stock will bear the risk of the Combined Corporation’s future offerings reducing the market price of the Combined Corporation’s common stock and diluting the value of their stock holdings in this joint proxy statement/prospectus is based in part on certain assumptions regarding the mergers that MAA and Colonial believe are reasonable under the circumstances. MAA and Colonial cannot assure you that the assumptions will prove to be accurate over time.Combined Corporation.
The Combined Corporation will have a significant amount of indebtedness and may need to incur more in the future.
The Combined Corporation will have substantial indebtedness following completion of the parent merger.mergers. For example, as of July 31, 2013,ofJune 30, 2016, the Combined Corporation would have had an estimated fixed charge coverage ratio of 1.5x2.5x and an estimated debt as a percentage of total market capitalization of 39.9% (by comparison, as of that date, the standalone figures for MAA were 2.1x and 36.0%, respectively, and for Colonial were 1.0x and 41.8%, respectively)28.3%. In addition, in connection with executing the Combined Corporation’s business strategies following the mergers, the Combined Corporation expects to continue to evaluate the possibility of acquiring additional properties and making strategic investments, and the Combined Corporation may elect to finance these endeavors by incurring additional indebtedness. The amount of such indebtedness could have material adverse consequences for the Combined Corporation, including:
reducing the Combined Corporation’s credit ratings and thereby raising its borrowing costs;
hindering the Combined Corporation’s ability to adjust to changing market, industry or economic conditions;
limiting the Combined Corporation’s ability to access the capital markets to refinance maturing debt or to fund acquisitions or emerging businesses;
limiting the amount of free cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses;
making the Combined Corporation more vulnerable to economic or industry downturns, including interest rate increases; and
placing the Combined Corporation at a competitive disadvantage compared to less leveraged competitors.
Moreover, to respond to competitive challenges, the Combined Corporation may be required to raise substantial additional capital to execute its business strategy. The Combined Corporation’s ability to arrange additional financing will depend on, among other factors, the Combined Corporation’s financial position and performance, as well as prevailing market conditions and other factors beyond the Combined Corporation’s control. If the Combined Corporation is able to obtain additional financing, the Combined Corporation’s credit ratings could be further adversely affected, which could further raise the Combined Corporation’s borrowing costs and further limit its future access to capital and its ability to satisfy its obligations under its indebtedness.
The Combined Corporation may incur adverse tax consequences if MAA or ColonialPost Properties has failed or fails to qualify as a REIT for U.S. federal income tax purposes.
Each of MAA and ColonialPost Properties has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the Code, and each intendintends to continue to do so through the time of the parent merger,mergers, and the Combined Corporation intends to continue operating in such a manner following the parent merger.mergers. None of MAA, ColonialPost Properties or the Combined Corporation has requested or plans to request a ruling
from the IRS that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The complexity of these provisions and of the applicable Treasury Regulations that have been promulgated under the Code is greater in the case of a REIT that holds its assets through a partnership (such as both ColonialPost Properties and MAA do, and as the Combined Corporation will, following the parent merger)mergers). The determination of various factual matters and circumstances not entirely within the control of MAA, ColonialPost Properties or the Combined Corporation, as the case may be, may affect any such company’s ability to qualify as a REIT. In order to qualify as a REIT, each of MAA, ColonialPost Properties and the Combined Corporation must satisfy a number of requirements, including requirements regarding the ownership of its stock and the composition of its gross income and assets. Also, a REIT must make distributions to shareholders aggregating annually at least 90% of its net taxable income, excluding any net capital gains.
If any of MAA, ColonialPost Properties or the Combined Corporation loses its REIT status, or is determined to have lost its REIT status in a prior year, it will face serious tax consequences that would substantially reduce its cash available for distribution, including cash available to pay dividends to its shareholders, because:
such company would be subject to U.S. federal income tax on its net income at regular corporate rates for the years it did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to shareholders in computing its taxable income);
such company could be subject to the federal alternative minimum tax and possibly increased state and local taxes for such periods;
unless such company is entitled to relief under applicable statutory provisions, neither it nor any “successor” company could elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified; and
for the ten years following re-election of REIT status (five years if REIT status is re-elected prior to August 8, 2016), upon a taxable disposition of an asset owned as of such re-election, such company would be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election.
The Combined Corporation will inherit any liability with respect to unpaid taxes of MAA or ColonialPost Properties for any periods prior to the parent merger. In addition, as described above, if ColonialPost Properties failed to qualify as a REIT as of the parent merger but the Combined Corporation nonetheless qualified as a REIT, in the event of a taxable disposition of a former ColonialPost Properties asset during the ten years following the parent merger the Combined Corporation would be subject to corporate tax with respect to any built-in gain inherent in such asset as of the parent merger. In addition, under the “investment company” rules under Section 368 of the Code, if both MAA and ColonialPost Properties are “investment companies” under such rules, the failure of either ColonialPost Properties or MAA to qualify as a REIT could cause the parent merger to be taxable to ColonialPost Properties or MAA, respectively, and its shareholders. As a result of all these factors, MAA’s, Colonial’sPost Properties’ or the Combined Corporation’s failure to qualify as a REIT could impair the Combined Corporation’s ability to expand its business and raise capital, and would materially adversely affect the value of its stock. In addition, for years in which the Combined Corporation does not qualify as a REIT, it will not otherwise be required to make distributions to shareholders.
In certain circumstances, even if the Combined Corporation qualifies as a REIT, it and its subsidiaries may be subject to certain U.S. federal, state, and other taxes, which would reduce the Combined Corporation’s cash available for distribution to its shareholders.
Even if each of MAA, ColonialPost Properties and the Combined Corporation has, as the case may be, qualified and continues to qualify as a REIT, the Combined Corporation may be subject to U.S. federal, state, or other taxes. For example, net income from the sale of properties that are “dealer” properties sold by a REIT (a “prohibited
transaction” under the Code) will be subject to a 100% tax. In addition, the Combined Corporation may not be able to make sufficient distributions to avoid income and excise taxes applicable to REITs. Alternatively, the Combined Corporation may decide to retain income it earns from the sale or other disposition of its property and
pay income tax directly on such income. In that event, the Combined Corporation’s shareholders would be treated as if they earned that income and paid the tax on it directly. However, shareholders that are tax-exempt, such as charities or qualified pension plans, might not have any benefit from their deemed payment of such tax liability. The Combined Corporation and its subsidiaries may also be subject to U.S. federal taxes other than U.S. federal income taxes, as well as state and local taxes (such as state and local income and property taxes), either directly or at the level of its operating partnership, or at the level of the other companies through which the Combined Corporation indirectly owns its assets. Any U.S. federal or state taxes the Combined Corporation (or any of its subsidiaries) pays will reduce cash available for distribution by the Combined Corporation to shareholders. See section “The Parent Merger—Mergers—Material U.S. Federal Income Tax Consequences of the Parent Merger”Merger and Ownership of Combined Corporation Common Stock and MAA Series I Preferred Stock” beginning on page 125.121.
MAA and ColonialPost Properties face other risks.
The foregoing risks are not exhaustive, and you should be aware that, following the mergers, the Combined Corporation will face various other risks, including those discussed in reports filed by MAA and ColonialPost Properties with the SEC. See “Where You Can Find More Information” beginning on page 205.page201.
Risk Factors Relating to MAA’s Business
You should also read and consider the risk factors specific to MAA’s business that will also affect the Combined Corporation after the mergers. These risks are described in Part I, Item 1A of MAA’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and in other documents that are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” for more detail on the information incorporated by reference into this joint proxy statement/prospectus.
Risk Factors Relating to Post Properties’ Business
You should also read and consider the risk factors specific Post Properties’ business that will also affect the Combined Corporation after the mergers. These risks are described in Part I, Item 1A of Post Properties’ Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and in other documents that are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” for more detail on the information incorporated by reference into this joint proxy statement/prospectus.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements which are based on current expectations, estimates and projections about the industry and markets in which MAA and ColonialPost Properties operate and beliefs of, and assumptions made by, MAA management and ColonialPost Properties management and involve uncertainties that could significantly affect the financial results of MAA, ColonialPost Properties or the Combined Corporation. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. Such forward-looking statements include, but are not limited to, statements about the anticipated benefits of the business combination transaction involving MAA and Colonial,mergers, including future financial and operating results of the Combined Corporation, and the Combined Corporation’s plans, objectives, expectations and intentions. All statements that address operating performance, events or developments that MAA and ColonialPost Properties expect or anticipate will occur in the future—including statements relating to expected synergies, improved liquidity and balance sheet strength—are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although MAA and ColonialPost Properties believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, MAA and ColonialPost Properties can give no assurance that their expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to:
each of MAA’s and Colonial’sPost Properties’ success, or the success of the Combined Corporation, in implementing its business strategy and its ability to identify, underwrite, finance, consummate and integrate acquisitions, developments or other investments;
changes in national, regional and local economic climates;
changes in financial markets and interest rates, or to the business or financial condition of MAA, ColonialPost Properties or the Combined Corporation or their respective businesses;
the nature and extent of future competition;
each of MAA’s and Colonial’sPost Properties’ ability, or the ability of the Combined Corporation, to pay down, refinance, restructure and/or extend its indebtedness as it becomes due;
the ability and willingness of MAA, ColonialPost Properties and the Combined Corporation to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations;
availability to MAA, ColonialPost Properties and the Combined Corporation of financing and capital;
each of MAA’s and Colonial’sPost Properties’ ability, or the ability of the Combined Corporation, to deliver high quality properties and services, to attract and retain qualified personnel and to attract and retain residents and other tenants;
the impact of any financial, accounting, legal or regulatory issues or litigation that may affect MAA, ColonialPost Properties or the Combined Corporation;
risks associated with achieving expected revenue synergiesthe outcome of any legal proceedings or cost savings as a result ofenforcement matters that may be instituted against MAA, Post Properties or the Combined Corporation relating to the mergers;
risks associated with the companies’ ability to consummate the mergers, the timing of the closing of the mergers and unexpected costs or unexpected liabilities that may arise from the mergers, whether or not consummated; and
Should one or more of the risks or uncertainties described above or elsewhere in this joint proxy statement/prospectus occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this joint proxy statement/prospectus.
All forward-looking statements, expressed or implied, included in this joint proxy statement/prospectus are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that MAA, ColonialPost Properties or persons acting on their behalf may issue.
Neither MAA nor ColonialPost Properties undertakes any duty to update any forward-looking statements appearing in this joint proxy statement/prospectus.
Mid-America Apartment Communities, Inc.
MAA is a Tennessee corporation that has elected to be taxed as a REIT under the Code. MAA owns, acquires, renovates, develops and manages apartment communities in the Sunbelt region of the United States. As of June 30, 2013,2016, MAA owned or owned interests in a total of 163256 multifamily apartment communities comprising 49,017 apartments80,300 apartment units located in 13 states, including four communities comprising 1,156 apartments owned through MAA’s joint venture, Mid-America Multifamily Fund II, LLC.15 states. MAA also had twofour development communities under construction totaling 564628 units as of June 30, 2013.2016. Total expected costs for the development projects are $73.8$96.9 million, of which $37.8$49.4 million hashad been incurred through June 30, 2013.2016. MAA expects to complete construction on one project by the threethird quarter of 2016, two projects by the second quarter of 2017, and one project by the fourth quarter of 2014. Four of MAA’s properties include retail components with approximately 107,000 square feet of gross leasable area.2017.
MAA’s most significant asset is its ownership interest in MAA LP. MAA conducts substantially all of its business and holds substantially all of its assets through MAA LP, which, together withand by virtue of its subsidiaries, conducts the operations of a substantial majority of MAA’s business, holds a substantial majority of MAA’s consolidated assetsownership interest and generates a substantial majority of MAA’s revenues.being MAA is theLP’s sole general partner, MAA has the ability to control all of the day-to-day operations of MAA LP and, asLP. As of June 30, 2013,2016, MAA owned 40,141,19775,524,086 common units of partnership interest, or approximately 95.9%94.8% of the outstanding partnership interests ofin MAA LP. Prior to the effective times of the mergers, MAA will contribute all of its assets, with the exception of its ownership interest in MAA LP and certain bank accounts held by MAA, to MAA LP, and as a result, MAA will be structured as a traditional UPREIT.
MAA common stock is listed on the NYSE, trading under the symbol “MAA.”
MAA was incorporated in the state of Tennessee in 1993, and MAA LP was formed in the state of Tennessee in 1993. MAA’s principal executive offices are located at 6584 Poplar Avenue, Memphis, Tennessee 38138, and its telephone number is (901) 682-6600.
OP Merger Sub, an indirect wholly-owned subsidiary of MAA LP, is a Delaware limited partnership formed on May 30, 2013 for the purpose of effecting the partnership merger. Upon completion of the partnership merger, OP Merger Sub will be merged with and into Colonial LP with Colonial LP surviving as an indirect wholly-owned subsidiary of MAA LP. OP Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement.
Additional information about MAA and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205.201.
ColonialPost Properties, TrustInc.
Colonial, originally formed asPost Properties, a Maryland REIT on July 9, 1993 and reorganized as an Alabama REIT under the Alabama REIT statute on August 21, 1995,Georgia corporation, is a self-administered REIT that has elected to be taxed as a REIT under the Code. Colonial is a multifamily-focused self-administered and self-managed equity REIT, which means that it is engaged in the acquisition, development, ownership, managementREIT. Post Properties and leasing ofits subsidiaries develop, own and manage upscale multifamily apartment communities in selected markets in the United States. Post Properties through its wholly-owned subsidiaries is the sole general partner, a limited partner and other commercial real estate properties.owns a majority interest in Post Apartment Homes, L.P., or Post LP, a Georgia limited partnership. Post LP, through its operating divisions and subsidiaries conducts substantially all of the on-going operations of Post Properties. As of June 30, 2013, Colonial2016, Post Properties owned or maintained a partial ownershipowned interests in a total of 11561 multifamily apartment communities comprising 34,577 apartments24,162 apartment units, including 1,471 apartment units in four communities held in unconsolidated entities and 2,360 apartment units in seven communities currently under development or in lease-up. At June 30, 2016, Post Properties had 2,290 apartment units in six communities under development with total budgeted development and construction costs of $478.6 million. Post Properties currently expects to initiate the lease-up of apartment units at two of these communities, containing 794 apartment units in 2016. An additional community containing 340 apartment units with total projected costs of $74.8 million continues its initial lease-up and, as of July 30, 2016, was 89.1% leased. At June 30, 2016, approximately 30.2%, 21.6%, 13.3% and 10.7% (on a unit basis) of Post Properties’ operating communities were located in 11 states. Additionally, Colonial has seven commercial properties with approximately 1,194,000 square feet of gross leasable area.the Atlanta, Georgia, Dallas, Texas, greater Washington, D.C. and Tampa, Florida metropolitan areas, respectively.
Colonial’sPost Properties’ only material asset is its ownership of limited partnership interestsinterest in ColonialPost LP, which, together with its subsidiaries, conducts substantially all of Colonial’sPost Properties’ business, holds substantially all of Colonial’sPost Properties’ consolidated assets and generates substantially all of Colonial’sPost Properties’ revenues. ColonialThrough its wholly-owned subsidiaries, Post Properties is the sole general partner of ColonialPost LP and, as of June 30, 2013,2016, owned approximately 92.5%99.8% of the outstanding partnership interests of Colonialin Post LP.
ColonialPost Properties common shares arestock is listed on the NYSE, trading under the symbol “CLP.“PPS.”
Colonial’s
Post Properties was incorporated in the state of Georgia in 1984, and is the successor by merger to the original Post Properties, Inc., a Georgia corporation, which was formed in 1971. Post LP is a Georgia limited partnership that was formed in 1993 for the purpose of consolidating the operating and development businesses of Post Properties and the Post Properties apartment portfolio. Post Properties’ principal executive offices are located at 2101 Sixth Avenue North,One Riverside, 4401 Northside Parkway, Suite 750, Birmingham, Alabama 35203,800, Atlanta, Georgia 30327, and its telephone number is (205) 250-8700.(404) 846-5000.
Additional information about ColonialPost Properties and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205.201.
The Combined Corporation will be named “Mid-America Apartment Communities, Inc.” and will be a Tennessee corporation that will be a self-administered REIT, structured as a traditional UPREIT, which has elected to be taxed as a REIT under the Code. The Combined Corporation iswill be a Sunbelt-focused, publicly traded,publicly-traded, multifamily REIT with enhanced capabilities to deliver value for residents, shareholders and employees. The Combined Corporation is expected to have a pro forma equity market capitalization of approximately $5.1$11 billion, and a pro forma total market capitalization in excess of $8.6 billion.approximately $16 billion, each as of September 27, 2016, the latest practicable trading day before the date of this joint proxy statement/prospectus. The Combined Corporation’s asset base will consist primarily of approximately 85,000 multifamily105,008 apartment units in 285 properties.317 multifamily apartment communities. The Combined Corporation will maintain strategic diversity across urban and suburban locations in large and secondary markets within the high growthhigh-growth Sunbelt region of the United States. The Combined Corporation’s ten largest markets are expected toby unit count will be Dallas/Ft.Atlanta, Dallas, Austin, Charlotte, Raleigh, Orlando, Tampa, Fort Worth, Atlanta, Austin, Raleigh, Charlotte, Nashville, Jacksonville, Tampa, OrlandoHouston and Houston.Washington, D.C.
The business of the Combined Corporation will be operated through MAA LP and its subsidiaries. On a pro forma basis giving effect to the mergers, the Combined Corporation will own an approximate 94.6%96.4% partnership interest in MAA LP and, as its sole general partner, the Combined Corporation will have the full, exclusive and complete responsibility for and discretion in the day-to-day management and control of MAA LP.
The common stock of the Combined Corporation will be listed on the NYSE, trading under the symbol “MAA.”
The Combined Corporation’s principal executive offices will be located at 6584 Poplar Avenue, Memphis, Tennessee 38138, and its telephone number will be (901) 682-6600.
The MAA special meeting will be held at MAAMAA’s corporate headquarters, 6584 Poplar Avenue, Memphis, Tennessee 38138, on September 27, 2013,November 10, 2016, at 9:008:30 a.m., Central Daylight Time.local time.
Purpose of the MAA Special Meeting
At the MAA special meeting, MAA shareholders will be asked to consider and vote upon the following matters:
a proposal to approve the merger agreement, the parent merger of Colonial with and into MAA, with MAA continuing as the surviving corporation, and the other transactiontransactions contemplated by the merger agreement, including the issuance of MAA common stock to ColonialPost Properties shareholders in connection with the parent merger, which we refer to collectively as the MAA merger proposal;
a proposal to approve an amendment to the MAA 2013 Stock Incentive Plan;charter to increase the number of authorized shares of MAA common stock from 100,000,000 shares to 145,000,000 shares, which we refer to as the MAA charter amendment proposal; and
a proposal to approve one or more adjournments of the MAA special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger.
Recommendation of the MAA Board
After careful consideration, the MAA Board has unanimously (i) determined and declared that the merger agreement, the parent merger, and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to ColonialPost Properties shareholders in connection with the parent merger, are advisable and in the best interests of MAA and its shareholders, and has unanimously(ii) adopted and approved the merger agreement, the parent merger and the other transactions contemplated thereby, and (iii) determined and declared that, due to the transactions contemplated by the merger agreement.agreement, it is necessary, advisable, desirable and in the best interest of MAA to amend the MAA charter to increase the number of shares of MAA common stock authorized for issuance from 100,000,000 shares to 145,000,000 shares. Certain factors considered by the MAA Board in reaching its decision to adopt and approve the parent merger agreement can be found in the section of this joint proxy/proxy statement/prospectus entitled “The Parent Merger—Mergers—Recommendation of the MAA Board and Its Reasons for the Parent Merger”Mergers” beginning on page 88.84.
The MAA Board unanimously recommends that MAA shareholders vote FOR the MAA merger proposal, FOR the proposal to approve the MAA 2013 Stock Incentive Plancharter amendment proposal and FOR the proposal to adjourn the MAA special meeting, if necessary or appropriate in the view of the MAA Board, to solicit additional proxies in favor of the proposals if there are not sufficient votes at the time of such adjournment to approve such proposals.
ApprovalThe MAA merger proposal requires the affirmative vote of the merger agreement is subject toholders of a vote by MAA’s shareholders separate from the vote on approvalmajority of the outstanding shares of MAA 2013 Stock Incentive Plan. Approval ofcommon stock entitled to vote. The proposal to approve the MAA 2013 Stock Incentive Plan is notcharter amendment requires the affirmative vote of a conditionmajority of shares of MAA common stock present in person or by proxy at the MAA special meeting and entitled to completionvote. The parent merger cannot be completed without the approval by MAA shareholders of the mergers.both proposals.
MAA Record Date; Who Can Vote at the MAA Special Meeting
Only MAA shareholders of record at the close of business on the record date, August 22, 2013,September 26, 2016, are entitled to receive notice of the MAA special meeting and to vote the shares of MAA common stock that they
held on the record date at the MAA special meeting, or any postponement or adjournment of the MAA special meeting. The only class of stock that can be voted at the MAA special meeting is MAA common stock. Each share of MAA common stock is entitled to one vote on all matters that come before the MAA special meeting.
On the record date, there were approximately 42,740,45075,541,759 shares of MAA common stock outstanding and entitled to vote at the MAA special meeting.
A list of MAA shareholders entitled to vote at the MAA special meeting will be open for examination by any MAA shareholder, for any purpose germane to the MAA special meeting, during ordinary business hours,
beginning two (2) days after notice of the MAA special meeting is given and through the time of the MAA special meeting and place of the MAA special meeting at MAA’s principal executive offices at 65876584 Poplar Avenue, Memphis, Tennessee 38138.
A quorum of shareholders is necessary to hold a valid special meeting. The presence, in person or by proxy, of holders of a majority of the shares of MAA common stock outstanding on the MAA record date will constitute a quorum. On the record date, there were 42,740,45075,541,759 shares of MAA common stock outstanding and entitled to vote. Thus, 21,370,22637,770,880 shares of MAA common stock must be represented by shareholders present at the MAA special meeting in person or by proxy to have a quorum for the MAA special meeting.
Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the Chairman of the MAA special meeting or a majority of the votes present at the MAA special meeting may adjourn the MAA special meeting to another date.
Approval of the MAA merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of MAA common stock.stock entitled to vote.
Approval of the MAA 2013 Stock Incentive Plancharter amendment proposal requires the affirmative vote of a majority of shares of MAA common stock present in person or by proxy at the MAA special meeting and entitled to vote.
Approval of the MAA adjournment proposal requires that the votes cast “FOR” the proposal exceed the votes cast “AGAINST” the proposal.
Approval of the adjournment of the MAA special meeting requires the votes cast “FOR” the proposal exceed the votes cast “AGAINST” the proposal.
Abstentions and Broker Non-Votes
If you are a MAA shareholder and fail to vote,you fail to instruct your broker, bank or other nominee to vote, or abstain from voting:
with respect to the MAA merger proposal, itabstentions and broker non-votes will have the same effect as a vote “AGAINST” the MAA merger proposal;
with respect to the MAA 2013 Stock Incentive Plancharter amendment proposal, if you abstain, fail toassuming a quorum is present, abstentions will have the same effect as a vote or fail to instruct your“AGAINST” the MAA charter amendment proposal, but broker bank or nominee to vote, itnon-votes will have no effect on the outcome of the vote for this proposal; and
with respect to the MAA adjournment proposal, itabstentions and broker non-votes will have no effect on the outcome of the vote for this proposal.
Voting by MAA Directors and Executive Officers
At the close of business on the record date, directors and executive officers of MAA and their affiliates were entitled to vote 302,780482,516 shares of MAA common stock, or approximately 0.71%0.6% of the shares of MAA common stock issued and outstanding on that date. Messrs. Bolton and Sanders have entered into voting agreements that obligate them to vote “FOR” the MAA merger proposal. Additionally, MAA currently expects that the other MAA directors and executive officers will vote their shares of MAA common stock in favor of the MAA merger proposal as well as the other proposals to be considered at the MAA special meeting, although none of them is obligated to do so.
A proxy card is enclosed for use by MAA shareholders. MAA requests that MAA shareholders sign the accompanying proxy card and return it promptly in the enclosed postage-paid envelope. MAA shareholders may also vote their shares by telephone or through the Internet. Information and applicable deadlines for voting proxies by telephone or through the Internet are set forth on the enclosed proxy card. When the accompanying proxy is returned properly executed, the shares of MAA common stock represented by it will be voted at the MAA special meeting or any adjournment or postponement thereof in accordance with the instructions contained in the proxy card.
If a proxy card is signed and returned without an indication as to how the shares of MAA common stock represented by the proxy are to be voted with regard to a particular proposal, the shares of MAA common stock represented by the proxy will be voted “FOR” each such proposal. As of the date of this joint proxy statement/prospectus, MAA has no knowledge of any business that will be presented for consideration at the MAA special meeting and which would be required to be set forth in this joint proxy statement/prospectus other than the matters set forth in the accompanying Notice of Special Meeting of Shareholders of MAA. In accordance with the MAA bylaws and Tennessee law, business transacted at the MAA special meeting will be limited to those matters set forth in such notice. Nonetheless, if any other matter is properly presented at the MAA special meeting for consideration, it is intended that the persons named in the enclosed proxy card and acting thereunder will vote in accordance with their discretion on such matter.
Your vote is important. Accordingly, please sign and return the enclosed proxy card whether or not you plan to attend the MAA special meeting in person.
If a MAA shareholder holds shares of MAA common stock in a stock brokerage account or if its shares are held by a broker, bank or other nominee (that is, in “street name”), such shareholder must provide the record holder of its shares with instructions on how to vote its shares of MAA common stock. MAA shareholders should follow the voting instructions provided by their broker, bank or nominee. Please note that MAA shareholders may not vote shares of MAA common stock held in street name by returning a proxy card directly to MAA or by voting in person at the MAA special meeting unless they provide a “legal proxy,” which MAA shareholders must obtain from their broker, bank or nominee. Further, brokers, banks or other nominees who hold shares of MAA common stock on behalf of their customers may not give a proxy to MAA to vote those shares without specific instructions from their customers.
If a MAA shareholder does not instruct its broker, bank or nominee to vote, then the broker, bank or nominee may not vote those shares, and it will have the effects described above under “—Abstentions and Broker Non-Votes.”
Shares held in the MAA Employee Stock Ownership Plan
If MAA shareholders hold shares of MAA common stock in an account under the MAA Employee Stock Ownership Plan, such shareholders have the right to vote the shares in their account. To do this, the MAA shareholder must sign and timely return the proxy card received with this joint proxy statement/prospectus, or grant the shareholder’s proxy by telephone or over the Internet by following the instructions on the proxy card.
Revocation of Proxies or Voting Instructions
MAA shareholders of record may change their vote or revoke their proxy at any time before the final vote at the MAA special meeting by:
| 1. | submitting another properly completed proxy card bearing a later date in time to be received before the MAA special meeting or by submitting a later dated proxy by telephone or over the Internet in which case the later-submitted proxy will be recorded and the earlier proxy revoked; |
| 2. | submitting written notice that the MAA shareholder is revoking the proxy to MAA’s Corporate Secretary, 6584 Poplar Avenue, Memphis, Tennessee 38138 in time to be received before the MAA special meeting; or |
| 3. | voting in person at the MAA special meeting. |
Attending the MAA special meeting without voting will not, by itself, revoke a MAA shareholder’s proxy.
If ayour shares of MAA shareholder’s common sharesstock are held by itsyour broker or bank as nominee or agent, the shareholderyou should follow the instructions provided by theyour broker or bank.
MAA will appoint an inspector of election for the MAA special meeting to tabulate affirmative and negative votes, broker non-votes and abstentions.
Solicitation of Proxies; Payment of Solicitation Expenses
The cost of proxy solicitation for the MAA special meeting will be borne by MAA. In addition to the use of the mail, proxies may be solicited by officers, directors and regular employees of MAA, without additional remuneration, in person, by telephone or any other electronic means of communication deemed appropriate. MAA will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on the record date and will provide customary reimbursement to such firms for the cost of forwarding these materials. MAA has retained D.F. King to assist in its solicitation of proxies and has agreed to pay them a fee of approximatelynot to exceed $20,000 for these services, plus reimbursement for reasonable out-of-pocket expenses and expenses, and to indemnify D.F. King against certain losses, costs and expenses.
In addition to the other proposals being considered at the MAA special meeting, MAA shareholders are also being asked to approve a proposal that will give the MAA Board authority to adjourn the MAA special meeting, if necessary or appropriate in the view of the MAA Board, to solicit additional proxies in favor of the other proposals if there are not sufficient votes at the time of such adjournment to approve such proposals. If this proposal is approved, the MAA special meeting could be successively adjourned to anyanother date. In addition, the MAA Board could postpone the MAA special meeting before it commences, whether for the purpose of soliciting additional proxies or for other reasons. If the MAA special meeting is adjourned for the purpose of soliciting additional proxies, shareholders who have already submitted their proxies will be able to revoke them at any time prior to their use.
If a quorum does not exist, the chairman of the MAA special meeting or the holders of a majority of the shares of MAA common stock present at the MAA special meeting, in person or by proxy, may adjourn the MAA special meeting to another place, date or time. If a quorum exists, but there are not enough affirmative votes to approve any other proposal, the MAA special meeting may be adjourned if the votes cast, in person or by proxy, at the MAA special meeting in favor of the MAA adjournment proposal exceed the votes cast, in person or by proxy, against the MAA adjournment proposal.
If you need assistance in completing your proxy card or have questions regarding the various voting options with respect to the MAA special meeting, please contact MAA’s proxy solicitor, D.F. King, toll-free at1-800-628-8532. (866) 811-1442.
PROPOSALS SUBMITTED TO MAA SHAREHOLDERS
(Proposal 1 on the MAA Proxy Card)
MAA shareholders are asked to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to ColonialPost Properties shareholders in the parent merger. For a summary and detailed information regarding thisthe MAA merger proposal, see the information about the merger agreement and the parent merger throughout this joint proxy statement/prospectus, including the information set forth in sections entitled “The Parent Merger”Mergers” beginning on page 6870 and “The Merger Agreement” beginning on page 151.148. A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus and incorporated herein by reference.
Pursuant to the merger agreement, approval of this proposal is a condition to the closing of the mergers. If this proposal is not approved, the mergers will not be completed.
MAA is requesting that MAA shareholders approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to Colonial shareholders in the parent merger. If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of MAA common stock represented by such proxy card will be voted “FOR” the approval of the merger agreement, the parent merger and the other transactions contemplated by the merger agreement.
Approval of the proposal to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of at least a majority of the outstanding shares of MAA common stock entitled to vote on such proposal.
Recommendation of the MAA Board
The MAA Board unanimously recommends that MAA shareholders vote FOR“FOR” the proposal to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to ColonialPost Properties shareholders in the parent merger.
2013 Stock Incentive PlanMAA Charter Amendment
(Proposal 2 on the MAA Proxy Card)
ProposalBackground
On June 17, 2013,In connection with its adoption and approval of the compensation committeemerger agreement and the parent merger, the MAA Board authorized and approved an amendment to the MAA charter to increase the number of authorized shares of MAA common stock from 100,000,000 to 145,000,000. The MAA charter amendment proposal is subject to MAA shareholder approval.
The complete text of the MAA Board, which we refer tocharter amendment is attached hereto as the MAA Compensation Committee, voted to approve the Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan, or the MAA 2013 Plan, and the MAA Board is recommending the MAA 2013 Plan to MAA shareholders for approval.
The MAA 2013 Plan will replace the Mid-America Apartment Communities, Inc. 2004 Stock Plan, or the MAA 2004 Plan, which expires by its terms on October 31, 2013. The MAA 2013 Plan provides flexibility to the MAA Compensation Committee to use various equity-based incentive awards as compensation tools to motivate MAA’s workforce.Annex B. If the MAA 2013 Plancharter amendment is approved by the MAA shareholders, the MAA charter amendment will become effective upon filing with the Secretary of State of the State of Tennessee, which we expect to occur immediately prior to the closing of the mergers. The text of the MAA charter amendment as filed with the Secretary of State of the State of Tennessee may vary, however, for such changes that are consistent with this proposal and which MAA may deem necessary or appropriate.
Purpose of the MAA Charter Amendment
Currently, the MAA charter authorizes the issuance of up to 100,000,000 shares of common stock. As of September 9, 2016, 75,541,759 shares of MAA common stock were issued and outstanding, 338,066 shares of MAA common stock were reserved for issuance under MAA’s equity incentive plans, and 4,143,203 shares of MAA common stock were reserved for issuance upon redemption of limited partnership units in MAA LP. In the
event the parent merger is consummated, an additional approximately 37,991,387 shares of MAA common stock will be issued to the Post Properties shareholders.
Without approval of the MAA charter amendment by the MAA shareholders, MAA will no longer make grants undernot have a sufficient number of authorized shares to complete the MAA 2004 Plan. Ifparent merger. Based on current estimates, if the MAA 2013 Planproposal is not approved, the MAA 2004 Plan will expire on October 31, 2013 and MAA will not be able to continue making stock-based incentive awards consistent with historical practices.
have approximately 31,466,854 authorized but unissued shares of common stock available for issuance after completion of the parent merger. The material featuresMAA Board considers the proposed increase in the number of authorized shares desirable and in MAA’s best interests and in the best interests of the MAA 2013 Plan are:shareholders because it will enable MAA to complete the parent merger and will provide MAA with an enhanced flexibility to issue shares of common stock in the future without shareholder approval, except as may be required by law, regulation or stock exchange rules, to take advantage of market conditions or favorable opportunities without the potential expense or delay incident to obtaining shareholder approval for a particular issuance. The MAA Board from time to time evaluates such opportunities and considers different capital structuring alternatives designed to advance MAA’s business strategy.
Description of MAA Common Stock
If this proposal is approved by the MAA shareholders, MAA will be authorized to issue up to 145,000,000 shares of common stock. Although MAA may consider issuing shares of common stock in the future for purposes of potential capital raising transactions, stock splits, stock dividends, acquisitions or similar transactions, there are currently no binding agreements or commitments with respect to the issuance of MAA common stock for any purpose, other than in connection with the parent merger and pursuant to MAA’s equity incentive plans.
The maximumadditional authorized shares of MAA common stock, if and when issued, would be part of the existing class of MAA common stock and would have the same rights, preferences, privileges and voting powers as the shares of MAA common stock presently outstanding. There are no preemptive rights related to MAA common stock. Please see “Description of Capital Stock” included elsewhere in this joint proxy statement/prospectus for a description of MAA common stock and the rights of MAA common shareholders.
Possible Effects on Holders of MAA Common Stock
The MAA Board considered the possible negative impact the increase in the number of shares of MAA common stock reserved and available for issuance undercould have on the existing MAA shareholders. The MAA Board believes that existing MAA shareholders would experience dilution of their ownership interests as additional shares of MAA common stock are issued. However, the MAA 2013 Plan isBoard concluded that any such negative impact would be outweighed by the sum of (i) 225,000 newly authorized shares, plus (ii) any shares underlying grants underpositive effect on the MAA 2004 Planshareholders resulting from MAA’s growth. Furthermore, the MAA Board believes there is a potential negative impact to MAA shareholders if MAA is unable to continue to raise the necessary capital for acquisition and growth needs.
Possible Anti-Takeover Effect
The MAA charter amendment could adversely affect the ability of third parties to take over MAA or change control of MAA by, for example, permitting issuances that are forfeited, cancelled or are terminated (other than by exercise)would dilute the stock ownership of a person seeking to effect a change in the future;composition of the MAA Board or contemplating a tender offer or other transaction for the combination of MAA with another company that the MAA Board determines is not in MAA’s best interests or in the best interests of MAA shareholders. The ability of the MAA Board to cause MAA to issue substantial amounts of MAA common stock without the need for shareholder approval, except as may be required by law, regulation or stock exchange rules, upon such 225,000 shares representterms and conditions as the approximate numberMAA Board may determine from time to time in the exercise of its business judgment may, among other things, be used to create voting impediments with respect to changes in control of MAA or to dilute the stock ownership of holders of MAA common stock
seeking to obtain control of MAA. The issuance of MAA common stock, while providing desirable flexibility in connection with possible acquisitions, financings and other corporate transactions, may have the effect of discouraging, delaying or preventing a change in control of MAA. The MAA Board, however, does not intend or view the increase in MAA’s authorized common stock as an anti-takeover measure and is not aware of any attempt or plan to obtain control of MAA.
Availability of Dissenters’ Rights
Pursuant to the TBCA, MAA shareholders are not entitled to dissenters’ rights with respect to the MAA charter amendment.
Approval of the MAA charter amendment requires the affirmative vote of a majority of shares of MAA common stock that remain available for issuance underpresent in person or by proxy at the MAA 2004 Plan, which will expire by its terms on October 31, 2013;
The award of stock options (both incentivespecial meeting and non-qualified options), restricted stock, restricted stock units, unrestricted stock, performance share awards, other stock-based awards, cash-based awards and dividend equivalent rights is permitted;
Any material amendment (other than an amendment that curtails the scope of the MAA 2013 Plan) is subjectentitled to approval by MAA’s shareholders;
Stock options may not be repriced without shareholder approval; and
The term of the MAA 2013 Plan is for ten years from the date of approval by MAA shareholders.
The maximum number of shares of MAA common stock reserved and available for issuance under the MAA 2013 Plan is the sum of (i) 225,000 newly authorized shares, plus (ii) any shares underlying grants under the MAA 2004 Plan that are forfeited, cancelled or terminated (other than by exercise) in the future; such 225,000 shares represent the approximate number of shares of MAA common stock that remain available for issuance under the MAA 2004 Plan, which will expire by its terms on October 31, 2013. Based solelyvote on the closing price of MAA’s common stock as reported by the NYSE on June 28, 2013 of $67.77, the maximum aggregate market value of such 225,000 shares of MAA common stock is $15,248,250. As of June 28, 2013 MAA had outstanding grants of 37,527 shares of restricted MAA common stock. The foregoing, along with the new share request of 225,000 shares (referred to as MAA’s “overhang”), would represent approximately 0.61% of MAA’s total outstanding shares as of June 28, 2013 on a fully diluted basis. Although 0.61%matter. Abstentions will represent the total overhang if the 2013 Plan is approved, MAA cannot predict the amount or timing of specific equity awards in the future and, thus, it is not possible to calculate the amount of subsequent dilution that may ultimately result from such awards; however, MAA is committed to maintaining an equity incentive program that accomplishes MAA’s incentive and retention goals while being sensitive to shareholders’ concerns about dilution and expense. MAA’s current three-year average burn rate is 0.10%.
The shares available under the MAA 2013 Plan will be authorized but unissued shares. The shares of common stock underlying any awards that are forfeited, cancelled, held back to cover the exercise price or tax withholding, reacquired by MAA prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise) under the MAA 2013 Plan are added back to the shares of MAA common stock available for issuance under the MAA 2013 Plan.
To ensure that certain awards granted under the MAA 2013 Plan to a “Covered Employee” (as defined in the Code) qualify as “performance-based compensation” under Section 162(m) of the Code, the MAA 2013 Plan provides that the MAA Compensation Committee may require that the vesting of such awards be conditioned on the satisfaction of performance criteria that may include any or all of the following:
Funds from operations;
Funds from operations per share;
Adjusted funds from operations;
Adjusted funds from operations per share;
Net operating income;
Gross operating income;
Total shareholder return;
Earnings per share;
Stock price;
Acquisitions;
Dispositions;
Strategic transactions;
Portfolio or regional occupancy rates;
Portfolio or regional rent rates;
Portfolio or regional revenue rates; or
Return on capital, assets, equity, development, or investment.
The MAA Compensation Committee will select the particular performance criteria within 90 days following the commencement of a performance cycle. Subject to adjustments for stock splits and similar events, the maximum award granted to any one individual that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code will not exceed 50,000 shares of MAA common stock for any performance cycle and options with respect to no more than 100,000 shares of common stock may be granted to any one individual during any calendar year period. If a performance-based award is payable in cash to any executive, it cannot exceed $2,500,000 for any performance cycle.
Reasons for the MAA 2013 Plan
The MAA Compensation Committee believes that stock-based incentive awards play an important role in MAA’s success by encouraging and enabling its current employees, officers and non-employee directors upon whose judgment, initiative and efforts it largely depends for the successful conduct of its business to acquire a proprietary interest in MAA. The MAA Compensation Committee anticipates that providing such persons with a direct stake in MAA will assure a closer identification of the interests of participants in the MAA 2013 Plan with those of MAA’s shareholders, thereby stimulating their efforts on MAA’s behalf and strengthening their desire to remain with MAA. The MAA 2004 Plan will expire on October 31, 2013 and the MAA 2013 Plan will therefore enable MAA to continue making such stock-based incentive awards.
Summary of the MAA 2013 Plan
The following description of certain features of the MAA 2013 Plan is intended to be a summary only. The summary is qualified in its entirety by the full text of the MAA 2013 Plan that is attached hereto as Annex E.
Plan Administration
The MAA 2013 Plan will be administered by the MAA Compensation Committee. The MAA Compensation Committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the MAA 2013 Plan. The MAA Compensation Committee may delegate to MAA’s Chief Executive Officer the authority to grant awards at fair market value to employees who are not subject to the reporting and other provisions of Section 16 of the Exchange Act.
Eligibility and Limitations on Grants
Persons eligible to participate in the MAA 2013 Plan will be those full or part-time officers, employees, non-employee directors and other key persons of MAA and its subsidiaries (including MAA LP) as selected from time-to-time by the MAA Compensation Committee. Approximately 63 individuals are currently eligible to participate in the MAA 2013 Plan.
The maximum award of stock options granted to any one individual will not exceed 100,000 shares of MAA common stock (subject to adjustment for stock splits and similar events) for any calendar year period. If any award of restricted stock, restricted stock units, performance shares or other stock-based award granted to an individual is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, then the maximum award shall not exceed 50,000 shares of MAA common stock (subject to adjustment for stock splits and similar events) to any one such individual in any performance cycle. If any cash-based award is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, then the maximum award to be paid in cash in any performance cycle may not exceed $2,500,000.
Stock Options
The MAA 2013 Plan permits the granting of (1) options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and (2) options that do not so qualify. Options granted under the MAA 2013 Plan will be non-qualified options if they fail to qualify as incentive options or exceed the annual limit on incentive stock options. Non-qualified options may be granted to any persons eligible to receive incentive options and to non-employee directors and key persons. The option exercise price of each option will be determined by the MAA Compensation Committee but may not be less than 100% of the fair market value of the MAA common stock on the date of grant. The MAA 2013 Plan provides that such fair market value will be deemed to be the last reported sale price of the shares of MAA common stock on the NYSE on the date of grant. The exercise price of an option may not be reduced after the date of the option grant, other than to appropriately reflect changes in MAA’s capital structure. Option repricing may not be effected through cancellation and re-grants or cancellation in exchange for cash.
The term of each option will be fixed by the MAA Compensation Committee and may not exceed ten years from the date of grant. The MAA Compensation Committee will determine at what time or times each option may be exercised. Options may be made exercisable in installments and the exercisability of options may be accelerated by the MAA Compensation Committee.
Upon exercise of options, the option exercise price must be paid in full either in cash, by certified or bank check or other instrument acceptable to the MAA Compensation Committee, by delivery (or attestation to the ownership) of shares of MAA common stock that are not then subject to restrictions under any MAA plan, or, with respect to stock options that are not incentive stock options, by a “net exercise” arrangement pursuant to which MAA will reduce the number of shares of stock issuable upon exercise by the largest whole number of shares with a fair market value that does not exceed the aggregate exercise price. Subject to applicable law, the exercise price may also be delivered to MAA by a broker pursuant to irrevocable instructions to the broker from the optionee.
To qualify as incentive options, options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive options that first become exercisable by a participant in any one calendar year.
Restricted Stock
The MAA Compensation Committee may award shares of common stock to participants subject to such conditions and restrictions as the MAA Compensation Committee may determine. These conditions and restrictions may include the achievement of certain performance goals (as summarized above under “—Proposal”) and/or continued employment with MAA or its subsidiaries through a specified restricted period.
Deferred Stock Awards
The MAA Compensation Committee may award phantom stock units as restricted stock units to participants. Restricted stock units are ultimately payable in the form of shares of common stock and may be
subject to such conditions and restrictions as the MAA Compensation Committee may determine. These conditions and restrictions may include the achievement of certain performance goals (as summarized above) and/or continued employment with MAA or its subsidiaries through a specified vesting period. In the MAA Compensation Committee’s sole discretion and subject to the participant’s compliance with the procedures established by the MAA Compensation Committee and requirements of Section 409A of the Code, it may permit a participant to make an advance election to receive a portion of his or her future cash compensation otherwise due in the form of restricted stock units. During the deferral period, the participant may be credited with dividend equivalent rights with respect to the restricted stock units.
Unrestricted Stock Awards
The MAA Compensation Committee may also grant shares of common stock that are free from any restrictions under the MAA 2013 Plan. Unrestricted stock may be granted to any participant in recognition of past services or other valid consideration and may be issued in lieu of cash compensation due to such participant.
Performance Share Awards
The MAA Compensation Committee may grant performance share awards to any participant that entitle the recipient to receive shares of common stock upon the achievement of certain performance goals (as summarized above) and such other conditions as the MAA Compensation Committee shall determine.
Dividend Equivalent Rights
The MAA Compensation Committee may grant dividend equivalent rights that entitle the recipient to receive credits for dividends that would be paid if the recipient had held specified shares of common stock. Dividend equivalent rights may be granted as a component of another award or as a freestanding award. Dividend equivalent rights may be settled in cash, shares of common stock or a combination thereof, in a single installment or installments, as specified in the award.
Other Stock-Based Awards
The MAA Compensation Committee may grant awards of capital stock other than common stock and other awards that are valued in whole or in part by reference to or are otherwise based on, common stock, including, for example, convertible preferred stock, convertible debentures, exchangeable securities, awards valued by reference to book value or subsidiary performance. These awards may be subject to such conditions and restrictions as the MAA Compensation Committee may determine. These conditions and restrictions may include the achievement of certain performance goals (as summarized above) and/or continued employment with us through a specified vesting period. If the applicable performance goals and other restrictions are not attained, the participant will forfeit his or her awards.
Cash-Based Awards
The MAA Compensation Committee may grant cash bonuses under the MAA 2013 Plan. The cash bonuses may be subject to the achievement of certain performance goals (as summarized above).
Transferability
In general, unless otherwise permitted by the MAA Compensation Committee, no award granted under the MAA 2013 Plan is transferable by the participant other than by will or by the laws of descent and distribution, and awards may be exercised during the participant’s lifetime only by the participant, or by the participant’s legal representative or guardian in the case of the participant’s incapacity.
Adjustments for Stock Dividends, Stock Splits, Etc.
The MAA 2013 Plan requires the MAA Compensation Committee to make appropriate adjustments to the number of shares of common stock that are subject to the MAA 2013 Plan and to any outstanding awards to reflect stock dividends, stock splits, extraordinary cash dividends and similar events.
Tax Withholding
Participants in the MAA 2013 Plan are responsible for the payment of any federal, state or local taxes that MAA is required by law to withhold upon any option exercise or vesting of other awards or election pursuant to Section 83(b) of the Code. Subject to approval by the MAA Compensation Committee, participants may elect to have the minimum tax withholding obligations satisfied by authorizing us to withhold shares of common stock to be issued pursuant tosame effect as an option exercise or upon vesting of other awards.
Amendments and Termination
The MAA Board may at any time amend or discontinue the MAA 2013 Plan and the MAA Compensation Committee may at any time amend or cancel any outstanding award for the purpose of satisfying changes in the law or for any other lawful purpose. However, no such action may adversely affect any rights under any outstanding award without the holder’s consent. Any amendments that materially change the terms of the MAA 2013 Plan, including any amendments that increase the number of shares reserved for issuance under the MAA 2013 Plan, expand the types of awards available, materially expand the eligibility to participate in, or materially extend the term of, the MAA 2013 Plan, or materially change the method of determining the fair market value of common stock, will be subject to approval by MAA’s shareholders. Amendments shall also be subject to approval by MAA’s shareholders if and to the extent determined by the MAA Compensation Committee to be required by the Code to preserve the qualified status of incentive options or to ensure that compensation earned under the MAA 2013 Plan qualifies as performance-based compensation under Section 162(m) of the Code.
New Plan Benefits
Because the grant of awards under the MAA 2013 Plan is within the discretion of the MAA Compensation Committee, MAA cannot determine the dollar value or number of shares of common stock that will in the future be received by or allocated to any participant in the MAA 2013 Plan. Accordingly, in lieu of providing information regarding benefits that will be received under the MAA 2013 Plan, the following table provides information concerning the benefits that were received by the following persons and groups during 2012: each named executive officer; all current executive officers, as a group; all current directors who are not executive officers, as a group; and all employees who are not executive officers, as a group.
| Restricted Stock | ||||||||
Name and Position | Dollar Value ($)(1) | Number (#) | ||||||
H. Eric Bolton, Jr., CEO | 522,050 | 8,385 | ||||||
Albert M. Campbell III, CFO | 190,702 | 3,063 | ||||||
Thomas L. Grimes, Jr., COO | 187,527 | 3,012 | ||||||
All current executive officers, as a group | 900,279 | 14,460 | ||||||
All current directors who are not executive officers, as a group | 251,219 | 4,035 | ||||||
All current employees who are not executive officers, as a group | 481,892 | 7,740 | ||||||
Tax Aspects Under the Code
The following is a summary of the principal U.S. federal income tax consequences of certain transactions under the MAA 2013 Plan. It does not describe all federal tax consequences under the MAA 2013 Plan, nor does it describe state or local tax consequences.
Incentive Options
No taxable income is generally realized by the optionee upon the grant or exercise of an incentive option. If shares of common stock issued to an optionee pursuant to the exercise of an incentive option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then, generally, for U.S. federal income tax purposes, (1) upon sale of such shares, any amount realized in excess of the option price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (2) MAA will not be entitled to any deduction. The exercise of an incentive option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee.
If shares of common stock acquired upon the exercise of an incentive option are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), then, generally, for U.S. federal income tax purposes, (a) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares of common stock at exercise (or, if less, the amount realized on a sale of such shares of common stock) over the option price thereof, and (b) MAA will be entitled to deduct such amount. Special rules will apply where all or a portion of the exercise price of the incentive option is paid by tendering shares of common stock. If an incentive option is exercised at a time when it no longer qualifies for the tax treatment described above, the option is treated as a non-qualified option. Generally, an incentive option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reason of disability). In the case of termination of employment by reason of death, thethree-month rule does not apply.
Non-Qualified Options
No income is realized by the optionee at the time the option is granted. Generally (1) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the option price and the fair market value of the shares of common stock on the date of exercise, and MAA receives a tax deduction for the same amount, and (2) at disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss depending on how long the shares of common stock have been held. Special rules will apply where all or a portion of the exercise price of the non-qualified option is paid by tendering shares of common stock. Upon exercise, the optionee will also be subject to Social Security taxes on the excess of the fair market value over the exercise price of the option.
Parachute Payments
The vesting of any portion of an option or other award that is accelerated due to the occurrence of a change in control may cause a portion of the payments with respect to such accelerated awards to be treated as “parachute payments” as defined in the Code. Any such parachute payments may be non-deductible to MAA, in whole or in part, and may subject the recipient to a non-deductible 20% U.S. federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).
Limitation on Deductions
As a result of Section 162(m) of the Code, MAA’s deduction for certain awards under the MAA 2013 Plan may be limited to the extent that the chief executive officer or other executive officer whose compensation is required to be reported in the summary compensation table (other than the chief financial officer) receives compensation in excess of $1 million per year (other than performance-based compensation that otherwise meets the requirements of Section 162(m) of the Code). The MAA 2013 Plan is structured to allow grants to qualify as performance-based compensation.
Approval of the MAA 2013 Plan requires the votes cast “FOR” the proposal exceed the votes cast “AGAINST” the proposal. For purposes of the proposal to approve the MAA 2013 Plan, if a MAA shareholder abstains, fails to vote, or fails to instruct itsbut broker bank or nominee to vote, itnon-votes will have no effect, on the outcome of the voteassuming a quorum is present for this proposal.
The vote on the approval of the MAA 2013 Plan is a vote separate and apart from the vote to approve the merger agreement and the other transactions contemplated by the merger agreement. You may vote to approve this proposal and vote not to approve the MAA merger proposal, or you may vote against this proposal and vote to approve the merger agreement and the other transactions contemplated by the merger agreement.special meeting.
Recommendation of the MAA Board
The MAA Board unanimously recommends that MAA shareholders vote FOR“FOR” the proposalamendment to approve the MAA 2013 Plan.charter to increase the number of authorized shares of MAA common stock from 100,000,000 to 145,000,000.
(Proposal 3 on the MAA Proxy Card)
The MAA special meeting may be adjourned to another time or place, if necessary or appropriate in the view of the MAA Board, to permit, among other things, further solicitation of proxies, if necessary or appropriate in the view of the MAA Board, in favor of the other proposals on the MAA proxy card if there are not sufficient votes at the time of such adjournment to approve such proposals.
MAA is asking MAA shareholders to consider and vote upon a proposal to approve the adjournmentone or more adjournments of the MAA special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval of the viewMAA merger proposal and the approval of the MAA charter amendment proposal.
In this proposal, you are being asked to authorize the holder of any proxy solicited by the MAA Board to vote in favor of granting discretionary authority to the proxy or attorney-in-fact to adjourn the MAA special meeting one or more times for the purpose of soliciting additional proxies. If MAA shareholders approve the MAA adjournment proposal, MAA could adjourn the MAA special meeting and any adjourned session of the MAA special meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from MAA shareholders that have previously returned properly executed proxies or authorized a proxy by using the Internet or telephone. Among other things, approval of the MAA adjournment proposal could mean that, even if MAA has received proxies representing a sufficient number of votes against the approval of MAA merger proposal such that the proposal would be defeated, MAA could adjourn the MAA special meeting without a vote on the MAA merger proposal and seek to obtain sufficient votes in favor of approval of the proposals if there are not sufficient votes at the timeMAA merger proposal to obtain approval of such adjournment to approve such proposals. that proposal.
Approval of this proposal requires the affirmative vote of a majority ofthat the votes cast onin favor the proposal exceed the votes cast against the proposal.
Recommendation of the MAA Board
The MAA Board unanimously recommends that MAA shareholders vote FOR the proposal to approve one or more adjournments of the MAA special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the MAA merger agreementproposal and approval of the parent merger.MAA charter amendment proposal.
As of the date of this joint proxy statement/prospectus, MAA does not intend to bring any other matters before the MAA special meeting, and MAA has no knowledge of any business that will be presented for consideration at the MAA special meeting and which would be required to be set forth in this joint proxy statement/prospectus other than the matters set forth in the accompanying Notice of Special Meeting of Shareholders of MAA. In accordance with the MAA bylaws and Tennessee law,the TCBA, business transacted at the MAA special meeting will be limited to those matters set forth in such notice. Nonetheless, if any other matter is properly presented at the MAA special meeting for consideration, it is intended that the persons named in the enclosed proxy and acting thereunder will vote in accordance with their discretion on such matter.
THE COLONIALPOST PROPERTIES SPECIAL MEETING
The ColonialPost Properties special meeting will be held inat the conference centeroffices of King & Spalding LLP located at 1180 Peachtree Street N.E., Atlanta, Georgia 30309, on the 1st floor of the Colonial Brookwood Center, 569 Brookwood Village, Suite 131, Homewood, Alabama 35209 on September 27, 2013November 10, 2016 commencing at 10:9:30 a.m., Central Daylight Time.local time.
Purpose of the ColonialPost Properties Special Meeting
At the ColonialPost Properties special meeting, ColonialPost Properties shareholders will be asked to consider and vote upon the following matters:
a proposal to approve and adopt the merger agreement, and the parent merger pursuant toand the plan ofother transactions contemplated by the merger agreement, which we sometimes refer to as the ColonialPost Properties merger proposal;
a proposal to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of ColonialPost Properties in connection with the parent merger;merger, which we refer to as the merger-related compensation proposal; and
a proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger, pursuantwhich we refer to as the plan of merger.
Recommendation of the ColonialPost Properties Board
The ColonialPost Properties Board unanimously recommends that ColonialPost Properties shareholders vote:
FOR the proposal to approve and adopt the merger agreement, and the parent merger pursuant toand the plan of merger;
FOR the proposal to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of ColonialPost Properties in connection with the mergers;parent merger; and
FOR the proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger pursuant to the plan of merger.
As discussed elsewhere in this joint proxy statement/prospectus, after careful consideration, and based in part on the unanimous recommendation of the transaction committee of the Colonial Board, the ColonialPost Properties Board has unanimously approved and adopted the merger agreement, and the plan of merger, and has determined that the parent merger is advisable and in the best interests of ColonialPost Properties and its shareholders. Certain factors considered by the ColonialPost Properties Board in reaching its decision to adopt and approve the parent merger can be found in the section of this joint proxy/proxy statement/prospectus entitled “The Parent Merger—Mergers—Recommendation of the ColonialPost Properties Board and Its Reasons for the Parent Merger”Mergers” beginning on page 92.88.
Approval and adoption ofThe vote by Post Properties’ shareholders to approve the merger agreement and the parent merger pursuant to the plan of merger is subject to a vote by Colonial’s shareholders separate from the vote on approval,to approve, on an advisory (non-binding) basis, of the compensation payable to certain executive officers of ColonialPost Properties in connection with the mergers.parent merger. Approval of the compensation arrangements is not a condition to completion of the mergers.parent merger.
ColonialPost Properties Record Date; Who Can Vote at the ColonialPost Properties Special Meeting
Only holders of record of Colonialshares of Post Properties common sharesstock at the close of business on August 22, 2013, Colonial’sSeptember 26, 2016, Post Properties’ record date for the ColonialPost Properties special meeting, are entitled to notice of, and to vote at, the ColonialPost Properties special meeting or any adjournments or postponements thereof. As of the close of business on the record date, there were 88,828,342 Colonial53,508,995 shares of Post Properties common shares stock, par value $0.01 per share,
outstanding and entitled to vote at the ColonialPost Properties special meeting, held by approximately 2,3811,214 holders of record. Because many of the Colonialshares of Post Properties common sharesstock are held by brokers and
other institutions on behalf of ColonialPost Properties shareholders, ColonialPost Properties is unable to estimate the total number of ColonialPost Properties shareholders represented by these record holders. ColonialPost Properties common shares arestock is the only security the holders of which are entitled to notice of, and to vote at, the ColonialPost Properties special meeting.
Each Colonialshare of Post Properties common sharestock owned on Colonial’sthe Post Properties record date is entitled to one vote on each proposal at the ColonialPost Properties special meeting.
If you own Colonialshares of Post Properties common sharesstock that are registered in the name of someone else, such as a broker, bank or other nominee, you need to direct that organization to vote those shares or obtain an authorization from them and vote the shares yourself at the ColonialPost Properties special meeting.
A list of ColonialPost Properties shareholders entitled to vote at the ColonialPost Properties special meeting will be open for examination by any ColonialPost Properties shareholder, for any purpose germane to the ColonialPost Properties special meeting, during ordinary business hours for a period of ten days before the ColonialPost Properties special meeting at Colonial’sPost Properties’ principal executive offices at 2101 Sixth Avenue North,One Riverside, 4401 Northside Parkway, Suite 750, Birmingham, Alabama 35203,800, Atlanta, Georgia 30327, and at the time and place of the ColonialPost Properties special meeting during the entire timeentirety of the ColonialPost Properties special meeting.
The presence at the ColonialPost Properties special meeting, in person or by proxy, of ColonialPost Properties shareholders entitled to castvote a majority of all the votes entitled to be castoutstanding shares of Post Properties common stock as such meetingof the Post Properties record date will constitute a quorum for the purposes of the ColonialPost Properties special meeting. There must be a quorum for business to be conducted at the ColonialPost Properties special meeting. It is important that ColonialPost Properties shareholders vote promptly so that their Colonialshares of Post Properties common sharesstock are counted toward the quorum.
All Colonialshares of Post Properties common sharesstock represented at the ColonialPost Properties special meeting, including abstentions and broker non-votes, will be treated as Colonialshares of Post Properties common sharesstock that are present for purposes of determining the presence of a quorum. ColonialPost Properties may seek to adjourn the ColonialPost Properties special meeting if a quorum is not present at the ColonialPost Properties special meeting.
Approval and adoption of the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement, will require the affirmative vote of the holders of at least a majority of the Colonialshares of Post Properties common shares outstandingstock entitled to vote as of the record date for the ColonialPost Properties special meeting. Approval of the Post Properties merger proposal is a condition to the closing of the parent merger.
Approval, on an advisory (non-binding) basis, of the compensation payable to certain executive officers of ColonialPost Properties in connection with the mergersparent merger will require that the affirmative votenumber of votes cast in favor of the holders of a majority ofproposal exceeds the Colonial common shares present in person or represented by proxy atvotes cast opposing the Colonial special meeting and entitled to vote on this proposal. An abstention from voting on this proposal will have no effect on the same effect as voting againstoutcome of this proposal.
ApprovalAssuming a quorum is present, approval of one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger, pursuant towill require that the plannumber of merger, will requirevotes cast in favor of the proposal exceeds the votes cast opposing the proposal. If a quorum is not present, the Post Properties special meeting may be adjourned by the affirmative vote of the holders of a majority of the Colonialshares of Post Properties common sharesstock present in person or represented by proxy at the Colonial special meeting and entitledproxy.
Abstentions and Broker Non-Votes
It is important that you vote your Colonial shares.shares of Post Properties common stock. Your failure to vote, or failure to instruct your broker, bank or other nominee on how to vote, will have the same effect as a vote against the ColonialPost Properties merger proposal, but will have no effect on the proposal to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of ColonialPost Properties in connection with the mergersparent merger or the proposal to approve one or more adjournments of the ColonialPost Properties special meeting.
If you attend the ColonialPost Properties special meeting, send in your signed proxy card or vote by telephone, or over the Internet, but abstain from voting on any proposal, you will still be counted for purposes of determining whether a
quorum exists. If you abstain from voting on the proposal to approve the parentPost Properties merger and to adopt the plan of merger, the advisory (non-binding) proposal to approve compensation payable to certain executive officers of Colonial in connection with the mergers or the adjournment proposal, your abstention will have the same effect as a vote against that proposal.proposal, but will have no effect on the merger-related compensation proposal or the Post Properties adjournment proposal (if a quorum is present).
Banks, brokers and other nominees that hold their customers’ shares in street name may not vote their customers’ shares on “non-routine” matters without instructions from their customers. As each of the proposals to be voted upon at the ColonialPost Properties special meeting is considered “non-routine,” such organizations do not have discretion to vote on any of the proposals. As a result, if you fail to provide your broker, bank or other nominee with any instructions, regarding how to vote your Colonialshares of Post Properties common shares, your Colonial common sharesstock will not be considered present at the ColonialPost Properties special meeting or voted on any of the proposals. If you provide instructions to your broker, bank or other nominee which do not indicate how to vote your Colonialshares of Post Properties common sharesstock with respect to a particular proposal, in accordance with stock exchange rules relating to non-routine shareholder matters, your Colonialshares of Post Properties common sharesstock will not be voted with respect to that particular proposal, (thiswhich is referred to in this context as a “broker non-vote”).broker non-vote. With respect to the Post Properties merger proposal, to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of Colonial in connection with the mergers or the proposal to approve one or more adjournments of the Colonial special meeting, broker non-votes will have the same effect as a vote against the Post Properties merger proposal, but will have no effect on the outcome.outcome of the merger-related compensation proposal and the Post Properties adjournment proposal.
Voting by Colonial TrusteesPost Properties Directors and Executive Officers
At the close of business on the Post Properties record date, trusteesdirectors and executive officers of ColonialPost Properties and their affiliates were entitled to vote 5,909,185 Colonial983,919 shares of Post Properties common shares,stock, or approximately 6.7%1.84% of the Colonial53,508,995 Post Properties common sharesstock issued and outstanding on that date. Messrs. T. Lowder, J. Lowder and Ripps have entered into voting agreements that obligate them to vote “FOR” the Colonial merger proposal. Additionally, ColonialPost Properties currently expects that the other Colonial trusteesPost Properties directors and executive officers will vote their Colonialshares of Post Properties common sharesstock in favor of the ColonialPost Properties merger proposal as well as the other proposals to be considered at the ColonialPost Properties special meeting, although none of them is obligated to do so.
Whether you plan to attend the ColonialPost Properties special meeting in person, you should submit your proxy as soon as possible.
If you own Colonialshares of Post Properties common sharesstock in your own name, you are an owner or holder of record. This means that you may use the enclosed proxy card or the Internet or telephone voting options to tell the persons named as proxies how to vote your Colonialshares of Post Properties common shares.stock. You have four voting options:
| • | In Person. To vote in person, come to the |
| • |
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| • | Telephone. To vote by telephone, dial the toll-free telephone number located on the enclosed proxy card using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by 11:59 p.m. |
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The Internet and telephone voting options available to holders of record are designed to authenticate ColonialPost Properties shareholders’ identities, to allow ColonialPost Properties shareholders to give their proxy voting instructions and to confirm that these instructions have been properly recorded. Proxies submitted over the Internet or by telephone through such a program must be received by 11:59 p.m. Central DaylightEastern Time on September 26, 2013.November 9, 2016. Submitting a proxy will not affect your right to vote in person if you decide to attend the ColonialPost Properties special meeting.
Shares heldHeld in “Street Name”
If your Colonialshares of Post Properties common sharesstock are held in “street name” by your broker, bank or other nominee, you should have received a voting instruction form, as well as voting instructions with these proxy materials from that organization rather than from Colonial.Post Properties. Your broker, bank or other nominee will vote your Colonialshares of Post Properties common sharesstock only if you provide instructions to that organization on how to vote. You should provide your broker, bank or other nominee with instructions regarding how to vote your Colonialshares of Post Properties common sharesstock by following the enclosed instructions provided by that organization. Without such instructions, your shares will NOT be voted on any of the proposals to be voted upon at the ColonialPost Properties special meeting, which will have the same effect as described above under “Abstentions and Broker Non-Votes.”
Please note that ColonialPost Properties shareholders may not vote Colonialshares of Post Properties common sharesstock held in street name by returning a proxy card directly to ColonialPost Properties or by voting in person at the ColonialPost Properties special meeting unless they provide a “legal proxy,” which ColonialPost Properties shareholders must obtain from their broker, bank or nominee. Further, brokers, banks or nominees who hold Colonialshares of Post Properties common sharesstock on behalf of their customers may not give a proxy to ColonialPost Properties to vote those Colonialshares of Post Properties common sharesstock without specific instructions from their customers
Shares held through Post Properties’ 401(k) plan
If you hold shares of Post Properties common stock through Post Properties’ 401(k) plan, your voting instructions (or any change to your voting instructions) must be received by 12:00 a.m., Eastern Time, on November 8, 2016 in order to allow the plan administrator to tabulate the vote for shares held in the 401(k) plan in accordance with the plan’s stock fund operating procedures.
Revocation of Proxies or Voting Instructions
Your grant of a proxy on the enclosed proxy card or through one of the alternative methods discussed above does not prevent you from voting in person or otherwise revoking your proxy at any time before it is voted at the ColonialPost Properties special meeting. If your Colonialshares of Post Properties common sharesstock are registered in your own name, you may revoke your proxy in one of the following ways by:
submitting notice in writing to Colonial’sPost Properties’ Corporate Secretary at ColonialPost Properties, Trust, 2101 Sixth Avenue North,Inc., One Riverside, 4401 Northside Parkway, Suite 750, Birmingham, Alabama 35203,800, Atlanta, Georgia 30327, that you are revoking your proxy that bears a date later than the date of the proxy that you are revoking and that is received before the ColonialPost Properties special meeting;
submitting another proxy card bearing a later date and mailing it so that it is received before the ColonialPost Properties special meeting;
submitting another proxy using the Internet or telephone voting procedures; or
attending the ColonialPost Properties special meeting and voting in person, although simply attending the ColonialPost Properties special meeting will not revoke your proxy, as you must deliver a notice of revocation or vote at the ColonialPost Properties special meeting in order to revoke a prior proxy.
Your last vote is the vote that will be counted.
If you have instructed a broker, bank or other nominee to vote your Colonialshares of Post Properties common shares,stock, you must follow the directions received from your broker, bank or other nominee if you wish to change your vote.
If you have questions about how to vote or revoke your proxy, you should contact our proxy solicitor, Morrow & Co., LLCInnisfree toll-free at (800) 460-1014.(888) 750-5834.
ColonialPost Properties will appoint an inspector of election for the ColonialPost Properties special meeting to tabulate affirmative and negative votes, broker non-votes and abstentions.
Solicitation of Proxies; Payment of Solicitation Expenses
ColonialPost Properties is soliciting proxies for the ColonialPost Properties special meeting from ColonialPost Properties shareholders. ColonialPost Properties will bear the entire cost of soliciting proxies from ColonialPost Properties shareholders. In addition to this mailing, Colonial’s trusteesPost Properties’ directors and officers may solicit proxies by telephone, by facsimile, by mail over the Internet or in person. They will not be paid any additional amounts for soliciting proxies. Arrangements also will be made with brokerage firms and other custodians, nominees and fiduciaries to forward proxy solicitation materials to the beneficial owners of Colonialshares of Post Properties common sharesstock held of record by those persons, and ColonialPost Properties will reimburse these brokerage firms, custodians, nominees and fiduciaries for related, reasonable out-of-pocket expenses they incur.
ColonialPost Properties has engaged Morrow & Co.Innisfree M&A Incorporated, or Innisfree, to assist in the solicitation of proxies for the ColonialPost Properties special meeting and will pay Morrow & Co.Innisfree a fee of approximately $25,000,$20,000, plus reimbursement of out-of-pocket expenses and will indemnify Morrow & Co.Innisfree and its affiliates against certain claims, liabilities, losses, damages and expenses. The address of Morrow & Co.Innisfree is 470 West501 Madison Avenue, Stamford, CT 06902.20th Floor, New York, NY 10022. You can call Morrow & Co., LLCInnisfree at (203) 658-9400 or toll-free at (800) 460-1014.(888) 750-5834.
In addition to the other proposals being considered at the ColonialPost Properties special meeting, ColonialPost Properties shareholders are also being asked to approve a proposal that will give the ColonialPost Properties Board authority to adjourn the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger pursuant to the plan of merger. If this proposal is approved, the ColonialPost Properties special meeting could be successively adjourned to anyanother date. In addition, the ColonialPost Properties Board could postpone the ColonialPost Properties special meeting before it commences, whether for the purpose of soliciting additional proxies or for other reasons. If the ColonialPost Properties special meeting is adjourned for the purpose of soliciting additional proxies, ColonialPost Properties shareholders who have already submitted their proxies will be able to revoke them at any time prior to their use.
WhetherIf a quorum is present uponand the number of votes cast in favor of the Post Properties adjournment proposal exceeds the votes cast opposing such proposal, Post Properties may adjourn the Post Properties special meeting.
If a quorum is not present, the Post Properties special meeting may be adjourned by the affirmative vote of the holders of a majority of the Colonialshares of Post Properties common sharesstock present in person or represented by proxy at the Colonial special meeting and entitled to vote on the adjournment, Colonial may adjourn the Colonial special meeting.proxy.
Rights of Dissenting Shareholders
Under the AREITL, Colonial shareholders are entitled toAppraisal or dissenters’ rights of appraisal with respectare statutory rights that, if available under law, enable shareholders to Colonial common shares that are the same rightsdissent from an extraordinary transaction, such as a dissenting shareholdermerger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of an Alabama business corporation. Therefore, pursuantreceiving the consideration offered to Section 10A-2-13.01et seq. of the ABCL (“ABCL Article 13”), holders of Colonial common shares are entitled to dissenters’ rights of appraisalshareholders in connection with the parent merger. This means that, subjectextraordinary transaction. Appraisal or dissenters’ rights are not available in all circumstances, and exceptions to these rights are provided in the GBCC. Because shares of Post Properties common stock are listed on a national securities exchange and at the effective time of the parent merger being consummated, you are entitled to payment by MAAeach outstanding share of the “fair value” (as defined in ABCL Article 13) of such dissenting ColonialPost Properties common shares plus accrued interest in accordance with ABCL Article 13. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the merger agreement. To exercise your dissenters’ rights, you must submit a written demand for dissenters’ rights of appraisal to Colonial before the shareholder vote is taken on the merger agreement and plan of merger, and you must not vote in favor of the proposal to adopt the merger agreement. Colonial common shares held by shareholders who properly demand and exercise their dissenters’ rights of appraisal pursuant to ABCL Article 13stock will not be converted into the right to receive theshares of MAA common stock as merger consideration. Your failure to follow exactly the procedures specified under ABCL Article 13 may result in the lossconsideration, holders of yourPost Properties common stock will not have appraisal or dissenters’ rights in connection with the merger. Because shares of appraisal. See “Dissenters’ Rights” beginningPost Properties Series A preferred stock generally have no voting rights and are listed on page 177a national securities exchange and at the texteffective time of ABCL Article 13 reproduced in its entiretythe parent merger each outstanding share of Post Properties Series A preferred stock will be converted into the right to receive shares of MAA Series I Preferred Stock as Annex H to this joint proxy statement/prospectus. If you hold your Colonial commonmerger consideration, holders of shares through a broker, bankof Post Properties Series A preferred stock will not have appraisal or other nominee and you wish to exercise dissenter’s rights, you should consult such organization to determine the appropriate procedures for the making of a demand for dissenters’ rights by that organization. In view ofin connection with the complexity of the ABCL, shareholders who may wish to pursue dissenters’ rights should consult their legal and financial advisors.merger.
If you need assistance in completing your proxy card or have questions regarding the various voting options with respect to the ColonialPost Properties special meeting, please contact Colonial’sPost Properties’ proxy solicitor, Morrow & Co., LLC,Innisfree, at (203) 658-9400 or toll-free at (800) 460-1014.(888) 750-5834.
PROPOSALS SUBMITTED TO COLONIALPOST PROPERTIES SHAREHOLDERS
Post Properties Merger Proposal
(Proposal 1 on the ColonialPost Properties Proxy Card)
ColonialPost Properties shareholders are asked to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement. For a summary and detailed information regarding this proposal to approve and adopt the merger agreement, the parent merger pursuant to plan of merger and the other transactions contemplated by the merger agreement, see the information about the merger agreement and the parent merger throughout this joint proxy statement/prospectus, including the information set forth in sections entitled “The Parent Merger”Mergers” beginning on page 6870 and “The Merger Agreement” beginning on page 151.148. A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus, and a copy of the plan of merger is attached as Annex B to this joint proxy statement/prospectus, each of which is incorporated by reference herein.
Pursuant to the merger agreement, approval of this proposal is a condition to the closing of the mergers.parent merger. If thethis proposal is not approved, the mergersparent merger will not be completed even if the other proposals considered at the ColonialPost Properties special meeting are approved.
ColonialPost Properties is requesting that ColonialPost Properties shareholders approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement. If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your Colonialshares of Post Properties common sharesstock represented by such proxy card will be voted “FOR” the approval and adoption of the merger agreement, the parent merger pursuant to plan of merger and the other transactions contemplated by the merger agreement.
Approval of the proposal to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of at least a majority of the outstanding Colonialshares of Post Properties common sharesstock entitled to vote on such proposal.
Recommendation of the ColonialPost Properties Board
The ColonialPost Properties Board unanimously recommends that ColonialPost Properties shareholders vote FOR the proposal to approve and adopt the merger agreement, the parent merger pursuant to plan of merger and the other transactions contemplated by the merger agreement.
Advisory Vote on Executive Compensation
(Proposal 2 on the ColonialPost Properties Proxy Card)
As required by Section 14A of the Exchange Act and the SEC’s rules thereunder, ColonialPost Properties is asking its shareholders to cast an advisory (non-binding) vote on the compensation that may be payable to its named executive officers in connection with the mergers,parent merger, as described in this joint proxy statement/prospectus under the table captioned “Change in Control Compensation” on page 119 under “The Parent Merger—Mergers—Executive Compensation Payable in Connection with the Mergers—Change in Control Compensation,Mergers,” including in the associated narrative discussion. In accordance with these requirements, ColonialPost Properties is asking its shareholders to vote on the adoption of the following resolution:
“RESOLVED, that the compensation that may be payable to Colonial’sPost Properties’ named executive officers in connection with the mergers,parent merger, as disclosed in the table captioned “Change in Control Compensation” on page 123119 under “The Parent Merger—Mergers—Executive Compensation Payable in Connection with the Mergers,” including the associated narrative discussion, and the agreements or understandings pursuant to which such compensation may be payable, are hereby APPROVED.”
The vote on the executive compensation payable in connection with the mergersparent merger is a vote separate and apart from the vote to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated
by the merger agreement. You may vote to approve this proposal and vote not to approve the ColonialPost Properties merger proposal, or you may vote against this proposal and vote to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement. Because the vote on this proposal is advisory in nature only, it will not be binding on Colonial.Post Properties. Accordingly, because ColonialPost Properties is contractually obligated to pay the compensation covered by this proposal, such compensation will be payable, subject only to certain applicable conditions, if the parent merger is approved and regardless of the outcome of the advisory vote.
The affirmative voteApproval, on an advisory (non-binding) basis, of the holderscompensation payable to certain executive officers of a majorityPost Properties in connection with the parent merger will require that the number of Colonial common shares presentvotes cast in person or represented by proxy atfavor of the Colonial special meeting and entitled to vote on this proposal will be required to approveexceeds the votes cast opposing the proposal. If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of common stock represented by such proxy card will be voted “FOR” this proposal. Abstentions from voting, on this proposal will have the same effect as a vote against this proposal. Failuresfailures to submit a proxy (if you do not attend the ColonialPost Properties special meeting in person) and any broker non-votes will not affect the outcome of the vote on this proposal.
Recommendation of the ColonialPost Properties Board
The ColonialPost Properties Board unanimously recommends that ColonialPost Properties shareholders vote FOR the proposal to approve, on an advisory (non-binding)(non- binding) basis, the compensation payable to certain executive officers of ColonialPost Properties in connection with the mergers.parent merger.
ColonialPost Properties Adjournment Proposal
(Proposal 3 on the ColonialPost Properties Proxy Card)
ColonialPost Properties is asking its shareholders to consider and vote upon a proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger pursuant to the plan of merger.
If the number of Colonialshares of Post Properties common sharesstock present in person or represented by proxy at the ColonialPost Properties special meeting voting in favor of the proposal 1 to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement is insufficient to approve the Post Properties merger proposal 1 at the time of the ColonialPost Properties special meeting, then ColonialPost Properties may move to adjourn the ColonialPost Properties special meeting in order to enable the ColonialPost Properties Board to solicit additional proxies in respect of such proposal. In that event, ColonialPost Properties shareholders will be asked to vote only upon the Post Properties adjournment proposal, and not on any other proposal, including proposal 1.the Post Properties merger proposal.
In this proposal, you are being asked to authorize the holder of any proxy solicited by the ColonialPost Properties Board to vote in favor of granting discretionary authority to the proxy or attorney-in-fact to adjourn the ColonialPost Properties special meeting one or more times for the purpose of soliciting additional proxies. If ColonialPost Properties shareholders approve the Post Properties adjournment proposal, ColonialPost Properties could adjourn the ColonialPost Properties special meeting and any adjourned session of the ColonialPost Properties special meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from ColonialPost Properties shareholders that have previously returned properly executed proxies or authorized a proxy by using the Internet or telephone. Among other things, approval of the Post Properties adjournment proposal could mean that, even if ColonialPost Properties has received proxies representing a sufficient number of votes against the approval of the Post Properties merger proposal 1 such that the proposal would be defeated, ColonialPost Properties could adjourn the ColonialPost Properties special meeting without a vote on the Post Properties merger proposal 1 and seek to obtain sufficient votes in favor of approval of the Post Properties merger proposal 1 to obtain approval of that proposal.
WhetherIf a quorum is present and the number of votes cast in favor of the Post Properties adjournment proposal exceeds the votes cast opposing such proposal, Post Properties may adjourn the Post Properties special meeting. If quorum is not present, the Post Properties special meeting may be adjourned by the affirmative vote of the holders of a majority of Colonialthe shares of Post Properties common sharesstock present in person or represented by proxy at the Colonial special meeting and entitled to vote on this proposal will be required to approve the proposal. proxy.
If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your Colonialshares of Post Properties common sharesstock represented by such proxy card will be voted “FOR” this proposal. Abstentions from voting, on this proposal will have the same effect as a vote against this proposal. Failuresfailures to submit a proxy (if you do not attend the ColonialPost Properties special meeting in person) and any broker non-votes will not affect the outcome of the vote on this Post Properties adjournment proposal.
Recommendation of the ColonialPost Properties Board
The ColonialPost Properties Board unanimously recommends that ColonialPost Properties shareholders vote FOR the proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger pursuant to the plan of merger.
At this time, ColonialPost Properties does not intend to bring any other matters before the ColonialPost Properties special meeting, and ColonialPost Properties does not know of any matters to be brought before the ColonialPost Properties special meeting by others. If, however, any other matters properly come before the ColonialPost Properties special meeting, the persons named in the enclosed proxy, or their duly constituted substitutes, acting at the ColonialPost Properties special meeting or any adjournment or postponement thereof will be deemed authorized to vote the Colonialshares of Post Properties common sharesstock represented thereby in accordance with the judgment of management on any such matter.
The following is a description of the material aspects of the parent merger.mergers. While MAA and ColonialPost Properties believe that the following description covers the material terms of the parent merger,mergers, the description may not contain all of the information that is important to the MAA shareholders and the ColonialPost Properties shareholders. MAA and ColonialPost Properties encourage the MAA shareholders and the ColonialPost Properties shareholders to carefully read this entire joint proxy statement/prospectus, including the merger agreement and the other documents attached to this joint proxy statement/prospectus and incorporated herein by reference, for a more complete understanding of the parent merger.mergers.
Each of the MAA Board and the ColonialPost Properties Board has unanimously approved the merger agreement, the parent mergermergers and the other transactions contemplated by the merger agreement. In the parent merger, ColonialPost Properties will merge with and into MAA, with MAA continuing as the Combined Corporation, and ColonialPost Properties shareholders will receive the merger consideration described below under “The Merger Agreement—Merger Consideration; Effects of the Parent Merger and the Partnership Merger.”
The boardsPost Properties Board and members of senior management teams of Colonialregularly review and MAA periodicallyassess Post Properties’ business, operations and in the ordinary course have evaluatedfinancial performance, including potential opportunities to maximize shareholder value through business combinations and considered a variety ofother strategic and financial and strategic opportunities astransactions. As part of their respective long-term strategies to enhance value for their shareholders.
Prior to April 2012, Colonial from time to time engagedthis assessment, Post Properties regularly engages in discussions with third parties regarding a variety of possible business opportunities,potential transactions, including discussions with other companies in Colonial’sthe multifamily real estate industry. These discussions ranged from possible commercial or partnering arrangements to possible acquisitions by orAs a result of Colonial ortheir background and experience as directors of Post Properties and in other business combination transactions. Colonial received, on occasion, unsolicited inquiries from third partiescapacities, the members of the Post Properties Board have substantial knowledge regarding possible business combinations or other strategic transaction opportunities. On occasion prior to April 2012, as partthe multifamily real estate industry and its participants and sources of its ongoing evaluation of its business strategy and business opportunities, Colonialcapital. Over the past several years, Post Properties has engaged in discussions with multiple third parties, including private equity firms, entities affiliated with pension and sovereign wealth funds, and strategic buyers, including those that are multifamily operators, regarding possiblepotential business combinations and other strategic transactions, including discussions with another public multifamily REIT, referred to in this joint proxy statement/prospectus as “Company A,” and financial transactions.
Most recently, during the first half of 2015, a private real estate investment and management services firm,company, referred to in this joint proxy statement/prospectusherein as “Company B,” which in each case were both brief and preliminary.
In January 2012, Colonial receivedParty A, made an unsolicited letter addressedapproach to the executive committee of the Colonial Board from the chairmanPost Properties to discuss potentially pursuing a strategic transaction involving Party A and chief executive officer of a national operator of multifamily apartments, referred to in this joint proxy statement/prospectus as “Company C.” The letter expressed an interest in exploring a potential business combination with ColonialPost Properties. Mr. David P. Stockert, President and specified an initial indication of value of $22 to $25 in cash per outstanding Colonial common share, noting that the ultimate valuation determination would be made following completion of Company C’s diligence review. The letter did not contain any other terms regarding a proposed combination. The Colonial Board, of which Mr. Thomas H. Lowder—Colonial’s Chief Executive Officer—serves as chairman, discussed the letter from Company C during its regular, in person board meeting at Colonial’s headquarters in Birmingham, Alabama on January 24, 2012, at which meeting a representativeOfficer of Colonial’s outside legal advisor, Hogan Lovells US LLP, herein referred to as Hogan Lovells, was present telephonically. Based on the preliminary nature of Company C’s expression of interest and its lack of material terms other than a preliminary indication of value, the Colonial Board’s view that the price range expressed in the letter was inadequate for a sale transaction of this type, Company C’s need for significant additional third party financing as part of an acquisition of ColonialPost Properties, and the impact on timing and certainty that would result from significant third party involvement, Colonial management’s familiarity with Company C and its concern with Company C’s ability to structure a public company acquisitionChief Executive Officer of this size and consummate a transaction of this complexity, the Colonial Board determined not to proceed with furtherParty A had preliminary discussions with Company C at that time.
Beginning in the spring 2012, Colonial’s improved financial position, resulting from Colonial’s improved operating performance and reduced debt levels, improvements in general economic conditions and financial markets and strong multifamily industry fundamentals led the Colonial Board to assess its current business strategy in light of other possible strategic alternatives. At Colonial’s regular, in person board meeting at Colonial’s headquarters in Birmingham on April 25, 2012, the Colonial Board invited BofA Merrill Lynch to discuss with the Colonial Board potential strategic alternatives for Colonial and subsequently engaged BofA Merrill Lynch as Colonial’s financial advisor. Representatives of Hogan Lovells and Edward Hardin, co-general counsel of Colonial, and counsel with Burr & Forman LLP, herein referred to as Burr Forman, were also present. Potential strategic alternatives discussed at this meeting included potential sale, merger and acquisition opportunities. During the discussion, the Colonial Board further discussed Colonial’s improved financial position, improvements in the financial markets and strong multifamily industry fundamentals as well as the potential benefits to Colonial shareholders if a transaction were structured to allow them to continue to participate in the ongoing success of Colonial’s business. As a result, the discussions were focused principally on the possibility of a strategic combination transaction with other multifamily REITs, including MAA and Company A. Following this discussion, the Colonial Board authorized Mr. Lowder to contact representatives of MAA and Company A in an effort to determine whether there was interest by either such party in discussing a possible strategic combination transaction with Colonial.
In early May 2012, Mr. Lowder spoke by telephone with the chief executive officer of Company A. Mr. Lowder and the chief executive officer of Company A discussedregarding the multifamily industry generally, as well as their respective companies. During this discussion, Mr. Lowder inquired whether Company A would have interest in considering a possible strategic combination of the two companies. This discussion was limited to a preliminary inquirycompanies, and did not address any specific terms of a possible transaction. At the end of the discussion, Mr. Lowder suggested that the chief executive officer of Company A contact Mr. Lowder if Company A was interested in engaging in further discussions regarding a possible strategic combination with Colonial. After this discussion, the chief executive officer of Company A did not contact Mr. Lowder or Colonial to engage in further discussions, and representatives of Colonial and Company A did not engage in further discussions regarding a potential strategic combination transaction.
On May 9, 2012, Mr. Lowder contacted H. Eric Bolton, Jr., Chairman and Chief Executive Officer of MAA, to inquire about whether MAA would be interested in exploring a potential strategic combination transaction with Colonial. As part of this conversation, Messrs. Lowder and Bolton discussed the potential strategic merits of combining the companies to create a leading Sunbelt-focused multifamily REIT. During the subsequent week, Mr. Bolton contacted each director of MAA individually by telephone to inform them of his conversation with Mr. Lowder and advise them that a potential strategic transaction with Colonial would be discussed at the next regular quarterly meeting of the MAA Board.
Subsequent to the May 9, 2012 meeting, Messrs. Bolton and Lowder contacted each other by telephone and email to make arrangements for an in person meeting to discuss a potential strategic combination transaction between MAA and Colonial further.
On May 24, 2012, the MAA Board held a regular quarterly meeting in Memphis with members of senior management and representatives of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, herein referred to as Baker Donelson. At this meeting, Mr. Bolton summarized his communications with Mr. Lowder and made a presentation to the MAA Board that provided a preliminary overview of Colonial including, among other things, information regarding Colonial’s history, strategy, core and non-core properties, financial condition, management and trustees. The MAA Board further discussed its interest in a potential strategic transaction with Colonial, but also discussed that it would likely not be interested in owning Colonial’s non-core assets long-term. The MAA Board then reviewed several financial metrics for Colonial and MAA and also reviewed Colonial’s publicly available financial statements. Next, Mr. Bolton and the MAA Board discussed the potential impact of combining the MAA and Colonial portfolios and certain terms of a potential strategic combination transaction, including conditions, pricing, synergies and costs with respect to such potential transaction. Mr. Bolton then
reviewed with the MAA Board certain considerations for a potential transaction with Colonial, including potential benefits to MAAbetween Post Properties and its shareholders and integration and other challenges associated with a potential strategic combination transaction with Colonial.
On July 11, 2012 and July 12, 2012, Messrs. Bolton and Lowder met in Memphis to discuss a potential strategic combination transaction. Messrs. Bolton and Lowder discussed, among other things,Party A. The Post Properties Board also authorized the locationsharing of the Combined Corporation’s corporate headquarters, key executive positions of MAA and Colonial, synergy opportunities from the combination of MAA’s and Colonial’s respective platforms, MAA’s and Colonial’s respective portfolios and strategies, the likely future of the publicly-traded apartment sector and scale-related advantages.
In mid-July, 2012, Mr. Lowder received and returned an unsolicited telephone call from the chairman and chief executive officer of Company C. The chairman and chief executive officer of Company C expressed interest in meeting with Mr. Lowder to discuss a possible strategic acquisition transaction. Mr. Lowder informed the chairman and chief executive officer of Company C of the Colonial Board’s concerns with respectconfidential information pursuant to a proposed transactionconfidentiality agreement with Company C and declined to engage in a substantive discussion regarding a possible strategic acquisition transaction with Company C. After this discussion, Mr. Lowder did not have any furtherParty A. Following these discussions, with the chairman and chief executive officer of Company C.
On July 25, 2012, the Colonial Board held a regular, in person meeting at Colonial’s headquarters in Birmingham with Mr. Hardin present. During this meeting, Mr. Lowder updated the Colonial Board regarding developments since the April 2012 Board meeting, including Mr. Lowder’s telephone discussion in May 2012 with the chief executive officer2015, Party A submitted an initial verbal indication of Company A. Mr. Lowder also updated the Colonial Board regarding Mr. Lowder’s communications with Mr. Bolton regarding a possible strategic business combination transaction. Mr. Lowder also reported to the Colonial Board regarding his telephone discussioninterest of $66 in mid-July with the chairman and chief executive officercash per share of Company C. Following discussion, the Colonial Board determined that Colonial should continue to consider the possibility of a strategic combination with MAA and authorized Mr. Lowder to continue preliminary discussions with MAA regarding a potential strategic business combination transaction.
On July 31, 2012, the MAAPost Properties common stock. The Post Properties Board held a special telephonic meeting to discuss this initial verbal indication of interest. Following discussion, the Post Properties Board determined not to accept this proposal and directed Mr. Stockert to reject this proposal but to continue engaging in discussions with members of senior management and representatives of Baker Donelson. Party A.
During the meeting, Mr. Bolton provided a summarysummer of 2015, Party A continued to the MAA Board of the meetings with Mr. Lowder and other developments related to evaluating a possible strategic combination transaction with Colonial.
On August 15, 2012, the MAA Board held a special telephonic meeting with members of senior management and representatives of Baker Donelson during which Mr. Bolton updated the MAA Board on his August 8, 2012 call with Mr. Lowder. The MAA Board then discussed the engagement ofengage in preliminary discussions including legal and financial advisors.
On or about August 16, 2012, pursuant to the recommendations of the MAA Board, Mr. Bolton contacted Goodwin Procter LLP, herein referred to as Goodwin Procter, and J.P. Morgan to act as counsel and financial advisor, respectively, for MAA in a potential strategic combination transaction with Colonial.
On August 28, 2012, the MAA Board held a special telephonic meeting with members of seniordue diligence. Post Properties’ management and representatives of Baker Donelson. During the meeting, Mr. Bolton updated the MAA Board that the Colonial Board was expected to meet to discuss potential strategic alternatives for Colonial. Mr. Bolton then summarized his recent discussions with J.P. Morgan regarding its preliminary assessment of the feasibility and potential structure of a proposal to Colonial. The MAA Board next discussed valuation and structuring options for a proposed strategic combination transaction with Colonial and potential earnings impact of a transaction on MAA.
On August 30, 2012, the Colonial Board held an in person meeting in Atlanta, Georgia with Mr. Hardin and representatives of BofA Merrill Lynch present. During this meeting, the Colonial Board reviewed and discussed
Colonial’s business plan and strategy and potential strategic alternatives. Potential strategic alternatives discussed at this meeting included potential sale, merger and acquisition opportunities. As part of this discussion, Colonial’s financial advisor discussed financial matters relating to a possible strategic transaction with MAA or Company A. Mr. Lowder reminded the Colonial Board of Mr. Lowder’s various communications with Mr. Bolton since May 2012, as well as Mr. Lowder’s telephone discussion in May 2012 with the chief executive officer of Company A. The Colonial Board also discussed certain issues associated with a cash sale transaction or auction process, including the risks and uncertainties associated with a buyer’s financing of a cash sale transaction and the potential detrimental effects on Colonial’s business from solicitation activities that occur prior to entering into and announcing a transaction. Following this discussion, the Colonial Board determined that Colonial should continue pursuing a strategy that offers Colonial shareholders the prospect of continued participation in long-term value creation. The Colonial Board also agreed that Colonial should continue preliminary discussions with MAA regarding the possibility of a strategic business combination transaction.
On September 11, 2012, Messrs. Bolton and Lowder, together with Albert M. Campbell III, Executive Vice President and Chief Financial Officer of MAA, and John W. Spiegel, an independent trustee of Colonial, met in Atlanta. Messrs. Bolton, Lowder, Campbell and Spiegel discussed the state of the apartment industry generally and potential business strategies. Messrs. Bolton and Campbell indicated that the parties would need to sign a confidentiality agreement and exchange information before MAA provided a written proposal for a potential strategic combination transaction.
On September 18, 2012, the MAA Board held a special in person meeting with members of seniorParty A’s management and representatives of J.P. Morgan, Goodwin Procter and Baker Donelson present in person or by telephone. Mr. Bolton provided a summary to the MAA Board of his meeting with Messrs. Lowder and Spiegel. Representatives of J.P. Morgan next presented a preliminary financial analysis relating to a potential strategic combination transaction with Colonial. The MAA Board also discussed with J.P. Morgan the strategic rationale of a potential transaction, certain preliminary financial information on each of MAA and Colonial, structural considerations and possible next steps in exploring a strategic combination transaction with Colonial. The MAA Board then instructed Mr. Bolton to continue discussions with Mr. Lowder regarding a strategic combination transaction.
On September 21, 2012, Messrs. Bolton and Lowder spoke by telephone. Mr. Bolton indicated that MAA was interested in pursuing a strategic combination transaction with Colonial given the strategic merits of the combination. During the conversation, Mr. Bolton highlighted that in order to proceed, both parties would need to share confidential information in order to best assess the opportunity. Mr. Bolton also noted that, given the strategic nature of the proposed transaction, both the anticipated level of synergies and the valuation of both MAA and Colonial would be important considerations in connection with evaluating whether to proceed with the proposed combination. Mr. Lowder indicated that the Colonial Board would further discuss a proposed strategic combination transaction with MAA.
On October 24, 2012, the Colonial Board held a regular, in person meeting at Colonial’s headquarters in Birmingham with Mr. Hardin present. During this meeting, Mr. Lowder updated the Colonial Board regarding the status of discussions with MAA since the August 30th Colonial Board meeting. Following discussion, the Colonial Board authorized Colonial management to enter into a confidentiality agreement with MAA to permit the exchange of non-public information in connection with the Colonial Board’s ongoing consideration of a possible strategic combination transaction with MAA.
On October 25, 2012, Mr. Lowder contacted Mr. Bolton by telephone and Mr. Lowder advised that Colonial was prepared to execute a confidentiality agreement, exchange further information and begin negotiations for a proposed strategic combination transaction.
On October 30, 2012, MAA and Colonial, with the assistance of their respective advisors, negotiated and entered into a confidentiality agreement that included mutual standstill and confidentiality restrictions.
On November 12, 2012, MAA and Colonial provided one another with access to an electronic data room containing due diligence materials.
On November 19, 2012, Mr. Bolton provided a written update to the MAA Board describing, among other things, the due diligence review of materials provided by Colonial in its electronic data room.
On November 27, 2012, Messrs. Bolton and Lowder met in Memphis to discuss considerations related to the proposed strategic combination transaction, including potential synergies and timing considerations. As part of the meeting, Mr. Lowder requested an outline of the basic terms of a transaction proposal.
Also on November 27, 2012, the management teams of both MAA and Colonial held a telephonic meeting with representatives of J.P. Morgan and BofA Merrill Lynch present to review the non-core assets owned and controlled by Colonial.
On December 4, 2012, the MAA Board held an in person regular quarterly meeting in Memphis with members of senior management and representatives of Baker Donelson, with representatives from J.P. Morgan and Goodwin Procter participating by telephone. Representatives from J.P. Morgan reviewed the discussions and meetings that had occurred since the last MAA Board meeting and presented a preliminary financial analysis of Colonial. The MAA Board discussed a proposed draft non-binding term sheet, as well as Colonial’s non-core assets, operating strategy and potential synergies that could result from the proposed combination with Colonial. Representatives from Goodwin Procter then discussed legal matters surrounding the term sheet with the MAA Board, including board composition, proposed conditions precedent to closing and mutual non-solicitation of competing transactions.
Also on December 4, 2012, the Nominating and Corporate Governance Committee of the MAA Board held a meeting to discuss the potential composition of the Combined Corporation’s board of directors in a proposed transaction with Colonial and a potential waiver of the MAA Board’s age limitation for General John S. Grinalds so that he could remain a member of the MAA Board for an additional year to assist in matters related to the proposed strategic transaction with Colonial.
On December 10, 2012, the MAA Board held a special telephonic meeting with members of senior management and representatives from J.P. Morgan, Goodwin Procter and Baker Donelson. Representatives of J.P. Morgan presented materials to the MAA Board containing, among other things, preliminary financial analyses relating to a combination between MAA and Colonial. The MAA Board then discussed various aspects of a proposed non-binding term sheet with Colonial. Following the discussion, the MAA Board authorized Mr. Bolton to deliver the non-binding term sheet to Colonial, proposing an exchange ratio of 0.340 of a share of MAA common stock per outstanding Colonial common share.
On December 11, 2012, MAA submitted the non-binding term sheet to Colonial, which provided for, among other things, an exchange ratio of 0.340 of a share of MAA common stock per outstanding Colonial common share and that the Combined Corporation would retain the MAA name and management team.
Also on December 11, 2012, Messrs. Bolton and Lowder met in Birmingham to discuss the material terms of the non-binding term sheet and to explain the rationale for those terms. Following the meeting, Mr. Bolton provided a written update to the MAA Board regarding his conversation with Mr. Lowder.
On December 12, 2012, at MAA’s and Colonial’s request, representatives from J.P. Morgan and BofA Merrill Lynch met to discuss the proposed financial terms presented by MAA to Colonial, including a review of financial metrics.
On December 16, 2012, the Colonial Board held a special telephonic meeting with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. The Colonial Board reviewed and discussed the proposed strategic combination with MAA as well as the MAA proposal received on December 11th. BofA Merrill Lynch discussed with the Colonial Board, among other things, financial matters relating to Colonial and financial terms and other aspects of MAA’s proposal. During this meeting, the Colonial Board reviewed certain valuation approaches utilized by MAA and Colonial, including assumptions regarding, among other things, anticipated growth and expected synergies. The Colonial Board members also reviewed and discussed a proposed
response to MAA’s exchange ratio proposal. In addition, the Colonial Board members discussed that, under the MAA proposal, MAA’s management would have responsibility for management of the Combined Corporation and MAA’s board members would constitute a majority of the initial members of the board of directors of the Combined Corporation. Following discussion, the Colonial Board determined to propose an alternative exchange ratio of 0.370 of a share of MAA common stock for each outstanding Colonial common share, which reflected an implied value of approximately $23.40 per Colonial common share as of December 14, 2012.
On December 17, 2012, Colonial submitted a counterproposal to MAA, which provided for, among other things, an exchange ratio of 0.370 of a share of MAA common stock per outstanding Colonial common share.
On December 17, 2012 and December 19, 2012, Messrs. Bolton and Lowder met both in person in Memphis and by telephone to discuss the terms of Colonial’s counterproposal.
On December 19, 2012, the MAA Board held a special telephonic meeting with members of senior management and representatives from J.P. Morgan, Goodwin Procter and Baker Donelson. Mr. Bolton summarized for the MAA Board the meetings and discussions that had occurred since the previous MAA Board meeting and reviewed the counterproposal received from Colonial. The MAA Board then discussed the terms of Colonial’s counterproposal, including its assumptions and exchange ratio. Mr. Bolton also discussed the factors considered in establishing the exchange ratio and emphasized the need for any potential transaction with Colonial to create value for MAA shareholders. Representatives from J.P. Morgan next presented a preliminary financial analysis of the counterproposal and an analysis of the proposed transaction at different exchange ratios. The MAA Board then discussed various exchange ratios that would create value for MAA shareholders. The MAA Board then formally authorized Mr. Bolton to continue discussions with Colonial.
On December 20, 2012, Mr. Bolton delivered to Mr. Lowder a letter in response to Colonial’s counterproposal outlining the strategic rationale for the proposed transaction and providing for an exchange ratio of 0.349 of a share of MAA common stock per outstanding Colonial common share.
On December 21, 2012, the Colonial Board held a telephonic meeting, with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, Mr. Lowder summarized his recent discussions with Mr. Bolton and MAA’s December 20th written response. The Colonial Board members discussed MAA’s written response, including MAA’s rationale in support of its exchange ratio proposal and synergy assumptions included in such written response. BofA Merrill Lynch discussed with the Colonial Board, among other things, financial terms of the MAA proposal, the relative contributions of Colonial and MAA to the Combined Corporation and certain related financial matters. During this discussion, the legal advisors discussed with the Colonial Board certain fiduciary considerations in the context of the Colonial Board’s consideration of a potential strategic combination transaction. The Colonial Board also discussed various alternative exchange ratios and resulting implied premiums and authorized Mr. Lowder to propose an exchange ratio of 0.360 of a share of MAA common stock for each outstanding Colonial common share, which reflected an implied value of approximately $23.25 per Colonial common share as of December 20, 2012.
On December 23, 2012, Mr. Lowder delivered to Mr. Bolton Colonial’s revised counterproposal, which provided for an exchange ratio of 0.360 of a share of MAA common stock per outstanding Colonial common share.
On December 27, 2012, the MAA Board held a special telephonic meeting with members of senior management. Mr. Bolton reviewed the events that had occurred since the previous MAA Board meeting and reviewed Colonial’s counterproposal delivered on December 23, 2012. The MAA Board discussed the changed assumptions reflected in Colonial’s counterproposal and resulting impact on value for MAA shareholders. Mr. Bolton then discussed the factors considered in establishing the exchange ratio and discussed the due diligence that would be conducted to evaluate the underlying assumptions. Mr. Bolton then discussed with the MAA Board a range of exchange ratios that would provide sufficient value to MAA shareholders. After the discussions, the MAA Board authorized Mr. Bolton to continue discussions with Colonial.
Also on December 27, 2012, Messrs. Bolton and Lowder spoke by telephone. Messrs. Bolton and Lowder discussed Colonial’s counterproposal from December 23, 2012 and Mr. Bolton proposed an exchange ratio of 0.3545 of a share of MAA common stock per outstanding Colonial common share, reflecting the midpoint between the 0.349 exchange ratio last proposed by MAA and the 0.360 exchange ratio last proposed by Colonial. Mr. Lowder informed Mr. Bolton that, based on the discussions with the Colonial Board, Colonial was not in a position to proceed with further discussions regarding a possible strategic transaction based on MAA’s proposal, and discussions were terminated.
Between early January 2013 and late March 2013, Colonial’s management team and financial advisor received several unsolicited inquiries via telephone and e-mail from third parties inquiring whether Colonial had an interest in considering a strategic transaction. None of these unsolicited inquiries included a proposed price or price range or other proposed terms of a potential transaction or, except in the case of Company B and Company D, resulted in any further discussions. The Colonial Board or, as noted below, the executive committee of the Colonial Board, herein referred to as the Colonial Executive Committee, considered and discussed each of these communications and, except with respect to Company B and Company D, decided, given the absence of any proposed terms and the uncertainty regarding any such party’s ability to complete such a strategic transaction with Colonial, not to pursue discussions with the inquiring parties.
On January 21, 2013, Mr. Bolton provided a written update to the MAA Board regarding the proposed strategic combination transaction with Colonial. Mr. Bolton advised the MAA Board that no further discussions had been held with Colonial since December 27, 2012. Mr. Bolton summarized MAA’s most recent proposal to Colonial and the key metrics supporting that proposal. Mr. Bolton advised that, although the opportunity could re-emerge later, MAA would not actively pursue the proposed strategic transaction with Colonial at that time.
On January 29, 2013, Colonial’s financial advisor received an unsolicited written inquiry from the chief executive officer of a real estate management company, referred to in this joint proxy statement/prospectus as “Company D,” indicating that Company D was interested in exploring a potential all-cash acquisition of Colonial. The unsolicited written inquiry indicated that the all-cash amount would be at a premium to Colonial’s then current stock price, but did not include a proposed price, price range or other specific terms of a potential transaction. On or about January 30, 2013, Mr. Lowder received and returned an unsolicited telephone call from the chief executive officer of Company D. During the telephone call, the chief executive officer of Company D inquired whether Colonial was interested in discussing a potential sale of Colonial. Given the preliminary nature of Company D’s expression of interest, including the absence of a proposed price, price range or other specific terms in Company D’s January 29th letter, as well as concerns regarding Company D’s ability to structure and complete an acquisition of Colonial, Colonial did not engage in further substantive discussions with Company D regarding a possible sale transaction at that time. On March 8, 2013, Colonial received an unsolicited joint letter from Company D and a private equity investment firm aligned with Company D, which letter expressed interest in exploring a potential all-cash acquisition of Colonial at a premium to Colonial’s then current stock price. The March 8th letter did not include a proposed price, price range or other specific terms of a potential transaction. As described further below, the Company D expression of interest was reviewed and considered by the Colonial Executive Committee on March 12, 2013.
During February 2013, Messrs. Bolton and Lowder spoke briefly by telephone and conveyed to each other that their respective companies had not considered a proposed strategic combination transaction of the companies since negotiations had ceased in late 2012.
On February 22, 2013, Mr. Lowder received an unsolicited telephone call from the chief financial officer of Company B, expressing Company B’s interest in a potential acquisition of Colonial in an all-cash transaction at a premium to Colonial’s then current stock price. The chief financial officer of Company B indicated that Company B would not involve third party partners in the transaction, and that Company B would have a preliminary price or price range to share with Colonial within a few weeks. In addition, Company B’s chief financial officer proposed that Company B and Colonial enter into a confidentiality agreement in order to proceed with negotiations for a potential transaction.
On February 26, 2013, Mr. Bolton sent a regular monthly update to the MAA Board regarding the possibility of increased REIT mergers and acquisitions activity generally and provided the MAA Board with an update on the conversation that Mr. Bolton had with Mr. Lowder.
On or about March 11, 2013, Mr. Lowder and another Colonial employee met over dinner with Mr. Bolton during an industry conference. During this dinner, Mr. Lowder and Mr. Bolton discussed certain matters related to the industry in general, but did not discuss the prior discussions between the two companies regarding a potential strategic combination transaction.
On March 12, 2013, the Colonial Executive Committee held a telephonic meeting with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, Mr. Lowder discussed with the Colonial Executive Committee the various unsolicited inquiries received from third parties since January 2013, including the inquiries from Company D and Company B. In addition, Mr. Lowder reported on his dinner meeting with Mr. Bolton the previous evening. The Colonial Executive Committee members then engaged in a discussion regarding Colonial’s strategic direction and the expressions of interest from each of Company D and Company B. The Colonial Executive Committee members also engaged in a discussionnegotiations regarding valuation and key transaction terms during the differences between an all-cash sale transactionsame period of the type proposed by Company D and Company B and a stock-for-stock business combination transaction of the type previously discussed with MAA. During this discussion, the legal advisors discussed with the Colonial Executive Committee certain fiduciary considerations pertaining to members of the Colonial Board when it receives an unsolicited expression of interest regarding a potential strategic combination transaction. BofA Merrill Lynch discussed with the Colonial Executive Committee, among other things, certain preliminary financial considerations with respect to Company D’s and Company B’s respective expressions of interest. Based on the preliminary nature of Company D’s expression of interest, as well as Colonial management’s familiarity with Company D and the private equity investment firm aligned with Company D, concerns regarding Company D’s ability to structure and complete an acquisition of Colonial, taking into account the private equity investment firm’s involvement, and the importance of certainty of closing and the ability to timely complete a transaction, the Colonial Executive Committee determined not to proceed withtime. At all times during these discussions, with Company D at that time. Based on Colonial management’s familiarity and experience with Company B, particularly with respect to executing large, complex transactions, and views regarding Company B’s ability to structure and complete a transaction with Colonial, the Colonial Executive Committee authorized Mr. Lowder to inform Company BParty A stated that it would need to submit its proposalnot participate in writing, and include a price and other material terms and details regarding equity and debt sources, timing and diligence requirements, if it was to be considered by the Colonial Board, noting that certaintyany form of closing and the ability to move quickly to complete a transaction should be stressed to Company B. The Colonial Executive Committee also determined that, given that no written proposal had been submitted, Colonial would not, at that time, engage in negotiations with Company B regarding the termspre-signing auction process of its expression of interest or enter into a confidentiality agreement or exchange non-public information with Company B.
On March 13, 2013, Mr. Lowder, together with representatives of BofA Merrill Lynch, spoke by telephone with the chief financial officer of Company B. Mr. Lowder informed the chief financial officer of Company BPost Properties, but that it would needbe willing for the definitive merger agreement to submit its proposal in writing, and include a price and other material terms, including details regarding equity and debt sources, timing and diligence requirements, if it was to be considered by the Colonial Board. Mr. Lowder also stressed the importance of certainty of closing and the ability to quickly complete a transaction. The chief financial officer of Company B indicated that it intended to arrange for an insurance company to provide bridge financing, that Company B intended to fund 50% of the equity financing from an existing investment fund and involve several other third party investors to provide the remaining equity financing and that Company B was evaluating the existing covenants applicable to Colonial’s outstanding debt instruments to determine whether to seek to modify any of the covenants in connection with a potential transaction. The chief financial officer of Company B also stated that Company B would agree, in the event that Company B and Colonial ultimately entered into a definitive agreement for a sale transaction, to include in such definitive agreementcontain a provision, commonly known as a “go shop” provision,“go-shop,” that would allow Colonial an opportunityPost Properties to engage in a post-signing effort to solicit higher bids from potential acquirors. Members of senior management of Post Properties emphasized in these negotiations
On March 28, 2013, Mr. Lowder receivedthat a letter from Company B expressing Company B’sbuyer in any cash transaction not involving a pre-signing auction process would have to propose a price representing a full value for Post Properties’ assets and business, and a substantial premium to the current trading price of shares of Post Properties’ common stock. Following those negotiations, on July 3, 2015, Party A delivered a revised preliminary non-binding indication of interest in a potential acquisition of Colonial infor an all-cash transaction. The letter proposed that Company B would acquire all of the outstanding Colonial common shares and all outstanding limited partner interests in Colonial LPtransaction for $26.00$69 per share, which represented a 15%21.7% premium to the closing price of Colonialshares of Post Properties common sharesstock on July 2, 2015. The Party A offer was not contingent on any financing.
On July 6, 2015, the Post Properties Board held a special meeting with members of senior management, representatives of Post Properties’ outside counsel, King & Spalding LLP, referred to herein as King & Spalding, and representatives of J.P. Morgan, which had advised Post Properties in the past on certain financial matters, to discuss the initial indication of interest. Following this discussion, the Post Properties Board authorized members of senior management of Post Properties, King & Spalding and J.P. Morgan to continue discussions with Party A. The Post Properties Board further authorized Post Properties to enter into an exclusivity agreement with Party A.
On July 6, 2015, Post Properties signed an exclusivity agreement with Party A. The exclusivity agreement contained a provision commonly known as a “fiduciary out,” which would allow Post Properties to consider unsolicited proposals. Following the signing of the exclusivity agreement, representatives of King & Spalding and the legal counsel to Party A began negotiating the terms of a draft merger agreement and Party A continued legal, financial and property-level due diligence.
In late July 2015, Party A informed Post Properties that it would not be able to confirm the proposed acquisition price of $69 per share and that any additional offer would be expected to be materially lower than that amount. On July 27, 2015, the Post Properties Board held a special meeting with members of senior management and representatives from King & Spalding. Following discussion, the Post Properties Board determined not to proceed with further discussions with Party A at that time.
Following the conclusion of discussions with Party A, the Post Properties Board and members of senior management continued to review and assess Post Properties’ business, operations and financial performance.
In late January 2016, H. Eric Bolton, Jr., Chairman and Chief Executive Officer of MAA, and Mr. Stockert met in person at the J.P. Morgan Real Estate CEO conference in Deer Valley, Utah and, among other things, briefly discussed the possibility of a strategic transaction involving their two companies.
In early March 26, 2013. The letter also noted2016, Mr. Bolton contacted Mr. Stockert to discuss whether Post Properties would be interested in exploring a potential strategic combination transaction with MAA. As part of this conversation, Messrs. Bolton and Stockert discussed the potential strategic merits of such a transaction as well as the multifamily REIT sector generally.
On March 9, 2016, Messrs. Bolton and Stockert met in person in Atlanta, Georgia. At that Company B intendedmeeting, Mr. Bolton discussed the potential benefits of combining the two companies. Mr. Bolton shared an initial financial analysis with respect to capitalizevaluation. Mr. Bolton suggested an exchange ratio of 0.684 of a share of MAA common stock per outstanding share of Post Properties common stock, which represented an 11% premium over the trading price of Post Properties’ common stock at the time. Mr. Bolton, however, did not make a formal offer to pursue a transaction. Mr. Stockert discussed the initial overture from MAA with Robert C. Goddard, III, Chairman of the Post Properties Board, and Donald C. Wood, a member of the Post Properties Board and Chairman of the Post Properties Strategic Planning and Investment Committee.
On March 14, 2016, Mr. Stockert and Mr. Bolton met again briefly at a dinner of apartment REIT chief executive officers held annually in connection with the Citigroup Global Property Conference in Hollywood, Florida.
On March 22, 2016, the MAA Board held a regular quarterly meeting in Memphis, Tennessee with members of MAA senior management. During the meeting, Mr. Bolton informed the directors of his preliminary conversations with Mr. Stockert regarding a potential strategic transaction with Post Properties and discussed the initial financial analysis conducted by MAA senior management with respect to valuation.
During the week of March 21, 2016, following the industry meeting, Mr. Stockert called Mr. Bolton to communicate that for Post Properties to consider any transaction with MAA, Post Properties would need to be convinced that the transaction throughwas strategically important to MAA and that the MAA Board was committed to the transaction. In addition, Mr. Stockert emphasized that the evaluation of any transaction would need to be accomplished expeditiously and without disruption to Post Properties’ business, and that any exchange ratio would take into account the relative net asset values of the two portfolios. Mr. Stockert further communicated that any decision by Post Properties to enter into serious discussions regarding a strategic transaction would be ultimately based on price and value, lack of disruption to the business, certainty to close, lack of conditionality and a thorough review from the Post Properties Board. Mr. Bolton responded that MAA would keep these factors in mind as MAA continued to evaluate a potential strategic transaction with Post Properties.
On May 17, 2016, the MAA Board held a regular quarterly meeting in Memphis, Tennessee with members of MAA senior management. At this meeting, Mr. Bolton summarized his communications with Mr. Stockert and reviewed the potential strategic merits of a combination with Post Properties. The MAA Board discussed, among other things, the potential fit of equity (including roll-over equitythe portfolios, the two companies’ complementary business strategies, potential operating and cost synergies, increased diversification of the portfolio and other potential benefits and challenges.
On June 29, 2016, Mr. Stockert and Mr. Bolton met again in Atlanta, Georgia. Mr. Bolton indicated he had discussed a potential strategic transaction with Post Properties with the MAA Board and that the MAA Board saw the strategic merit of the combination. Mr. Bolton outlined the potential benefits of the combination, including the fact that the combined company would be the leading apartment REIT in the Sunbelt region, may benefit from existing limited partnersan improved market and product mix and could be better positioned to achieve improved returns throughout future economic and real estate cycles. Mr. Bolton also provided financial analysis that MAA had prepared regarding the potential combination and again proposed an exchange ratio of Colonial LP), new mortgage debt0.684 of a share of MAA common stock per outstanding share of Post Properties common stock, which represented a 20% premium over the then-current trading price of Post Properties common stock.
Mr. Stockert again called Mr. Goddard and Mr. Wood to discuss the conversation between Mr. Stockert and Mr. Bolton, including the proposed exchange ratio. As part of the evaluation of the proposal, Messrs. Stockert, Goddard and Wood agreed that Mr. Stockert should continue engaging with Mr. Bolton. Messrs. Goddard and Wood directed Mr. Stockert to negotiate with Mr. Bolton for a higher exchange ratio. Messrs. Goddard and Wood told Mr. Stockert that they were interested in continuing discussions with Mr. Bolton to better understand the MAA Board’s depth of commitment to the potential strategic transaction with Post Properties and the assumptionvalue and benefits to Post Properties and its shareholders of Colonial’s existing debt,such a transaction.
On July 6, 2016, Mr. Stockert called Mr. Bolton to convey that existing limited partners of Colonial LPfor any transaction to progress, MAA would have to offer a higher exchange ratio and would have to convince the optionPost Properties Board of the MAA Board’s commitment to roll-over their interests, in a transaction intendedthe transaction. In addition, MAA would need to constitute a tax-deferred exchange, into unitsdemonstrate that it was prepared to move through an expeditious and non-disruptive due diligence process and negotiation of a reconstituted partnership or similar entity,merger agreement.
On July 7, 2016, Mr. Bolton called Mr. Stockert and indicated that for MAA to offer a higher exchange ratio, MAA would need additional information about overhead, property operating cost, and development and redevelopment/renovation activity.
On July 8, 2016, Mr. Stockert called Mr. Bolton to discuss the potential strategic transaction. Mr. Stockert said that for Post Properties to be willing to share non-public information and to continue discussions, MAA would need to offer an exchange ratio above 0.70 of a share of MAA common stock per outstanding share of
Post Properties common stock and would have to demonstrate both the commitment of the MAA Board to the strategic transaction and that Company B’s proposalMAA was subjectprepared to satisfactory completionmove quickly to conclude due diligence and finalize the terms of diligence (for which Company B requested a 60-day exclusivity period) and negotiation and execution of definitive documentation. The lettermerger agreement. Mr. Bolton told Mr. Stockert that additional information from Post Properties would be helpful to evaluate whether an increased exchange ratio was possible. Mr. Stockert responded that he did not address severalbelieve sharing confidential information was necessary at this stage and that Post Properties’ publicly available information was sufficient for MAA to evaluate an increase. Mr. Stockert also reiterated that execution and certainty to close would be important factors in the decision of the significant termsPost Properties Board as to whether to pursue a potential combination. Mr. Bolton told Mr. Stockert that the MAA Board would be meeting on July 13, 2016 and conditionsthat he would provide Mr. Stockert with additional information following that meeting.
On July 13, 2016, the MAA Board held a special meeting with members of MAA senior management and representatives of Citi, MAA’s financial advisor, and Goodwin Procter LLP, referred to herein as “Goodwin,” MAA’s primary counsel. Mr. Bolton first provided background information on the potential strategic combination transaction with Post Properties. Representatives from Citi next presented a preliminary financial analysis relating to the potential strategic transaction, highlighting the proposed structure of the deal and a potential range of exchange ratios for the transaction that included a discussion of the implied premium to Post Properties based on MAA’s current stock price, the current trading premium and a comparison to current net asset value of both companies, as well as the potential total synergies achievable from the transaction. Representatives from Citi also reviewed the pro forma impact for the proposed transaction and discussed on March 13thvarious pro forma financial and leverage metrics relating to the combined company and provided the MAA Board with Company B’scustomary relationship disclosure regarding MAA and Post Properties. The MAA Board also discussed, among other things, the potential implications of a 100% stock transaction versus a combination stock and cash transaction, the assumptions underlying Citi’s preliminary financial analysis, and the strategic rationale of a potential transaction including the investment concentration impact for individual markets, new Post Properties markets that would be added to the MAA portfolio, and the increased levels of development from the Post Properties development portfolio and related risks. The MAA Board then discussed the Post Properties Series A preferred stock, branding opportunities, the expected impact of the transaction to MAA’s credit rating, the recent departure of Post Properties’ chief financial officer, potential culture issues, and other strategic benefits and risks of the proposed transaction. The MAA Board also discussed with Goodwin the appropriate number of potential board seats for Post Properties in a combined company and next steps in exploring a strategic combination transaction with Post Properties. The MAA Board then authorized Mr. Bolton to pursue a non-binding letter of intent with Post Properties.
On July 13, 2016, following the MAA Board meeting, Mr. Bolton called Mr. Stockert and communicated that the MAA Board was supportive of a potential strategic transaction with Post Properties. Mr. Bolton told Mr. Stockert that the MAA Board authorized him to offer an exchange ratio of 0.70 of a share of MAA common stock per outstanding share of Post Properties common stock. Mr. Bolton emphasized that MAA believed at such time that the potential combination would create approximately $19.5 million in synergies. Mr. Bolton told Mr. Stockert that MAA could deliver a draft term sheet to Post Properties within a day and could be in a position to deliver a draft merger agreement within a week. Mr. Bolton also communicated that MAA could complete due diligence and negotiate a transaction within three weeks. In addition, Mr. Bolton communicated his assumption that, following the merger, Post Properties would obtain two of twelve seats on the MAA Board. Mr. Stockert responded that he would consider this proposal and discuss with the Post Properties Board at a meeting scheduled for July 22, 2016.
On July 21, 2016, in light of the fact that Post Properties and J.P. Morgan had not entered into a formal engagement letter, Post Properties and J.P. Morgan signed a letter agreement that provided customary indemnification to J.P. Morgan for the advice it would provide to the Post Properties Board at the upcoming Post Properties Board meeting on July 22, 2016. J.P. Morgan also provided the Post Properties Board with customary relationship disclosure regarding MAA.
On July 22, 2016, the Post Properties Board held a special meeting with representatives of King & Spalding and J.P. Morgan in attendance. Mr. Stockert outlined MAA’s proposal, including the proposed exchange ratio,
and discussed other conversations he had previously engaged in with other potential suitors. In particular, Mr. Stockert discussed a publicly traded apartment REIT, referred to herein as Party B. Mr. Stockert reminded the Post Properties Board that Post Properties had engaged in discussions with Party B in the past both during Post Properties’ publicly-announced auction process several years prior and again after the conclusion of the auction process. Mr. Stockert also reminded the Post Properties Board that these discussions included preliminary discussions with respect to debt and equity sources or the inclusion of a “go shop” provision in definitive documentation.
On April 2, 2013, Mr. Lowder, together with representatives of BofA Merrill Lynch, spoke by telephone with the chief financial officer of Company B. At Mr. Lowder’s request, the chief financial officer of Company B provided additional information regarding certain aspects of Company B’s March 28th letter, including with respect to Company B’s proposed debt and equity financing requirements and sources, Company B’s internal approval process, the proposed ultimate capital structure including Company B’s intention to engage a third party operator to manage Colonial’s properties, Company B’s lender due diligence requirements and timing. Company B’s chief financial officer notedvalue, but that CompanyParty B had identified a private company to operate the Colonial properties, but had not engaged outside legal and financial advisors regarding a possible transaction with Colonial, and confirmed Company B’s willingness to include a “go shop” provision in the definitive transaction document relating to the acquisition.
On April 4, 2013, Mr. Lowder met with a representative of J.P. Morgan in Birmingham where they discussed the real estate capital markets generally, the asset sale environment, and the strategic transaction discussions between MAA and Colonial in late 2012. As part of that discussion, Mr. Lowder indicated that Colonial was moving forward with its current business strategy as a stand-alone company and, if MAA continued to havenever shown an interest in a strategic combinationtransaction that adequately valued Post Properties’ assets and business. In particular, Mr. Stockert noted that Post Properties had countered an initial proposal regarding a stock-for-stock merger with Party B a number of years ago, encouraging Party B to evaluate an exchange ratio based on relative net asset values, but that Party B had ceased communication and had not engaged with Post Properties again regarding a strategic transaction since that time. Mr. Stockert also discussed conversations he had held in the past two years with three private equity firms, none of which had indicated an interest in a transaction at levels approaching Post Properties’ internal estimates of net asset values and that there had been no further indication of any interest in a strategic transaction with Colonial, it should indicate that interest.
On April 8, 2013,Post Properties by Party A since July 2015. Representatives of King & Spalding then provided an overview of the Colonial Board held a telephonic meeting at which Mr. HardinPost Properties Board’s fiduciary duties. Representatives of J.P. Morgan discussed Post Properties’ and representativesMAA’s portfolio metrics and geography and discussed the relative share price performance of BofA Merrill LynchPost Properties, MAA, Party B and Hogan Lovells were present. During this meeting, Mr. Lowderthe multifamily REIT sector generally. Representatives of J.P. Morgan discussed with the ColonialPost Properties Board a preliminary financial analysis of a proposed business combination with MAA based on Post Properties’ then-current trading price and MAA’s proposal. In addition, representatives of J.P. Morgan discussed, based on public information, the financial impact of a proposed combination of MAA and Post Properties at various offer prices for Post Properties. Representatives of J.P. Morgan also discussed with the Post Properties Board an overview of certain strategic alternatives available to Post Properties, including but not limited to a transaction with MAA. As part of this discussion, J.P. Morgan reviewed with the Post Properties Board the various unsolicited inquiries received from third parties since January 2013, includinguniverse of potential strategic and financial buyers, their strategic fit with Post Properties and their likely interest (or lack thereof) in a transaction at the inquiries from Company Dvalue proposed by MAA.
During the July 22, 2016 Post Properties Board meeting, the Post Properties Board evaluated and Company Bconsidered, with the assistance of their legal and reportedfinancial advisors, the financial and other terms of MAA’s proposal, MAA’s ability and interest in a potential strategic transaction, the strategic fit associated with a combination of Post Properties and MAA (including the combined company becoming the leading apartment company in the Sunbelt region), the discussions with MAA to date, the proposed due diligence process, the universe of potential strategic and financial buyers, their potential strategic fit with Post Properties and their likely interest (or lack thereof) in a transaction at the value proposed by MAA, the potential limited universe of acquirors in the context of a cash sale and the realistic constraints on the discussiona cash acquiror by internal rates of these unsolicited inquiriesreturn and limits on leverage imposed by the Colonial Executive Committee during its March 8th meeting,financing markets, historic discussions with other potential bidders, and whether the exchange ratio in MAA’s acquisition proposal was at a sufficient level to warrant further conversation regarding a potential strategic transaction. The Post Properties Board also discussed certain strategic alternatives, including the Colonial Executive Committee’s reasons for deciding not(i) continuing to pursue discussions with Company D and to continue discussions with Company B. The Colonial Board then considered the following potential strategic alternatives: (1) continue to pursue Colonial’sPost Properties’ existing business strategy as an independent, stand-alone company and not engageengaging in any strategic transactionstransaction with any third parties; (2) continue to pursue Colonial’s existing business strategy as an independent, stand-alone company, but make certain adjustments to that business strategy to help further strengthen Colonial’s financial position, and not engage in any strategic transactions with any third parties; (3) explore aparty, (ii) exploring possible strategic combination transaction with MAA; or (4) explore a possiblecash sale transaction with Company B or another third party. BofA Merrill Lynch discussed with the Colonial Board, among other things, certain preliminary financial considerations in connection with such potential strategic alternatives. During this discussion, the legal advisors discussed with the Colonial Board certain fiduciary considerations pertaining to members of the Colonial Board in the context of considering strategic combination transactions and sale transactions, including the differences between an all-cash sale transaction of the type proposed by Company D and Company B and a stock-for-stock business combination transaction of the type previously discussed(iii) exploring other strategic combinations with MAA.public companies. The ColonialPost Properties Board also discussed the specific terms and conditions of Company B’s written expression of interest received on March 28th, including the matters discussed on April 2nd with Company B’s chief financial officer. Following this discussion, the Colonial Board authorizedinstructed Mr. LowderStockert to continue preliminary discussions
regarding a potential transaction with Company B. The Colonial Board also authorized Mr. Lowder to contactask MAA to determine whether MAA was interested in reengaging in discussions regardingevaluate a strategic combination transaction.
In addition, during the April 8, 2013 Colonial Board meeting, the Colonial Board established two separate committees with respect to consideration of a possible strategic transaction: (1) a transaction committee, herein referred to as the Colonial Transaction Committee, consisting of Messrs. T. Lowder, Bailey, Crawford and Spiegel, to help facilitate the exploration, evaluation and negotiation of possible strategic transactions; and (2) a separate committee, herein referred to as the Colonial Special Committee, consisting of the three trustees who did not own limited partner interests in Colonial LP—Messrs. Bailey, Crawford and Spiegel—to evaluate, oversee and negotiate, as necessary, any matters that may arise in connection with a strategic transaction which relate to the interests of limited partners in Colonial LP that are potentially not aligned with the interests of Colonial shareholders generally. The Colonial Board formed the Colonial Transaction Committee at this meeting to facilitate timely reaction and response to rapidly changing circumstances with multiple simultaneous discussions with MAA and Company B that may be more difficult to accomplish on a timely basis given the size of the full Colonial Board. The Colonial Board formed the Colonial Special Committee at this meeting given the uncertainty regarding potential conflicts that may arise depending on the actual transaction structure in the event the Colonial Board ultimately decided to pursue a strategic transaction.
Also on April 8, 2013, Mr. Bolton contacted Mr. Lowder by telephone to discuss reopening negotiations between MAA and Colonial regarding a potential strategic combination transaction.
On April 11, 2013, the MAA Board held a special telephonic meeting with members of senior management and representatives from J.P. Morgan, Goodwin Procter and Baker Donelson. Mr. Bolton summarized recent discussions between MAA and Colonial and provided an update on changes in share prices, financial guidance and third party net asset value analyses for MAA and Colonial. Representatives from J.P. Morgan then presented the MAA Board with an updated financial analysis for a proposed strategic transaction with Colonial (including, among other things, updated preliminary analyses reflecting changes in Colonial’s portfolio, including a number of asset sale transactions completed by Colonial) and an update on strategic and financial rationales for a potential combination. The MAA Board then discussed various issues, including, among others, potential exchange ratios as well as the due diligence review of Colonial being conducted. After the discussion, the MAA Board authorized the submission of a proposal to Colonial that provided for anhigher exchange ratio of up to 0.3600.715 of a share of MAA common stock per outstanding Colonialshare of Post Properties common share.stock. The Post Properties Board asked Mr. Stockert and Mr. Goddard to convene another meeting after receiving feedback from MAA. The Post Properties Board agreed it would be willing to enter into a confidentiality agreement with MAA to provide them with additional information to allow MAA to evaluate increasing the proposed exchange ratio. The Post Properties Board directed King & Spalding to draft a confidentiality agreement with MAA. The Post Properties Board also directed King & Spalding to discuss the scope of potential due diligence with MAA.
On April 12, 2013,Later on July 22, 2016, following the Post Properties Board meeting, Mr. Stockert communicated the Post Properties Board’s proposal regarding a higher exchange ratio to Mr. Bolton contacted Mr. Lowder by telephone. During the course of such conversation, Mr. Lowder notedand communicated that Colonial had received an unspecified strategic transaction proposal or proposals.
Also on April 12, 2013,Post Properties would be willing to enter into a confidentiality agreement and share non-public information. Later that same day, Mr. Bolton provided a written update to the MAA Board to summarize his conversation with Mr. Lowder. Mr. Bolton advised the MAA Boardresponded that MAA would submitbe willing to proceed with a written proposalpotential strategic transaction
based on an exchange ratio of 0.3600.71 of a share of MAA common stock per outstanding Colonialshare of Post Properties common share.stock. Mr. Stockert responded that he would discuss this proposal with the Post Properties Board.
Also on July 22, 2016, representatives of King & Spalding provided a draft confidentiality agreement to Goodwin and MAA also provided members of senior management of Post Properties with a document request list for legal due diligence.
On April 13, 2013,July 23, 2016, representatives of Goodwin and representatives of King & Spalding discussed the scope of potential due diligence. Representatives of King & Spalding noted that they would expect any diligence efforts to be reciprocal given that Post Properties shareholders would own immediately following the transaction at least 30% of the surviving company.
On July 24 and 25, 2016, representatives of Goodwin and representatives of King & Spalding negotiated the terms of the confidentiality agreement, the draft of which provided by King & Spalding included a “standstill” provision that would prohibit MAA from engaging in certain transactions during an 18-month period. Among other items, Goodwin requested that the 18-month standstill fall away if Post Properties entered into a definitive agreement to sell the company to another party. After King & Spalding discussed the standstill provision with Mr. Bolton deliveredGoddard and Mr. Stockert, Post Properties agreed to this change. On July 25, 2016, Post Properties and MAA signed the confidentiality agreement.
On July 26, 2016, the Post Properties Board held a non-bindingspecial meeting to evaluate the July 22, 2016 proposal to Colonial providing, among other things, forfrom MAA that included an exchange ratio of 0.3600.71 of a share of MAA common stock per outstanding Colonialshare of Post Properties common share,stock. Representatives of King & Spalding and J.P. Morgan also attended. Mr. Stockert provided the retentionPost Properties Board with an overview of Messrs. BoltonMAA’s proposal. Representatives of J.P. Morgan discussed with the Post Properties Board its preliminary financial analysis of MAA’s proposal and Campbell as Chairmanhow the most recent proposal compared to MAA’s prior proposals and Chief Executive Officerto precedent stock-for-stock mergers. Representatives of King & Spalding gave a presentation regarding the Post Properties Board’s fiduciary duties. After these presentations, the Post Properties Board discussed the terms and Chief Financial Officer, respectively,implications of the Combined Corporation,proposal received from MAA. The Post Properties Board agreed that Post Properties should continue to move forward with discussions regarding the proposed strategic transaction and instructed Mr. Stockert to ask Mr. Bolton for a term sheet that included additional deal terms so that the Post Properties Board could more fully evaluate the proposal. The Post Properties Board directed representatives of King & Spalding to evaluate any term sheet sent by representatives of MAA, to discuss the key provisions with Mr. Stockert and J.P. Morgan and to negotiate the terms with representatives of MAA. Pursuant to the Post Properties Board’s direction, Mr. Stockert asked Mr. Bolton for a term sheet following the Post Properties Board Meeting.
Later on July 26, 2016, representatives of Goodwin provided a detailed term sheet to Post Properties that outlined material terms of the proposed strategic transaction. Among other items, the term sheet contemplated a 30-day exclusivity period foras a condition to MAA’s continued negotiations, between MAA and Colonial.
On April 16 and 17, 2013,coupled with a seven-day automatic extension unless affirmatively terminated by Post Properties or MAA. Pursuant to the Colonial Transaction Committee held telephonic meetings at whichPost Properties Board’s direction, King & Spalding discussed the key provisions of the term sheet with Mr. HardinStockert and representatives of BofA Merrill LynchJ.P. Morgan that same day. Among the provisions discussed were the exclusivity period, the no-shop covenant, termination rights and Hogan Lovellsfees and other deal protection terms. After those discussions, Mr. Stockert instructed King & Spalding to engage with Goodwin to better understand whether MAA would be willing to include a go-shop provision in the definitive merger agreement. Mr. Stockert directed King & Spalding to reach out to Goodwin to discuss including in the draft term sheet a provision that the definitive merger agreement would contain a go-shop provision and determined to discuss the proposed exclusivity terms with the Post Properties Board.
On July 27, 2016, representatives of King & Spalding contacted representatives of Goodwin to discuss key provisions of the term sheet. In particular, representatives of King & Spalding noted that the Post Properties Board would have to approve entering into any exclusivity arrangement. Representatives of King & Spalding
further noted that if Post Properties were present. Duringto consider exclusivity, it would be important to include a go-shop provision, a lower termination fee or an alternative deal protection structure that would allow for the submission of competing proposals by any interested parties following the signing of a definitive merger agreement with MAA. Representatives of Goodwin said that they would discuss these meetings,requests with MAA and did so on July 27, 2016.
On July 28, 2016, representatives of Citi contacted representatives of J.P. Morgan to communicate that MAA would be willing to discuss a potential two-tier termination fee structure, which would involve a lower termination fee being payable during an initial window and a higher termination fee being payable during the remainder of the period between signing and closing.
Later on July 28, 2016, representatives of Goodwin communicated to representatives of King & Spalding that MAA was unwilling to entertain any discussions regarding a go-shop as part of the deal structure, but that MAA would consider a two-tier termination fee structure. Representatives of Goodwin underscored that MAA expected that any lower termination fee would be payable during an initial window to provide any other interested parties an opportunity to make competing bids based on the lower termination fee but that once that window was over, it would not be extended for any reason. Representatives of Goodwin also suggested that the termination fee payable following the initial window would be an amount equal to approximately 4% of equity value. Representatives of Goodwin also indicated that MAA would be willing to discuss a single-tier termination fee at a level lower than 4% of equity value but higher than the lower fee envisioned by a two-tier termination fee structure. Representatives of Goodwin also underscored that MAA was willing to pursue a transaction quickly as an incentive for Post Properties to provide MAA with exclusivity. Representatives of Goodwin further communicated that they would be sending Post Properties a draft merger agreement later in the day.
Also on July 28, 2016, Mr. LowderBolton spoke with Mr. Stockert and emphasized that MAA was in a position to move quickly to complete due diligence and negotiate a merger agreement, but only if Post Properties was prepared to move forward and negotiate on an exclusive basis with MAA.
Also on July 28, 2016, Post Properties opened a virtual data room with due diligence information for MAA. Representatives of Goodwin sent an initial draft merger agreement to Post Properties and representatives of King & Spalding later that evening.
On July 29, 2016, MAA opened a virtual data room with due diligence information for Post Properties. That same day, the Post Properties Board held a special meeting with representatives of King & Spalding and J.P. Morgan in attendance. J.P. Morgan provided the Post Properties Board with an update on Colonial’s ongoing evaluation of Company B’s expression of interest. Mr. Lowder also reported on the receipt of a new proposal frommultifamily sector and MAA’s and Post Properties’ relative share price performance following earnings announcements by MAA and his discussions with Mr. Bolton regarding that proposal. The Colonial Transaction Committee engaged inother multifamily REITs. Representatives of King & Spalding provided a discussion regardingsummary of the terms of
MAA’s proposalproposed by MAA in the term sheet and Company B’s expressiondraft merger agreement provided by MAA. Representatives of interest and the advantages and disadvantages of the two types of transactions. This discussion included,King & Spalding highlighted, among other items, that MAA (i) was insistent on exclusivity, (ii) included in its draft merger agreement a discussion regarding the length of the relative diligence periods requested by Company B and MAA, the relative price proposed by Company B compared to the implied value of Colonial’s common shares based on the MAA exchange ratio proposal, the likelihoodprovision, commonly known as a “no-shop” provision, that each of Company B and MAA could complete its proposed transaction in a timely manner, andwould restrict the ability of ColonialPost Properties (but not MAA) to solicit other acquisition proposals after the signing of a definitive agreement, subject to certain exceptions for the Post Properties Board to consider unsolicited superior proposals, (iii) asked in the draft merger agreement for a termination fee payable by Post Properties to MAA if Post Properties materially breached its obligations under the no-shop covenant, if the Post Properties Board changed its recommendation or if Post Properties terminated the agreement to enter into a superior proposal and (iv) asked in the draft merger agreement for expense reimbursement if the Post Properties shareholders disapprove the merger transaction with MAA (even in a scenario where the failure of Post Properties’ shareholders to continueapprove the merger transaction with MAA is not followed by Post Properties’ acceptance of an alternative transaction, which circumstance is commonly known as a “naked no vote”), if the Post Properties Board changed its recommendation or if Post Properties terminated the agreement to participateenter into a superior proposal. Representatives of King & Spalding also noted that, despite what was included in the future growthdraft merger agreement, MAA was willing to discuss a two-tier termination fee structure. Representatives of King & Spalding also told the Combined Corporation if Colonial werePost Properties Board that Goodwin reiterated that MAA was unwilling to pursue a strategic combination transaction with MAA. The Colonial Transaction Committee discussed the significant additional timing likely involved in a transaction with Company B given the limited diligence conducted by Company B to date, that Company B had not yet hired outside legal or financial advisors and had relied on public information for purposes of formulating its latest expression of interest and the greater transaction execution risk associatedmove forward with a transaction with Company B givengo-shop provision included in the numbermerger agreement.
At the July 29, 2016 meeting, representatives of outside partners, the multiple layers of financing and the desire to engage a third party operator reflected in Company B’s expression of interest. During this discussion, the legal advisorsJ.P. Morgan discussed with the Colonial Transaction Committee membersPost Properties Board the Colonial Board member’s fiduciary duties infinancial aspects of the context of consideringcurrent proposal provided by MAA, and they further discussed strategic alternatives available to Post Properties including but not limited to the potential alternativestrategic transaction with MAA and a potential strategic transaction with Party B. The Post Properties Board discussed certain strategic alternatives, including (i) continuing to pursue Post Properties’ existing business strategy as an independent, stand-alone company and not engaging in any strategic transaction with any third party, (ii) exploring possible cash sale transactions including in the context of considering a stock-for-stockand (iii) exploring other strategic combination and an all-cash sale transaction.combinations with public companies. The Colonial Transaction CommitteePost Properties Board also discussed the advantages and disadvantages of agreeinga strategic transaction with MAA as opposed to exclusivity in the context of competing proposals,Party B, including the potential impact on price negotiations resulting from additional diligence review during an exclusivity period,benefits of becoming the risks associated with a lengthy diligence period and strategic considerations and appropriate timing for entering into exclusivity with a potential counterparty. The Colonial Transaction Committee also engaged in a discussion regarding the provisions included in MAA’s proposal, including the “force the vote” provision, the change of board recommendation provisions,leading Sunbelt apartment REIT and the circumstances in which a termination fee would be payable. Following these discussions, the Colonial Transaction Committee authorized Mr. Lowder to engage in additional discussions with Company B to seek to improve its proposed terms, including the proposedpotential benefits of increased diversification across submarkets and rental price points and obtain greater specificity regarding the terms of Company B’s proposal, including with respect to Company B’s debt and equity financing plans, as well as a shorter exclusivity period. The Colonial Transaction Committee also authorized Mr. Lowder to engage in additional discussions with MAA to seek to improve the exchange ratio and revise the composition of the Combined Corporation boardless exposure to more closely reflectvolatile markets, such as Houston and Washington, D.C. The Post Properties Board concluded that, taking into account all considerations, MAA was the relative ownership of MAA’s and Colonial’s shareholders inbest long-term strategic deal available for Post Properties.
At the Combined Corporation, as well as a shorter exclusivity period. The Colonial Transaction Committee requested that Mr. Lowder seek to obtain improved proposals from MAA and Company B in advance of Colonial’s regular, in person board and committee meetings on April 23-24, 2013 in Birmingham so that the Colonial Board would be in a position to consider and discuss such proposals from MAA and Company B.
On April 17, 2013, Mr. Lowder contacted Mr. Bolton by telephone. In response to MAA’s proposal from April 13, 2013, and based on the requests of the Colonial Transaction Committee, Mr. Lowder requested an increase in the exchange ratio, an increase in the number of proposed board members at the Combined Corporation for Colonial representatives and a shorter exclusivity period.
On April 18, 2013, Mr. Bolton provided a written update to the MAA Board summarizing the requests he received from Mr. Lowder on April 17, 2013.
On April 18, 2013, Mr. Lowder, together withJuly 29, 2016 meeting, representatives of BofA Merrill Lynch, spoke by telephoneJ.P. Morgan reviewed with the chiefPost Properties Board the constraints on potential financial officer of Company B requesting that Company B improve its expression of interest, includingand other cash buyers’ ability to achieve on a cash basis the cash price, and submit a proposal with greater detail regarding the terms of Company B’s proposal. The chief financial officer of Company B indicated that he had communicated with several outside investors in Company B, without identifying Colonial, and had received indications of interest from such investors in providing 50% or more of the equity financing for a transaction. He also stated that Company B intended to use commercial bank financing to fund a portion of the acquisition and to arrange for financing from Freddie Mac post-closing to replace the commercial bank financing, that Company B would obtain a debt commitment letter if requested, and that an unaffiliated public company operator was interested in a joint venture arrangement with Company B to acquire Colonial, noting that the partner desired to acquire outright certain properties representing approximately 30% of Colonial’ existing multifamily portfolio. The chief financial officer of Company B
indicated that Company B would provide a more detailed written proposal on or prior to April 23, 2013. In several brief telephone conversations between a representative of BofA Merrill Lynch and the chief financial officer of Company B attempting to arrange this April 18th discussion, the chief financial officer of Company B originally had suggested that the proposed price could be as high as $27.00 per share but subsequently noted thatvalue implied by the proposed price would be $26.50 per share because of, in the view of Company B’s investment committee, valuation considerations associated with certain land recorded on Colonial’s financial statements.
On April 22, 2013, the MAA Board held a special telephonic meeting with members of senior management. Mr. Bolton summarized his recent conversations with Mr. Lowder and the status of the discussions with Colonial. The MAA Board discussed responses to Colonial’s requests, including the0.71 exchange ratio board composition of the Combined Corporation and exclusivity period. The MAA Board then authorized Mr. Bolton to respond to Colonial with the same exchange ratio of 0.360 of a share of MAA common stock per outstanding Colonialshare of Post Properties common share,stock offered by MAA.
At the July 29, 2016 meeting, King & Spalding further reviewed the Post Properties Board’s fiduciary duties in the context of evaluating a revised proposal onpotential strategic transaction with MAA.
At the compositionJuly 29, 2016 meeting, representatives of J.P. Morgan and King & Spalding discussed with the Post Properties Board precedent pre-announcement market checks and go-shops in strategic transactions, as well as precedent termination fee levels and terms for go-shop provisions, including the publicly available data which highlighted the relatively low incidence of go-shops in strategic stock-for-stock mergers. Representatives of King & Spalding discussed with the Post Properties Board other details regarding deal protection and the related drafting of the boardno-shop covenant. Representatives of King & Spalding also discussed with the Post Properties Board how a two-tier termination fee structure would work, including the termination events that would trigger the payment of a termination fee and/or expense reimbursement. The Post Properties Board noted that, given the high profile of an announced transaction between Post Properties and MAA and the fact that the terms of the Combined Corporationmerger agreement would be publicly available, any potential bidder would have the knowledge and a request for a reduced exclusivitytime to be able to make, and reach agreement with Post Properties regarding, an unsolicited superior proposal during the period of 21 days fromtime in which a lower termination fee would be payable. The Post Properties Board discussed certain precedent transactions that contained two-tier termination fee structures and the date on which substantially all due diligence materials were provided by Colonial.
Later on April 22, 2013, Mr. Bolton delivered to Mr. Lowder MAA’s response to Colonial’s requests from April 17, 2013. MAA responded that it would not agree to an increase toamount of such termination fees. Following this discussion, the exchange ratio above 0.360Post Properties Board directed members of a share of MAA common stock per outstanding Colonial common sharesenior management, J.P. Morgan and proposed a revised board compositionKing & Spalding regarding parameters for the Combined Corporation along with a request for an exclusivity period of 21 days starting on the date on which substantially all due diligence materials were provided.
On April 23, 2013, Mr. Lowder received a letter and proposed term sheet from Company B’s chief financial officer. In the letter, Company B proposed to acquire all outstanding Colonial common shares and all outstanding limited partner interests in Colonial LP for $26.50 per share in cash, which represented a 15% premium to the closing price of Colonial common shares on April 22, 2013. The letter also noted that Company B intended to capitalize the transaction through a combination of equity (including roll-over equity from existing limited partners of Colonial LP),negotiating deal protection generally, the inclusion of a joint venture partner, new mortgage debttwo-tier termination fee structure and the assumptionrelative amount of Colonial’s existing debt,the termination fees in such structure and which termination events should trigger the payment of a termination fee and/or expense reimbursement.
At the July 29, 2016 meeting, Mr. Stockert reiterated that existing limited partners of Colonial LP would have the optionhe understood that MAA had a strong desire for exclusivity and that MAA wanted to roll-over their interests, inquickly negotiate a transaction intended to constituteand commence further due diligence. The Post Properties Board discussed MAA’s proposed terms in detail and approved entering into a tax-deferred exchange, into units of a reconstituted partnership or similar entity,short-term exclusivity agreement and that Company B was requesting a 60-day exclusivity period to conduct diligence and negotiate definitive documentation. The letter noted that Company B’s proposal was notproceeding with negotiations over the near term, subject to MAA’s agreement to a financing contingency.two-tier termination fee with market terms generally consistent in amount and tenor to termination fees in transactions with go-shop provisions. The term sheet receivedPost Properties Board directed Mr. Stockert, King & Spalding and J.P. Morgan to continue working with MAA while the key terms were being negotiated and to pursue the negotiations of the exclusivity agreement and deal protection terms within the parameters the Post Properties Board had set. The Post Properties Board agreed that it would reconvene to discuss further if representatives of King & Spalding and representatives of Goodwin could not agree to market terms with respect to the two-tier termination fee structure.
Following the direction from Company Bthe Post Properties Board to continue working with MAA, representatives of King & Spalding revised the merger agreement. King & Spalding also notedcontacted Goodwin on July 29, 2016 to
communicate that thePost Properties’ willingness to enter into an exclusivity agreement and proceed quickly to negotiate a transaction potentially could be structured to provide Colonial LP unitholders the option to exchange their units for those of another publicly traded REIT. The term sheet further noted that Company B’s proposed lender had given assurance that Colonial’s portfolio could be financed and that the lender was prepared to assist with bridge financing, that closing would be conditioned on among other things, receiptMAA agreeing to the key terms of regulatory approvals and other standard conditions for Company B’s obligation to acquire a public company, that the definitive agreement would containtwo-tier termination fee structure.
On July 29, 2016, representatives of King & Spalding sent representatives of Goodwin a 30-day “go shop” provision and that Company B was anticipating a shareholder vote and closingrevised draft of the transaction on or before July 31, 2013. Company B also separately confirmed by e-mailexclusivity agreement and a proposal for a two-tier termination fee. The exclusivity agreement reduced the original 30-day proposal to Mr. Lowder on April 23, 2013 that Company B’s joint venture partner would agree to issue units in its operating partnership if requested.
On April 23, 2013, the Colonial Transaction Committee met in person at Colonial’s headquarters in Birmingham, with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present (in person or telephonically). During this meeting, Mr. Lowder provided an update on the status of discussions with MAA and Company B. Mr. Lowder informed the Colonial Transaction Committee of the updated information and proposals received from MAA and Company B.a period through August 15, 2016. The Colonial Transaction Committee engaged in a discussion regarding thekey terms of the two proposals. During this discussion,two-tier termination fee proposal made by Post Properties were as follows (i) a termination fee of 1.25% of equity value payable by Post Properties to MAA if (A) Post Properties terminated the legal advisors discussedmerger agreement to enter into a superior proposal made by a potential acquiror that submitted an acquisition proposal during the first 35 days after signing and Post Properties entered into a binding agreement in respect of such acquisition proposal within 60 days of signing or (B) MAA terminated the merger agreement in response to the Post Properties Board changing its recommendation in response to an acquisition proposal submitted by a potential acquiror during the first 35 days after signing and Post Properties entered into a binding agreement in respect of such acquisition proposal within 60 days of signing, (ii) a termination fee of 2.5% of equity value thereafter and (iii) no expense reimbursement under any circumstances. Representatives of Goodwin requested that representatives of King & Spalding also provide a markup of the no-shop section of the merger agreement so that MAA could evaluate that markup along with the Colonial Transaction Committee membersexclusivity letter.
Later on July 29, 2016, at the direction of the Post Properties Board, members’ fiduciary duties when considering a stock-for-stock strategic combination transaction andMr. Stockert communicated to Mr. Bolton that Post Properties would move forward on an all-cash sale transaction. Following this discussion, the Colonial Transaction Committee agreed to discuss the two proposals, and other potential strategic alternatives, with the Colonial Board at its board meeting on April 24, 2013.
On April 24, 2013, the Colonial Board held its regular, in person board meeting at Colonial’s headquarters in Birmingham with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present (in person or telephonically). During this meeting, Mr. Lowder updated the Colonial Board on the status of discussionsexclusive basis with MAA and Company B and the terms of each of MAA’s and Company B’s latest proposals. In addition, BofA Merrill Lynch updated the Colonial Board with respect to financial matters. The Colonial Board also engaged in a discussion regarding the terms of the two proposals and the various considerations discussed by the Colonial Transaction Committee during its meetings on April 16, 17 and 23. With respect to theif MAA proposal, the Colonial Board discussed, among other things, the strength of the MAA management team, MAA’s anticipated approach to Colonial’s development pipeline, potential synergies, timing considerations, and the proposed board composition of the Combined Corporation in light of the relative ownership of shareholders in the two companies and historical knowledge of the members of the Colonial Board of the current Colonial properties that would comprise a substantial portion of the Combined Corporation’s portfolio. With respect to Company B’s proposal, the Colonial Board discussed, among other things, that the price proposed by Company B was at a substantial premium to the then current Colonial share price, management’s belief that Company B was capable of executing a sale transaction of the type proposed, Company B’s willingness to arrange for a third party operator to provide a liquidity option to holders of limited partnership interests in Colonial LP who elect to roll-over their equity as contemplated in Company B’s term sheet. The Colonial Board also noted the less-developed nature of Company B’s proposal, the fact that Company B had not completed the same level of diligence as MAA and concerns of not being able to reach agreement on mutually acceptable terms with Company B with respect to a sale transaction due to matters outside Colonial’s and, in some cases outside Company B’s control, including the need for Company B to conduct diligence on Colonial, Company B’s need to obtain substantial third party equity and debt financing from multiple parties and the likely need for each provider of such equity and debt financing to conduct diligence on Colonial, and Company B’s intention to involve a joint venture partner which would require a separate negotiation. During this discussion, the legal advisors discussed with the Colonial Board the Colonial Board members’ fiduciary duties when considering a stock-for-stock strategic combination transaction and an all-cash sale transaction. The Colonial Board also discussed, with respect to each proposal, the risks associated with the pursuit of, but failure to consummate, a transaction, confidentiality considerations associated with a lengthy process, and the potential disruption to Colonial in the event of rumors and leaks and management’s distraction from continuing business activities, as well as the possibility of continuing discussions with both MAA and Company B, noting the difficulties with such approach given the separate requests for exclusivity. The Colonial Board also noted the importance of including appropriate flexibility in the definitive transaction agreement with either MAA or Company B to enable Colonial to respond to other bona fide acquisition proposals, including Company B’s willingness to include a “go shop” provision in the definitive transaction agreement, given the Colonial Board’s prior decision not to solicit proposals for other transactions due to the potential detrimental effects on Colonial’s business and the appropriateness of a mutual non-solicitation of competing transactions in a strategic combination transaction with MAA. Following this discussion and its evaluation of the two proposals, the Colonial Board authorized the Colonial Transaction Committee to continue negotiations with MAA and enter into exclusivity arrangements with MAA subject to MAA agreeing to a more balanced representation on the Combined Corporation board (based on the relative ownership of shareholders from the two companies) than that included in MAA’s last proposal and subject to MAA agreeing that Colonial board designees on the Combined Corporation board would be entitled to be re-nominated for at least two years following the combination to facilitate the integration and combination of the two companies.
On April 25, 2013, Mr. Lowder contacted Mr. Bolton by telephone. In response to Mr. Bolton’s proposal from April 22, 2013, Mr. Lowder indicated, on behalf of Colonial, that Colonial was preparedwere willing to agree to an exchange ratioa reasonable two-tier termination fee structure. Mr. Bolton communicated that MAA was in a position to complete negotiations and due diligence by August 15, 2016.
On July 30, 2016, pursuant to Goodwin’s request, representatives of 0.360King & Spalding sent a markup of the no-shop provisions of the merger agreement to Goodwin. Among other items, the King & Spalding markup made the no-shop binding on MAA in addition to Post Properties. Representatives of King & Spalding and Goodwin continued to negotiate the language of the exclusivity letter that same day.
On July 31, 2016, representatives of Goodwin sent a share of MAA common stock per outstanding Colonial common sharecounterproposal on the two-tier termination fee and a 21-day exclusivity period, but requested that the board of directorsrevised markup of the Combined Corporation consistno-shop provision to representatives of 12 directors, including seven directors fromKing & Spalding. The counterproposal contained the following terms (i) a termination fee of 1.625% of equity value payable by Post Properties to MAA Board and five directors fromif (A) Post Properties terminated the Colonial Board.
On April 26, 2013, Mr. Bolton providedmerger agreement to enter into a written update to the MAA Board. Mr. Bolton summarized his telephone call with Mr. Lowder from April 25, 2013, and explained that the Colonial Board was prepared to begin detailed diligence, subject to resolution of board composition matters.
Also on April 26, 2013, one of the independent trustees of the Colonial Board received an email from a business acquaintance inquiring whether Mr. Lowder was interested in speaking with a former employee of the business acquaintance. The Colonial Board member subsequently learned that the former employee was now employedsuperior proposal made by a partypotential acquiror that previously had madesubmitted an unsolicited verbal inquiry regarding a transaction to acquire Colonial. On May 5, 2013,acquisition proposal during the Colonial Board member responded by e-mail stating that he had passed alongfirst 21 days after signing or (B) MAA terminated the e-mail inquiry to Mr. Lowder. Neither the business acquaintance nor the former employee contacted the Colonial Board member or Mr. Lowder further. Given the status of negotiations with MAA, and the non-solicitation provision includedmerger agreement in the term sheet signed by Colonial and MAA on May 2, 2013, as discussed below, as well as the speculative nature of the inquiry, Mr. Lowder did not contact the former employee.
Later on April 26, 2013, the Colonial Transaction Committee held a telephonic meeting with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, the Colonial Transaction Committee discussed the terms and conditions included in the non-binding term sheet included as part of MAA’s April 22nd written proposal. Following discussion, the Colonial Transaction Committee authorized Mr. Lowder to prepare and deliver to MAA a written response to the termsPost Properties Board changing its recommendation in response to an acquisition proposal submitted by a potential acquiror during the first 21 days after signing, (ii) a termination fee of 3.8% of equity value thereafter, (iii) expense reimbursement up to a cap of $10 million payable by either party to the other party whenever a termination fee would be payable and conditions included in(iv) the non-binding term sheet.no-shop provision would be binding on Post Properties but not MAA.
On April 29, 2013, at Colonial’s request, representatives from BofA Merrill Lynch separately contacted representatives from JP Morgan and Goodwin Procter regarding Colonial’s views with respectAugust 1, 2016, pursuant to the compositionPost Properties Board’s direction, representatives of King & Spalding distributed a markup of the Combined Corporation’s boardmerger agreement and an issues list to Post Properties and J.P. Morgan. Representatives of directors.
Also on April 29, 2013,King & Spalding discussed the MAA Board held a special telephonic meetingrevised two-tier termination fee proposal with members of senior management of Post Properties and representatives fromof J.P. Morgan Goodwin Procterthat afternoon, including a discussion on the market data for the size of termination fees and Baker Donelson. Thewhen such termination fees would be payable, the advantages and disadvantages of certain counterproposals that Post Properties could make to MAA Board discussed the board composition of the Combined Corporation, including the proposed number of directors of the Combined Corporation from the Colonial Board taking into account the negotiated exchange ratio of 0.360 of a share of MAA common stock per outstanding Colonial common share. The MAA Board then authorized Mr. Boltonand next steps with respect to accept Colonial’s proposal that the Combined Corporation’s board of directors consist of no more than seven directors from the MAA Board and no more than five directors from the Colonial Board.timing.
Later on April 29, 2013, Mr. Bolton delivered a revised proposal to Colonial, which provided for (i) an exchange ratioAugust 1, 2016, based on feedback from members of 0.360senior management of a share of MAA common stock per outstanding Colonial common share, (ii) a board of directors for the Combined Corporation consisting of 12 members, with seven directors from the MAA BoardPost Properties and five directors from the Colonial Board, and (iii) a 21-day exclusivity period beginning on the execution date of a term sheet. Following the delivery of the revised proposal, Mr. Bolton contacted Mr. Lowder by telephone to discuss the proposed board composition of the Combined Corporation.
On or about April 29, 2013, Mr. Lowder left a voicemail message for Company B’s chief financial officer informing him that the Colonial Board had determined not to pursue at this time further discussions with Company B regarding a possible strategic sale transaction.
Also on April 30, 2013, at Colonial’s request, BofA Merrill Lynch delivered Colonial’s revised non-binding term sheet to MAA. The term sheet requested, among other things, (i) that each Colonial designee to the Combined Corporation’s board of directors serve for two years, (ii) removal of a “force the vote” provision, (iii) removal of a requirement for a party to pay the other party’s expenses if its shareholders failed to approve the transaction, and (iv) removal of a requirement for a party to advise the other party of the terms of any competing proposals received during the exclusivity period.
Later on April 30, 2013, Mr. Bolton provided a written update to the MAA Board summarizing the status of negotiations relating to the composition of the Combined Corporation’s board of directors.
On May 1, 2013, Mr. Bolton contacted Mr. Lowder by telephone to discuss integration matters relating to the proposed strategic transaction, including the applicability of MAA’s mandatory retirement policy for its board members to the Combined Corporation’s board of directors.
Also on May 1, 2013, representatives of Goodwin Procter and Hogan Lovells met telephonically to discuss the “force the vote” provision in the draft non-binding term sheet.
Also on May 1, 2013, J.P. Morgan delivered to Colonial, on behalf of MAA, a revised non-binding term sheet. The term sheet provided for, among other things, (i) a requirement that Colonial’s nominees to the Combined Corporation’s board of directors satisfy MAA’s existing corporate guidelines and code of business conduct and ethics, (ii) the reinstatement of the requirement for a party to pay the other party’s expenses if its shareholders failed to approve the transaction, and (iii) the reinstatement of the requirement for a party to advise the other party of the terms of any competing proposals received during the exclusivity period. The revised term sheet sent by J.P. Morgan did not contain a “force the vote” provision.
Later on May 1, 2013, at the request of MAA and Colonial, representatives of J.P. Morgan and BofA Merrill Lynch met telephonicallywithin the parameters previously outlined by the Post Properties Board, representatives of King & Spalding contacted representatives of Goodwin that evening to discuss certain matters relatingrelay the following proposal (i) a termination fee of 1.5% of equity value payable if (A) Post Properties terminated the merger
agreement to enter into a superior proposal made by J.P. Morgan earlier in the day, including the possibilitya potential acquiror that any new contractual arrangements intended to protect the income tax position of holders of limited partnership interests in Colonial LP, herein referred to as tax protection arrangements, may be requested for unitholders of Colonial LP in the strategic combination transaction and the requirement that a party would be required to advise the other party of the terms of any competingsubmitted an acquisition proposal during the exclusivity period.
On May 2, 2013, Mr. Bolton contacted Mr. Lowder telephonicallyfirst 35 days after signing or (B) MAA terminated the merger agreement in response to inquire whether any new tax protection arrangementsthe Post Properties Board changing its recommendation in response to an acquisition proposal submitted by a potential acquiror during the first 35 days after signing, which date, in each case, would be requestedsubject to extension periods to account for unitholdersany matching rights exercised by MAA, (ii) a termination fee of Colonial LP3.0% of equity value thereafter, (iii) expense reimbursement up to a cap of $10 million, which would be payable by either party in any situation where the strategic combination transaction. Mr. Lowder advised Mr. Bolton that any new tax protection arrangementstermination fee would needalso be payable, (iv) the no-shop provision would be binding on MAA in addition to Post Properties, (v) no termination fee or expense reimbursement would be discussed with the Colonial Special Committee.
On May 2, 2013, MAA and Colonial executed a term sheet that provided for, among other things, (i) an exchange ratio of 0.360payable in respect of a share of MAA common stock per outstanding Colonial common share, (ii) a board of directors fornaked no vote, (vi) the Combined Corporation consisting of twelve directors, seven of whomfiduciary out from the exclusivity provision would be designated initially by MAA and five of whom would be designated initially by Colonial, (iii) nomination of Colonial’s designees toremoved given the board of directorsshort duration of the Combined Corporationinitial exclusivity period (i.e., through August 15, 2016) and (vii) a monetary limit on the transactions in which MAA could engage during the 2014period between signing and 2015 annual meetings so long as each individual designee remained in compliance with MAA’s then existing corporate governance guidelines and code of business conduct and ethics, (iv) retention of Messrs. Bolton and Campbell asclosing.
Also on August 1, 2016, Post Properties signed the Chief Executive Officer and Executive Vice President and Chief Financial Officer, respectively, of the Combined Corporation, (v) a mutual non-solicitation provisionJ.P. Morgan engagement letter with respect to competing transactions, (vi) paymentthe proposed transaction.
Also on August 1, 2016, representatives of expensesGoodwin called representatives of King & Spalding to discuss the two-tiered termination fee proposal sent by King & Spalding earlier that day. At the outset of the call, representatives of Goodwin told representatives of King & Spalding that they were not calling to negotiate the proposal on MAA’s behalf; however, they were authorized to offer a party,counterproposal. Goodwin communicated that both of King & Spalding’s proposals regarding the amount of the two-tiered termination fee (1.5% of equity value during the initial period and 3.0% of equity value thereafter, plus expense reimbursement up to a specified amount, if such party’s shareholders failcap of $10 million in each case) were acceptable to approve the transaction, and (vii) a 21-day exclusivity period beginning on May 2, 2013.
On May 3, 2013, representatives fromMAA. Representatives of Goodwin Procter and Hogan Lovells met telephonicallyalso indicated that MAA would be willing to discuss tax matters relatedaccept two alternatives with respect to the transaction. During this discussion, Goodwin Procter inquired whether any new tax protection arrangementsinitial period for determining when the termination fee of 1.5% of equity value would be requestedpayable (i) 28 days from signing, which period would not be extended to account for unitholdersany matching rights exercised by MAA, or (ii) 21 days from signing, which period would be extended to account for any matching rights exercised by MAA. Representatives of Colonial LPGoodwin told representatives of King & Spalding that MAA would agree that the no-shop provision would be binding on both Post Properties and MAA. In addition, representatives of Goodwin proposed that MAA would be prohibited from engaging in transactions in excess of $1 billion in the strategic combination transaction. Hogan Lovells noted any new tax protection arrangements would needaggregate during the period between signing and closing. Representatives of Goodwin also asked for a reciprocal expense reimbursement up to be discusseda cap of $10 million in the event of a naked no vote from either Post Properties’ shareholders or MAA’s shareholders. Following this conversation with the Colonial Special Committee.
On May 3, 2013, Mr. Bolton provided a written update to the MAA Board. Mr. Bolton advised the MAA Board that a term sheet had been executed and a full diligence process was commencing.
Between May 3, 2013 and June 2, 2013, MAA and Colonial, together with their respective advisors, conducted due diligence reviews of each other.
On May 6, 2013, the Colonial Transaction Committee held a telephonic meeting, with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, Mr. Lowder updatedGoodwin, representatives of King & Spalding discussed the Colonial Transaction Committee on the status of negotiationsrevised proposal with MAA and related transaction matters.
On May 9, 2013, Messrs. Bolton and Campbell and Thomas L. Grimes, Jr., MAA’s Chief Operating Officer, met with Mr. Lowder, Paul F. Earle, Colonial’s Chief Operating Officer, and John P. Rigrish, Colonial’s Chief Administrative Officer and Corporate Secretary, in Memphis to discuss potential synergies from the proposed strategic combination transaction and matters relating to the integration of MAA’s and Colonial’s operations.
Also on May 9, 2013, Mr. Bolton sent an update to the MAA Board. Mr. Bolton explained that each company had commenced its diligence process. Mr. Bolton summarized his discussions with members of Colonial’s senior management regarding potential synergies and integration matters.
On May 13, 2013, members of senior management of Colonial and MAA met in Birmingham to discuss due diligence matters, including asset and other valuation matters and structural matters. Representatives of J.P. Morgan and BofA Merrill Lynch also attended this meeting.
On May 13, 2013, the Colonial Special Committee held a telephonic meeting, with representatives of Hogan Lovells present. During this meeting, the members of the Colonial Special Committee discussed matters relating to the proposed strategic combination transaction with MAA.
On May 13, 2013, the Colonial Transaction Committee held a telephonic meeting, with Mr. HardinPost Properties and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting,J.P. Morgan. Members of senior management of Post Properties told representatives of King & Spalding that the membersproposal from Goodwin was generally acceptable, subject to ultimate approval of the Colonial Transaction Committee discussed the status of negotiations with MAAdeal protection terms and other matters related to the proposed strategic combination transaction with MAA.
On May 14, 2013, the Colonial Board held a telephonic meeting, with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, Mr. Lowder provided an update on the status of negotiations with MAA and related transaction matters.
On May 14, 2013, Goodwin Procter distributed an initial draft of the merger agreement to Hogan Lovells and BofA Merrill Lynch. Overby the course of the next several weeks, Colonial and MAA, together with their respective legal and financial advisors, continued to negotiate the merger agreement and related transaction documentation, including the forms of voting agreement and the amended and restated limited partnership agreement of MAA LP.
On May 16, 2013, the Colonial Special Committee held a telephonic meeting, with representatives of Hogan Lovells and Hunton & Williams LLP, herein referred to as Hunton & Williams, present. During the meeting, the Colonial Special Committee discussed matters relating to the proposed strategic combination transaction with MAA and the proposed engagement of Hunton & Williams. Following discussion, the Colonial Special Committee retained Hunton & Williams as its outside legal advisor to provide advice to the Colonial Special Committee in its consideration of matters in which the interests of limited partners in Colonial LP potentially were not aligned with the interests of Colonial shareholders generally in accordance with the Colonial Special Committee’s mandate.
On May 20, 2013, the Colonial Special Committee held a telephonic meeting, with Mr. Hardin and representatives of Hunton & Williams present and representatives of Hogan Lovells present for part of the meeting. During this meeting, the members of the Colonial Special Committee discussed matters relating to the proposed strategic combination transaction with MAA.
On May 20, 2013, the Colonial Transaction Committee held a telephonic meeting, with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, representatives of Hogan Lovells provided an update on the terms of the MAA transaction. BofA Merrill Lynch discussed with the Colonial Transaction Committee financial terms and related financial matters regarding the proposed MAA transaction. The Colonial Transaction Committee also discussed the updated proposed terms as well as MAA’s proposal for those individuals that would enter into voting agreements in connection with the proposed
transaction. Following these discussions, the Colonial Transaction Committee instructed Hogan Lovells to prepare a revised draft of the merger agreement in accordance with the Colonial Transaction Committee’s guidance and to circulate the revised draft to MAA and its legal advisor.
On May 21, 2013, the Colonial Board held a telephonic meeting with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, BofA Merrill Lynch updated the Colonial Board regarding financial terms and related financial matters regarding the proposed MAA transaction. A representative of Hogan Lovells then updated the Colonial Board on the status of negotiations with MAA and the negotiation of terms and conditions related to the merger agreement. Following discussion, the Colonial Board concluded that discussions with MAA were progressing in an appropriate manner and unanimously agreed that the exclusivity period with MAA should be allowed to automatically renew for an additional 14 days in accordance with the provisions of the May 2, 2013 term sheet between Colonial and MAA.
On May 21, 2013, the MAA Board held a regular quarterly in person meeting with members of senior management and representatives from J.P. Morgan, Goodwin Procter and Baker Donelson. Mr. Bolton updated the MAA Board on the areas of focus for the proposed strategic combination transaction with Colonial, including the current valuation analysis of Colonial, potential synergies from the transaction, quality of earnings review by Ernest & Young, and the structure of the transaction to minimize costs, risks and exposure. Representatives from J.P. Morgan presented materials to the MAA Board relating to the status of the proposed transaction, the proposed financial terms of the transaction, J.P. Morgan’s preliminary valuation of Colonial and the pro forma impact of the proposed transaction to MAA. Representatives of J.P. Morgan then discussed the effect of the proposed strategic combination transaction on exposure to certain markets and the current performance of the REIT sector in general. The MAA Board then discussed issues relating to the proposed transaction, including the financial metrics of the Combined Corporation and potential transaction costs. The MAA Board also discussed the status of Colonial’s disposition of its non-core assets, including three non-multifamily properties with signed letters of intent and the Three Ravinia property, whichPost Properties Board; however, neither alternative was under contract for sale at a value close to MAA’s estimated value for the property. Following that discussion, representatives from J.P. Morgan then presented a preliminary valuation summary of MAA and Colonial that included analyses of trading comparables, net asset values, discounted cash flows and exchange ratios as well as earnings impact of the proposed transaction. Following J.P. Morgan’s presentation, representatives from Goodwin Procter presented material to the MAA Board relating to structuring considerations for the proposed transaction, the existence of dissenters’ rights for Colonial shareholders, the potential required approvals of equity holders of Colonial and Colonial LP and open points in the merger agreement. Representatives of Goodwin Procter then presented information to the MAA Board on certain legal points that were under discussion in connection with the proposed strategic combination transaction, summarized the due diligence materials received to date from Colonial’s counselacceptable with respect to the built-in-gaininitial period for determining when the termination fee of unitholders1.5% of Colonial LPequity value would be payable.
On August 2, 2016, representatives of King & Spalding sent MAA a summary of Post Properties’ response to MAA’s proposal. Post Properties requested that the initial period for determining when the termination fee of 1.5% of equity value would be payable would be 30 days, which period would be extended to account for any matching rights exercised by MAA. Later in the evening of August 2, 2016, representatives of Goodwin confirmed that the terms as proposed by representatives of King & Spalding were acceptable to MAA. Based on that communication, Post Properties and MAA signed an exclusivity agreement that would be applicable if Colonial requested new tax protection arrangements for these unitholders, discussed the need for waivers from certainexpire on August 15, 2016 but that would automatically renew every seven days unless Post Properties or MAA executives with respect to rights under existing employment agreements and equity awards, and summarized certain insurance policies. Finally, Mr. Bolton discussed with the MAA Board his opinion that the proposed strategic combination transaction was a compelling value creation opportunity for MAA shareholders, but highlighted that management and the MAA board needed to fully understand and explore risks relatinggave notice to the potential transaction. Followingother party that it was terminating the MAA board meeting, General John S. Grinalds retired from the MAA Board since he had reached the maximum director age contained in MAA’s existing corporate governance guidelines and code of business conduct and ethics and would not be standing for reelection to the MAA Boardagreement. That same day, at the annual meetingPost Properties Board’s direction, representatives of MAA shareholders to be held later that day.
Later on May 21, 2013, Hogan Lovells distributedKing & Spalding sent a revised draft of the merger agreement to Goodwin Procter and J.P. Morgan. Therepresentatives of Goodwin. Among other items, this revised draft provided for, among other things, (i) reciprocal interim operating covenants, (ii) an asymmetrical termination fee of $50 million for Colonial and $65 million for MAA in the eventthat following the merger, agreementPost Properties would obtain three of thirteen seats on the MAA Board, which increased board representation was subsequently terminatedlater agreed to by such partyMAA.
On August 4, 2016, representatives of Goodwin provided representatives of King & Spalding with an open issues list that set forth certain open issues with respect to enter into a Superior Proposal or in certain other limited circumstances, which is referredthe merger agreement. This list included comments
regarding King & Spalding’s revisions to (i) the provision restrictingrepresentations and warranties of both Post Properties and MAA, (ii) the abilitycovenant related to the conduct of a party to solicit other proposals afterbusiness of Post Properties and MAA between signing and closing, (iii) the signing of a definitive agreement, which is referred to as the non-solicitation provision,no-shop and employee matters covenants and (iv) the removal of a provision that allowed for limited flexibility in the structuretermination provisions of the transaction followingmerger agreement. Later that day, representatives of King & Spalding discussed the executionopen issues list with members of senior management of Post Properties. At Post Properties’ direction, representatives of King & Spalding called representatives of Goodwin to discuss the items contained on the list.
On August 5, 2016, representatives of Goodwin sent Post Properties and representatives of King & Spalding a revised draft of the merger agreement.
On May 22, 2013, Goodwin Procter circulated to Hogan Lovells an initial draft of a form of voting agreement for certain Colonial shareholders.
On May 22, 2013, the Colonial Special Committee held a telephonic meeting, withAugust 6, 2016, representatives of HuntonKing & Williams present. During this meeting, the members of the Colonial Special Committee discussed with Hunton & Williams matters relating to the proposed transaction with MAA. The Colonial Special Committee discussed the tax protection arrangements currently afforded to holders of limited partnership interests in Colonial LP, including the provisions in the existing limited partnership agreement of Colonial LP relating to Colonial LP’s consideration of the income tax considerations of limited partners of Colonial LP with respect to actions taken by the general partner of Colonial LP. The Colonial Special Committee also discussed MAA’s proposal that the existing limited partnership agreement of Colonial LP be used as the limited partnership agreement of the Combined Corporation’s operating partnership and tax protection arrangement structures generally. During this discussion, Hunton & Williams discussed with the Colonial Special Committee the members’ fiduciary duties under applicable law, the types of tax protection arrangements that could be provided to limited partners in an operating partnership and the tax protection arrangements, if any, provided in other merger transactions to limited partners in operating partnerships. Following discussion, the Colonial Special Committee determined that the mergers should be structured to provide that the limited partnership agreement for the Combined Corporation’s operating partnership contain substantially the same provisions as contained in the existing limited partnership agreement of Colonial LP including, in particular, for the benefit of limited partners in MAA LP after the partnership merger, the provision relating to Colonial LP’s consideration of the income tax considerations of limited partners of Colonial LP with respect to actions taken by the general partner of Colonial LP. The Colonial Special Committee did not identify any other significant potential conflicts between limited partners of Colonial LP and Colonial shareholders, based on the structure of the proposed MAA transaction, that the Colonial Special Committee believed were within its mandate from the Colonial Board.
On May 23, 2013, Mr. Bolton provided a written update to the MAA Board. Mr. Bolton summarized the remaining open points in the merger agreement as well as procedural and timing considerations for signing the merger agreement and announcing the proposed transaction.
Also on May 23, 2013, Goodwin Procter circulatedSpalding sent a revised draft of the merger agreement to Hogan LovellsMAA and BofA Merrill Lynch.representatives of Goodwin. The revised draft provided for,included, among other things, (i)revisions to the no-shop covenant related to the standard for the Post Properties Board’s fiduciary determination, a condition to closing that no more than a certain percentageremoval of Colonial shareholders exercise dissenters’ rights in connection with the proposed transaction, (ii) the deletion or modification of certain interim operating covenants applicable to MAA, (iii) a symmetrical termination fee (but a retention of $100 million for boththe expense reimbursement) that would be payable as a result of a material breach of the no-shop covenant and revisions to certain closing mechanics and closing conditions.
Throughout the week of August 7, 2016, MAA and Colonial, (iv) certain modificationsPost Properties continued to engage in mutual due diligence. Diligence efforts were largely completed by August 12, 2016 with confirmatory diligence finalized over that weekend.
On August 7, 2016, representatives of Goodwin sent Post Properties and representatives of King & Spalding a list of open issues on the non-solicitation provision,merger agreement. Representatives of King & Spalding discussed with representatives of Goodwin, among other items, the mechanics for an extension of closing at MAA’s election. Representatives of Goodwin and (v) a reinstatementrepresentatives of King & Spalding also discussed details of the provision that allowed for flexibilityno-shop covenant, the termination right and remedies in respect of a breach of the no-shop covenant and the contours of when the first-tier termination fee would be payable.
On August 8, 2016, Mr. Bolton and Mr. Stockert met in person in Atlanta, Georgia to discuss further synergies between the two companies and details of the employee covenants in the structuremerger agreement to provide each Post Properties employee who remains employed after the closing with certain compensation, benefits and severance payments for specified periods of time following the mergers. They also met with David Ward, Post Properties’ Executive Vice President and Chief Investment Officer, and conducted property visits. That evening, Mr. Bolton had dinner with Mr. Goddard and Mr. Stockert to discuss the transaction.
Also on August 8, 2016, representatives of King & Spalding and representatives of Goodwin discussed further the details of when the lower termination fee would be payable and the details of the transaction followingno-shop covenant and the executiontermination right and remedies in respect of a breach of the no-shop covenant. Later that day, representatives of Goodwin sent Post Properties and representatives of King & Spalding a revised draft of the merger agreement.
On May 23, 2013, the Colonial Transaction Committee held a telephonic meeting, with Mr. Hardin andAugust 9, 2016, representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, the Colonial Transaction CommitteeKing & Spalding discussed the status of negotiations with MAA, the revised draft merger agreement received from MAA and certain provisions therein, including the amount and structure of the termination fee and expense reimbursement amount and a proposed closing condition regarding dissenters’ rights under Alabama law. The Colonial Transaction Committee also discussed Colonial’s proposed response to the revised draft merger agreement received from MAA.
On May 24, 2013, representatives from Goodwin Procter and Hogan Lovells met telephonically to discuss open points relating to the merger agreement and the identities of the officers, trustees, directors and shareholders, as applicable, of MAA and Colonial who would sign voting agreements in connection with the proposed transaction. Hogan Lovells also circulated to Goodwin Procter a revised draft of the formmerger agreement with representatives of voting agreement forGoodwin to clarify certain Colonial shareholders.
On May 25, 2013, representatives from Goodwin Procterprovisions and Hogan Lovells met telephonically. Hogan Lovells advised that Colonial, based on the determinationfurther discussed certain details of the Colonial Special Committee, would not request
any new tax protection arrangements for unitholdersno-shop covenant and the termination right and remedies in respect of Colonial LP other than a continuation in the MAA LP partnership agreement, for the benefit of MAA LP limited partners after the partnership merger,breach of the existing provision in the limited partnership agreementno-shop covenant. Later that day, representatives of Colonial LP relating to Colonial LP’s consideration of the income tax considerations of limited partners of Colonial LP with respect to actions taken by the general partner of Colonial LP. The representatives from Goodwin Procter and Hogan Lovells then discussed various other open items relating to the merger agreement. Additionally, Goodwin Procter circulated to Hogan Lovells a revised draft of the form of voting agreement for certain Colonial shareholders.
On May 26, 2013, Hogan Lovells circulatedKing & Spalding sent a revised draft of the merger agreement to representatives of Goodwin. Representatives of Goodwin Procteralso circulated drafts of its Section 368 tax opinion and J.P. Morgan. The revised draft provided for, among other things, reciprocal interim operating covenants forthe representation letters from MAA supporting Goodwin’s and Colonial. The revised draft also reflected other items that were continuing to be negotiated, including, among others, the closing condition relating to the percentageKing & Spalding’s Section 368 tax opinions.
On August 10, 2016, representatives of Colonial shareholders that could exercise dissenters’ rights without MAA havingKing & Spalding circulated a right to not consummate the mergers, the termination fee and a modified provision addressing the parties’ ability to restructure the transaction following the execution of the merger agreement.
Also on May 26, 2013, Goodwin Procter circulated to Hogan Lovells an initial draft of the formrepresentation letter from Post Properties supporting the Goodwin and King & Spalding Section 368 tax opinions. Bass, Berry & Sims PLC, referred to herein as Bass Berry, counsel to MAA, circulated drafts of voting agreement for certainits REIT opinion relating to MAA shareholders.and the supporting representation letter from MAA.
On May 27, 2013,
Later on August 10, 2016, representatives of King & Spalding called representatives of Goodwin Procter circulated to Hogan Lovells an initial draft of MAA’s disclosure schedules todiscuss the merger agreement. The disclosure schedules included a list of certain third party consentsLater that would need to be obtained as a condition to closing. Colonial, through Hogan Lovells, objected to the inclusion of those consents as a closing condition.
On May 27, 2013, the Colonial Special Committee held a telephonic meeting, withday, representatives of Hunton & Williams and Hogan Lovells present. During this meeting, the Colonial Special Committee discussed with the legal advisors the status of negotiations with MAA regarding the structure of the transaction and the terms of the limited partnership agreement of the Combined Corporation’s operating partnership. During this discussion, the Colonial Special Committee discussed with the legal advisors the nature of changes with respect to the partnership merger reflected in the merger agreement. Also, during this discussion, the Colonial Special Committee noted that, consistent with the direction at the Colonial Special Committee’s May 22nd meeting, the current draft of the merger agreement provided that the limited partnership agreement of MAA LP would be amended to be in substantially the same form as the limited partnership agreement of Colonial LP then in effect, and would retain, for the benefit of all limited partners in MAA LP after the partnership merger, the provision relating to Colonial LP’s consideration of the income tax considerations of limited partners of Colonial LP with respect to actions taken by the general partner of Colonial LP.
On May 28, 2013, Hogan Lovells circulated to Goodwin Procter an initial draft of Colonial’s disclosure schedules to the merger agreement.
On May 28, 2013, the Colonial Board held a telephonic meeting, with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, the Colonial Board discussed the status of negotiations with MAA and certain provisions of the merger agreement. Also on May 28, 2013, Mr. Bolton contacted Mr. Lowder by telephone to discuss certain closing conditions to the completion of the proposed transaction. Messrs. Bolton and Lowder also discussed the inclusion of the provision in the merger agreement that would allow for flexibility in the structure of the transaction following the execution of the merger agreement.
Later on May 28, 2013, Goodwin Procter circulatedsent a revised draft of the merger agreement to Hogan Lovells and BofA Merrill Lynch. The revised draft included, among other things, reciprocal interim operating covenants.representatives of King & Spalding.
On May 29, 2013, Goodwin Procter circulated a further revised draftLater on August 10, 2016, the MAA Board was provided current drafts of the merger agreement to Colonialand other transaction documents as well as a summary of the terms of the merger agreement prepared by Goodwin.
Also on August 10, 2016, J.P. Morgan provided the Post Properties Board with an updated customary relationship disclosure regarding MAA.
On August 11, 2016, representatives of King & Spalding circulated drafts of its Section 368 tax opinion and its REIT opinion relating to Post Properties, together with representation letters from Post Properties and MAA supporting the REIT opinion. Representatives of King & Spalding, Goodwin, and Bass Berry discussed and resolved open points on these documents on August 11, 2016 and August 12, 2016. Final forms of the Section 368 tax opinions and supporting representation letters from MAA and Post Properties were circulated on August 11, 2016 and final forms of the REIT opinions and supporting representation letters from MAA and Post Properties were circulated on August 12, 2016.
On August 11, 2016, Post Properties’ Board held a special meeting. Representatives of J.P. Morgan and King & Spalding were also in attendance. Mr. Stockert provided an overview of the discussions that had occurred since the Post Properties Board’s last meeting and the status of negotiations with MAA. Mr. Stockert also provided an overview of the financial, legal, accounting, tax, human resources, litigation, environmental and breakage cost due diligence that Post Properties had conducted on MAA. Finally, Mr. Stockert discussed his meeting with Mr. Bolton and Mr. Goddard on August 8, 2016.
At the August 11, 2016 meeting, representatives of J.P. Morgan and King & Spalding discussed with the Post Properties Board an update on the negotiation process, including an overview of the status of the mutual due diligence process, how the merger agreement negotiations were progressing, the status of the preparation of potential shareholder communications regarding the potential announcement of a transaction and the timetable for steps between signing and closing a transaction. The Post Properties Board also reviewed and discussed with J.P. Morgan the strategic rationale for the combination of the companies. The Post Properties Board then discussed certain benefits of the transaction, including (i) an increased scale and diversification across Sunbelt markets, (ii) a diversification of the Post Properties portfolio away from markets with high exposure to new supply, (iii) Post Properties’ development expertise, (iv) an increased earnings power with synergy and efficiency potential, (v) an enhanced investment-grade pro forma balance sheet and (vi) an increased float for an overlapping shareholder base.
At the August 11, 2016 meeting, representatives of J.P. Morgan discussed an update of its preliminary financial advisors.analysis of the proposed transaction, noting that this preliminary analysis was based on financial forecasts that were prepared by management of Post Properties, with respect to Post Properties, and by management of MAA and provided to management of Post Properties, with respect to MAA (which were adjusted by management of Post Properties and provided to J.P. Morgan for use in preparing its financial analysis) and that prior preliminary financial analysis had been derived from analyst estimates. Additionally, J.P. Morgan’s analysis addressed the impact of projected synergies prepared by management of MAA and provided to it by management of Post Properties.
At the August 11, 2016 meeting, the Post Properties Board discussed J.P. Morgan’s preliminary financial analysis in detail and asked questions of representatives of J.P. Morgan. The draftPost Properties Board discussed the price implied by the exchange ratio, including by discussing the highly attractive value that it provided for, amongto the holders of shares of Post Properties common stock as compared to other things,potential strategic alternatives. The Post Properties Board discussed the relative trading of the two companies since the Post Properties Board’s initial meeting to discuss MAA’s proposal. The Post Properties Board also asked questions regarding the combined company’s position in the marketplace and transaction synergies, and deliberated and discussed with members of senior management of Post Properties and representatives of J.P. Morgan a reciprocalcombination with MAA as opposed to a combination with Party B.
At the August 11, 2016 meeting, representatives of King & Spalding provided a detailed summary of the proposed merger agreement, referring to a summary distributed to the Post Properties Board in advance of the meeting. As part of the discussion, representatives of King & Spalding walked the Post Properties Board through the details of the two-tier termination fee structure, the events that would trigger the payment of $75 milliona termination fee and/or expense reimbursement, the details of the no-shop covenant and related deal protection provisions in the merger agreement. The Post Properties Board asked questions of representatives of King & Spalding and discussed deal protection generally.
At the August 11, 2016 meeting, the members of the Post Properties Board discussed the financial analysis from J.P. Morgan and the legal summary from King & Spalding at length and concluded that they remained comfortable with proceeding with final negotiations and due diligence. The Post Properties Board noted, however, that the relative trading price of the two stocks through August 12, 2016 would be a closing conditionfactor that no more than 15%it would consider at its next meeting on August 14, 2016. The Post Properties Board directed representatives of Colonial shareholders could exercise dissenters’ rights without MAA having a rightJ.P. Morgan to not consummateupdate J.P. Morgan’s financial analysis for the mergers.August 14, 2016 Post Properties Board meeting based on trading information through the end of the week. Representatives of J.P. Morgan agreed to do so. Additionally, representatives of King & Spalding explained that the final version of the merger agreement, together with all exhibits and disclosure letters would be made available for the Post Properties Board in advance of the August 14, 2016 Post Properties Board meeting, together with an updated summary presentation.
Later on May 29, 2013,August 11, 2016, following the Post Properties Board Meeting, Mr. Stockert reached out to Mr. Bolton to let him know that the Post Properties Board was still comfortable proceeding with the strategic transaction.
On August 12, 2016, Goodwin sent comments to the Post Properties disclosure letter. In addition, on August 12, 2016, representatives of King & Spalding discussed with representatives of Goodwin open issues with respect to the Post Properties disclosure letter and the MAA disclosure letter.
Later on August 12, 2016, the MAA Board held a special telephonic meeting with members of MAA’s senior management and representatives from J.P. Morgan, Goodwin ProcterCiti and Baker Donelson. Mr. Bolton summarized forGoodwin. At the meeting, the MAA Board approved the overall status of the proposed strategic combination transaction with ColonialCiti engagement letter and, the decision by Colonial, based on the determination of the Colonial Special Committee, not to request new tax protection arrangements for unitholders of Colonial LP. Mr. Bolton and representatives from Goodwin Procter and Baker Donelson summarized and described for the MAA Board the remaining open points in the merger agreement. The MAA Board then discussed the proposed terms of the merger agreement.
On May 29, 2013, the Colonial Board held a telephonic meeting, with Mr. Hardin and representatives of BofA Merrill Lynch and Hogan Lovells present. During this meeting, a representative of Hogan Lovells summarized the status of negotiations with respect to the revised draft merger agreement. The Colonial Board discussed the revised draft merger agreement, including MAA’s inclusion of certain third party consents as a closing condition.
On May 30, 2013, Mr. Bolton contacted Mr. Lowder by telephone to discuss the remaining open points in the merger agreement.
Later on May 30, 2013, Goodwin Procter circulated to Hogan Lovells a revised draft of MAA’s disclosure schedules to the merger agreement. The revised MAA disclosure schedules significantly limited the number of third party consents that were a condition to closing.
Also on May 30, 2013, Hogan Lovells circulated a revised draft of the merger agreement to Goodwin Procter and J.P. Morgan. The revised draft provided for, among other things, (i) a symmetrical termination fee of $75 million, (ii) an agreement by MAA to assume all existing registration rights agreements of Colonial in connection with the proposed transaction, and (iii) the removal of the ability of either party to extend the outside closing date under the merger agreement in order to obtain third party consents. Subsequent to the distribution of the revised draft of the merger agreement, the parties agreed that the merger agreement would contain a provision that the parties would cooperate to provide flexibility in the structuring of the transaction following theafter execution of the merger agreement and a closing condition that no more than 15% of Colonial shareholders could exercise dissenters’ rights without MAA having a right to not consummate the mergers.
On May 31, 2013,Citi engagement letter, representatives from Goodwin Procter and Hogan Lovells met telephonically to discuss the remaining open points in the merger agreement, including the termination fee.
On May 31, 2013, Goodwin Procter circulated to Hogan Lovells an initial draft of the amended and restated limited partnership agreement of MAA LP. Later that day, Hogan Lovells circulated a revised draft of that agreement to Goodwin Procter, along with a revised draft of Colonial’s disclosure schedules to the merger agreement.
On June 1, 2013, the MAA Board held a special telephonic meeting with members of senior management and representatives from J.P. Morgan, Goodwin Procter and Baker Donelson. At the meeting, Mr. Bolton and representatives of Goodwin Procter and Baker Donelson summarized the resolution of the open points in the merger agreement discussed at the last meeting of the MAA Board and the minor terms of the merger agreement that needed to be finalized prior to the execution of the merger agreement. Representatives from Goodwin Procter and Baker Donelson then summarized the final terms of the merger agreement and described the process required for obtaining certain third party consents. The MAA Board then held an extended discussion of the terms of the merger agreement. Next, representatives from J.P. MorganCiti summarized the valuation methodologies used in its valuation of MAA and Colonial,Post Properties, the results of that analysis and the key financial highlights relating to the transaction with Colonial.Post Properties. After a discussion by the MAA Board of various financial aspects of the proposed strategic transaction with ColonialPost Properties and J.P. Morgan’sCiti’s valuation analysis, J.P. MorganCiti delivered to the MAA Board an oral opinion, which was confirmed by the delivery of a written opinion dated June 1, 2013,August 14, 2016, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its opinion, the exchange ratio provided for in the merger agreement was fair, from a financial point of view, to MAA. Next, representatives from Goodwin reviewed the summary of the merger agreement previously provided to the MAA Board and confirmed that there had not been any material changes to the terms of the merger agreement since it was circulated to the MAA Board. Members of senior management then provided a summary of a United States Department of Justice lawsuit filed against Post Properties and summarized MAA’s diligence review of the lawsuit and estimates of potential ranges of exposure as well as environmental matters at certain properties owned by Post Properties. The MAA Board then held an extended discussion of the terms of the merger agreement. Mr. Bolton led an extended discussion about the exchange ratio and the strategic rationale for the proposed transaction, and provided a summary of the negotiations with Post Properties related to the exchange ratio and other terms of the proposed transaction, and members of senior management also led a discussion on the anticipated cost savings and synergies from the proposed transaction. Following
these presentations and discussions, and other discussions and deliberations by the MAA Board concerning, among other things, the matters described below under “—Recommendation of the MAA Board and Its Reasons for the Parent Merger,Mergers,” representatives offrom Goodwin Procter and Baker Donelson summarized the process for the approval of the transaction and the duties of the directors, following which, Mr. Bolton and representativesmembers of Baker Donelsonsenior management reviewed the resolutions for consideration by the MAA Board to approve the proposed strategic transaction with Colonial.Post Properties. The MAA Board, by a unanimous vote of all directors, then unanimously (i) determined that the merger
agreement, the parent merger and the transactions contemplated by the merger agreement were advisable and in the best interests of MAA and its shareholders, (ii) approved the mergers, the merger agreement and the other transactions contemplated by the merger agreement, (iii) authorized and approved the issuance of shares of MAA common stock to the holders of ColonialPost Properties common sharesstock and the issuance of MAA Series I preferred stock to the holders of Post Properties Series A preferred stock in the parent merger, (iv) directed that the merger agreement, and the issuance of shares of MAA common stock, and an amendment to the MAA charter to increase the number of authorized shares of MAA common stock from 100,000,000 shares to 145,000,000 shares, referred to herein as the MAA charter amendment, be submitted for approval at a meeting of MAA shareholders, and (v) recommended the approval of the merger agreement, and the issuance of shares of MAA common stock and the MAA charter amendment by MAA shareholders. In connection with the foregoing, the MAA Board also approved, among other things, the waivers to be given by certain MAA executivesemployees with respect to rights under existing employment agreements and equity awards, the preparation and filing of this joint proxy statement/prospectus, the engagement letter with J.P. Morgan,Citi, the MAA charter amendment, and restatement of the limited partnership agreementdesignation and issuance of MAA LP, andSeries I preferred stock in connection with the preparation and mailingparent merger.
Following the MAA Board meeting, Mr. Bolton contacted Mr. Stockert to let Mr. Stockert know that the MAA Board had approved the transaction.
Also on August 12, 2016, representatives of Goodwin sent a consent solicitation for holders of limited partnership units in MAA LP.
On June 1, 2013 and June 2, 2013, Goodwin Procter and Hogan Lovells exchanged draftsrevised draft of the merger agreement to representatives of King & Spalding reflecting certain changes to the representations and warranties and covenants related to the conduct of business between signing and closing.
On August 13, 2016, representatives of King & Spalding and representatives of Goodwin finalized the terms of their respective disclosure schedulesletters and the exhibits to the merger agreement. Representatives of both ColonialKing & Spalding and MAA torepresentatives of Goodwin also exchanged comments on the merger agreement and finalized the amendedmerger agreement. The final merger agreement, together with the final exhibits and restated limited partnership agreement of MAA LP.disclosure letters, was posted for the Post Properties Board’s review.
On June 2, 2013,August 14, 2016, the ColonialPost Properties Board held a telephonicspecial meeting with Mr. Hardinmembers of senior management of Post Properties and representatives of BofA Merrill LynchKing & Spalding and Hogan Lovells present. During this meeting, Colonial’s legal andJ.P. Morgan. Mr. Stockert explained to the Post Properties Board that the MAA Board had already approved the transaction on August 12, 2016. Representatives of J.P. Morgan then walked the Post Properties Board through an updated financial advisors reviewed withanalysis presentation. After a discussion by the ColonialPost Properties Board among other things, legal andof various financial aspects of the proposed strategic transaction with MAA. In addition, a representative of Hogan Lovells reviewed with the Colonial Board the material terms of the proposed merger agreement. Mr. Lowder then reviewed the strategic rationaleMAA and anticipated benefits of the proposed strategic combination transaction to Colonial shareholders. BofA Merrill Lynch then reviewed with the Colonial Board the financial terms of the proposed transaction and itsJ.P. Morgan’s financial analysis, of the exchange ratio provided for in the parent merger and deliveredJ.P. Morgan rendered to the ColonialPost Properties Board an oral opinion, which was later confirmed by the delivery of a written opinion dated June 2, 2013,August 14, 2016, to the effect that, as of that date and based on and subject to various assumptions, factors, qualifications and limitations described in theits written opinion, the exchange ratio provided for in the parent merger was fair, from a financial point of view, to the holders of ColonialPost Properties common shares. During thisstock. Representatives of King & Spalding once again reviewed the Post Properties Board’s fiduciary duties. Representatives of King & Spalding also walked the Post Properties Board through a presentation summarizing the final terms of the merger agreement. Representatives of King & Spalding noted that there were no material changes to the merger agreement since the last Post Properties Board meeting on August 11, 2016 and that there had been no material updates on due diligence. Representatives of King & Spalding walked the Colonial Transaction Committee delivered its recommendationPost Properties Board through the proposed corporate approvals for the transaction. Mr. Goddard then led the Post Properties Board in a discussion of the transaction, including discussions with Mr. Stockert about the strategic rationale and exchange ratio. The Post Properties Board discussed the value provided by the exchange ratio and determined that the Colonial Board approveimplied price paid by MAA was highly attractive to the merger agreement.holders of shares of Post Properties common stock. Following these presentations and discussions, and other discussions by the ColonialPost Properties Board concerning, among other things, the matters described below under “—Recommendation of the ColonialPost Properties Board and Its Reasons for the Parent Merger,Mergers,” the ColonialPost Properties Board, by a unanimous vote of all trustees,directors, then (i) concluded thatapproved, adopted, declared advisable and authorized the merger agreement and the transactions contemplated thereby, including the parent merger and the partnership merger, were advisable and in the best interests of Colonial and its shareholders, (ii) approved and adopted the merger agreement and the plan of merger, (iii) directed that the merger agreement and the parent merger pursuant to the plan of merger be submitted for approval at a meeting of Colonial shareholders and (iv) recommended the approval of the merger agreement and the parent merger pursuantby Post Properties shareholders.
On the morning of June 3, 2013,August 15, 2016, Post Properties and MAA and Colonial executed and delivered the merger agreement and certain ancillary documents prior to the opening of the stock markets and issued a joint press release publicly announcing the mergers and execution of the merger agreement.
Recommendation of the MAA Board and Its Reasons for the Parent MergerMergers
In evaluating the parent merger, the MAA Board consulted with its legal and financial advisors and MAA’s management and, after careful consideration, the MAA Board unanimously determined and declared that the merger agreement, the parent merger and the other transactions contemplated by the merger agreement (including the issuance of shares of MAA common stock and MAA Series I preferred stock to ColonialPost Properties shareholders in the parent merger) are
advisable and in the best interests of MAA and its shareholders. The MAA Board unanimously adopted and approved the merger agreement, the parent merger and the other transactions contemplated by the merger agreement.
The MAA Board unanimously recommends that MAA shareholders voteFOR the proposalIn deciding to declare advisable and approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of shares of MAA common stock to Colonial shareholders in the parent merger.
In deciding to declare advisable and approve and adopt the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the issuance of the MAA commonSeries I preferred stock to the ColonialPost Properties shareholders in connection with the parent merger, and to recommend that MAA shareholders vote to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, the MAA Board considered various factors that it viewed as supporting its decision, including the following material factors described below:
| • | Strategic |
the combination of two highly complementary multifamily portfolios toMAA and Post Properties would create the preeminenta Sunbelt-focused multifamily REIT and the second largest publicly-held owner and operator of multifamily units in the United States by number of units will allow MAA shareholders to participate inwith a stronger Combined Corporation with the opportunity to leverage both companies’ strong presence across the United States Sunbelt region and would result in a platform with superior value creation opportunities;
the combined portfolio of approximately 85,000105,000 multifamily units in 285 properties317 communities which would provide an enhanced competitive advantage across the Sunbelt region and drive opportunistic growth and capital deployment;
by combining two companies with businesses in highly complementary geographic regions, the Combined Corporation is expected towould have improved diversification across urban and suburban locations in large and secondary markets inwithin the high-growth Sunbelt region, which will enhanceis expected to result in an enhanced platform for execution with superior value creation opportunities and improve the strengthperformance of the portfolio;
the combination of MAA and ColonialPost Properties would more rapidly advance a number of strategic priorities underway at MAA, including improving operating efficiencies, achieving more profitable scale, increasing assets in major and secondary Sunbelt markets and lowering debt and equity capital costs to provide a stronger balance sheet;
the transaction is expected to create operational and general and administrative cost synergies (based primarily on the elimination of general and administrative expenses and other potentially duplicative expenses, including back-office functions and property management administration) that would drive higher margins primarily from the elimination of duplicative costs associated with supporting a public company platform and the leveraging of state of the art technology and systems,operating efficiencies derived from increased scale, resulting in anticipated gross savings of approximately $25$20 million annually upon full integration, which is expected to occur over the 18–montha 12-month period afterfollowing the closing of the mergers;
as a result of its larger size, greater access to multiple forms of capital and an improved investment-grade rating with limited near-term debt maturities, the Combined Corporation is expected to have a lower cost of capital than MAA on a stand-alone basis and provide financial flexibility to capture opportunities across business cycles;
the combination of MAA and Post Properties would create the largest publicly-held owner and operator of multifamily units in the United States by number of units with an equity market capitalization of approximately $12 billion and a total enterprise value of approximately $17 billion (based on the
closing share price as of August 12, 2016), which should provide the Combined Corporation with greater access to multiple forms of debt and equity capital at a lower cost of capital over the long term than MAA on a stand-alone basis and offer financial flexibility to capture opportunities across business cycles; |
| • | Fixed Exchange Ratio. The MAA Board |
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Opinion of Financial Advisor. The MAA Board considered the financial analyses presented to it by |
| • | Familiarity with Businesses. The MAA Board considered its knowledge of the business, operations, financial condition, earnings and prospects of MAA and |
| • | Governance. The MAA Board considered that the following governance arrangements would enable continuity of management and an effective and timely integration of the two companies’ operations: |
seventen of the twelvethirteen members of the board of directors of the Combined Corporation would be members of the MAA Board;
H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman of the Co-LeadBoard of Directors, would serve as the Chief Executive Officer and Chairman of the Board of Directors of the Combined Corporation;
the senior executives of MAAAlbert M. Campbell, III, MAA’s Chief Financial Officer, Thomas L. Grimes, Jr., MAA’s Chief Operating Officer, and Robert J. DelPriore, MAA’s General Counsel, would serve as the senior executivesChief Financial Officer, Chief Operating Officer and General Counsel, respectively, of the Combined Corporation.
| • | High Likelihood of Consummation. The MAA Board considered the commitment on the part of both parties to complete the mergers as reflected in their respective obligations under the terms of the merger agreement, and the likelihood that the |
| • | Maintenance of REIT Status. The MAA Board considered that following the consummation of the mergers and the other transactions contemplated by the merger agreement, the Combined Corporation would be expected to qualify as a REIT for U.S. federal income tax purposes under the Code. |
| • | Merger Agreement. The MAA Board considered the overall terms of the merger agreement, including, among other things, the following: |
The MAA Board also considered a variety of risks and other potentially negative factors concerning the merger agreement, the parent mergermergers and the other transactions contemplated by the merger agreement. These factors included:
that, under the terms of the merger agreement, MAA must pay Colonial a termination fee of $75 million and/or reimburse certain expenses incurred by Colonial in connection with the parent merger (up to $10 million) if the merger agreement is terminated under certain circumstances, which may deter other parties from proposing an alternative transaction that may be more advantageous to MAA shareholders, or which may become payable following a termination of the merger agreement in circumstances where no alternative transaction or superior proposal is available to MAA;
the terms of the merger agreement placing limitations on the ability of MAA to initiate, solicit or knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer by or with a third party with respect to an Acquisition Proposal, and to furnish non-public information to, or engage in discussions or negotiations with a third party interested in pursuing an alternative business combination transaction;
the risk that the anticipated strategic and financial benefits of the parent mergermergers may not be realized or that the Combined Corporation may not achieve the forecasted net operating income or sales proceeds from the sale of certain of Colonial’s non-core and other assets;
the risk that the cost savings, operational synergies and other benefits to the holders of MAA common stockshareholders expected to result from the parent mergermergers might not be fully realized or not realized at all, including as a result of possible changes in the real estate market or the multifamily industry affecting the markets in which the Combined Corporation will operate;
the risk of other potential difficulties in integrating the two companies and their respective operations;
the restrictions on the conduct of MAA’s business prior to the completion of the parent merger,mergers, which could delay or prevent MAA from undertaking certain business opportunities that may arise or any other actionactions it would otherwise take with respect to the operations of MAA absent the pending completion of the parent merger;
that ColonialPost Properties and MAA may be obligated to complete the parent mergermergers without having obtained appropriate consents, approvals or waivers from or successfully refinanced, the outstanding indebtednesscounterparties under certain of Colonial and MAAPost Properties’ contracts that requires lenderrequire consent or approval to consummate the parent merger,mergers, and the risk that such consummation could trigger the termination of, and mandatory prepayments of all amounts outstandingor default under, certain of MAA’ssuch contracts; and Colonial’s indebtedness;
the existence of statutory dissenters’ rights for Colonial shareholders; and
other matters described under the section “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements.”
The MAA Board also considered the interests that certain executive officers and directors of MAA may have with respect to the mergers that may be different from, or in addition to, the interests of MAA shareholders generally. See the section titled “—Interests of MAA’s Directors and Executive Officers in the Mergers” beginning on page114 of this joint proxy statement/prospectus.
This discussion of the information and factors considered by the MAA Board in reaching its conclusion and recommendations is not intended to be exhaustive and is not provided in any specific order or ranking. In view of the wide variety of factors considered by the MAA Board in evaluating the merger agreement, the parent merger and the other transactions contemplated by it, including the parent merger, and the complexity of these matters, the MAA Board did not find it practicable to, and did not attempt to, quantify, rank or otherwise assign relative weight to those factors. In addition, different members of the MAA Board may have given different weight to different factors. The MAA Board did not reach any specific conclusion with respect to any of the factors considered and instead conducted an overall review of such factors and determined that, in the aggregate, the potential benefits considered outweighed the potential risks or possible negative consequences of approving the merger agreement, the parent merger and the other transactions contemplated by the merger agreement.
THE MAA BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND DETERMINED THAT THE PARENT MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE ADVISABLE AND IN THE BEST INTERESTS OF MAA AND ITS SHAREHOLDERS. ACCORDINGLY, THE MAA BOARD UNANIMOUSLY RECOMMENDS THAT MAA COMMON SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT, THE PARENT MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE ISSUANCE OF SHARES OF MAA COMMON STOCK TO POST PROPERTIES SHAREHOLDERS IN THE PARENT MERGER.
ThisThe explanation of the reasoning of the MAA Board and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitledtitled “Cautionary Statement Concerning Forward-Looking Statements.”Statements” beginning on page49 of this joint proxy statement/prospectus.
Recommendation of the ColonialPost Properties Board and Its Reasons for the Parent MergerMergers
By vote atAt a meeting held on June 2, 2013, and based in part onAugust 14, 2016, the unanimous recommendation of the transaction committee of the Colonial Board, the ColonialPost Properties Board unanimously (i) determined that the parent merger (including the plan of merger) and the other transactions contemplated by the merger agreement areapproved, adopted, declared advisable and in the best interests of Colonial and its shareholders, (ii) approved and adoptedauthorized the merger agreement and the plantransactions contemplated thereby, including the parent merger and the partnership merger, and (ii) recommended the approval of merger, (iii) directed that a proposal to approve and adopt the merger agreement and the parent merger pursuant to the plan of merger be submitted for consideration at a meeting of Colonial’s shareholders and (iv) recommended the approval and adoption of the merger agreement and parent merger pursuant to the plan of merger by Colonial’sPost Properties shareholders. The ColonialPost Properties Board unanimously recommends that ColonialPost Properties shareholders voteFOR the proposal to approve and adopt the merger agreement, the parent merger pursuant to plan of merger and the other transactions contemplated by the merger agreement,FOR the proposal to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of ColonialPost Properties in connection with the parent merger andFOR the proposal to approve one or more adjournments of the ColonialPost Properties special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of approval and adoption of the merger agreement and the parent merger pursuant to the plan of merger.
In evaluating the parent merger agreement and the Colonialtransactions contemplated thereby, the Post Properties Board consulted with Colonial’sPost Properties’ senior management and outside legal counsel and financial advisors. In deciding to declare advisable and approve and adopt the merger agreement the parent merger pursuant to the plan of merger and the other transactions contemplated bythereby, and to recommend that Post Properties shareholders vote to approve the merger agreement and to recommend that Colonial’s shareholders vote to approve and adopt the merger agreement, the parent merger, pursuant to the plan of merger and the other transactions contemplated by the merger agreement, the ColonialPost Properties Board considered various factors that it viewed as supporting its decision, including the material factors described below.
| • | Strategic and Financial Benefits. Discussions with |
attractive valuation for Post Properties’ assets and business, including a substantial premium to the combinationthen-current trading price of Colonial’sPost Properties common stock and MAA’s highly complementary multifamily portfoliosimmediate accretion in earnings, cash flow and dividends;
as a resultdiversification of its larger size, greater accessthe Post Properties portfolio away from markets with high exposure to multiple forms of capital and improved investment grade debt rating with limited near-term debt maturities, the Combined Corporation is expected to have a lower cost of capital than Colonial on a stand-alone basis and provide financial flexibility to capture opportunities across business cycles;
the combination of the two companies would more rapidly advance Colonial’s existing strategic priorities to grow its multifamily portfolio and strengthen its balance sheet;
by combining two companies with businesses in complementary geographic regions, the Combined Corporation is expected to have improved diversification across large and secondary markets in the high-growth Sunbelt region, which will enhance the strength of the portfolio;
the Combined Corporation is expected to benefit from Colonial’sPost Properties’ development pipeline and internal development capabilities;
the increased size and scaleearnings power of the Combined Corporation is expected to produce operating cost advantages, enhance its ability to attract top talent,with synergy and strengthen the operating platform through integration of best practices from both companies, thereby allowing the Combined Corporation to be more competitive in the markets in which it operates;
| • | as a result of its larger size, greater access to multiple forms of capital and improvedpro forma investment-grade debt rating, the Combined Corporation is expected to have a lower cost of capital than Post Properties on a stand-alone basis and provide financial flexibility to capture opportunities across business cycles; |
by creating one of the largest U.S. multifamily REITsapartment REIT by number of units and, based on current market prices, one of the largest publicly tradedpublicly-held U.S. multifamily REITs by enterprise value, the mergertransaction is expected to enhance the Combined Corporation’s ability to execute large, accretive transactionsacquisitions and development, and facilitate opportunistic growth and capital deployment.
| • | Familiarity with MAA’s Business, Operating Results, Financial Condition and |
| • | Continued Operation as a Stand-Alone Company. The |
| • | Merger Consideration. The |
| • | Dividend Rate. The |
| • | Ownership in the Combined |
| • | Opinion of Financial Advisor. The |
| • | Tax-Free Transaction. The |
| • | Governance. The |
| • | Negotiations with MAA. The Post Properties Board considered the course of negotiations with MAA, which were conducted at arm’s length and during which the Post Properties Board was advised by its legal and financial advisors, including the fact that the negotiations resulted in an increased exchange ratio and two-tiered termination fees, allowing an interested party an opportunity to make an alternative proposal at a low termination fee during a specified period. |
| • | Likelihood of Consummation. The |
| • | Terms and Conditions of the Merger Agreement. The |
Colonial’sPost Properties’ ability, under certain circumstances, prior to the time Colonialthat Post Properties shareholders approve the parent merger, to consider and respond to an unsolicited bona fide alternative proposal or engage in discussions or negotiations with the third party making such a proposal if the ColonialPost Properties Board determines in good faith (after consultation with its outside legal counsel and financial advisors) that such alternative proposal either constitutes a Superior Proposal or is reasonablywould likely to lead to a superior proposalSuperior Proposal and the ColonialPost Properties Board shall have determinedconcluded in good faith (after consultation with outside legal counsel) that the failure to take such actiondo so would be inconsistent with the trustees’ exercise of their fiduciary obligations to the shareholders of Colonialduties under applicable laws;
Colonial’sPost Properties’ ability, under certain circumstances, to terminate the merger agreement in order to enter into an agreement providing for a Superior Proposal, provided that Colonial complies with its obligations relating to the entering into of any such agreement and immediately prior to orsubstantially concurrently with the termination of the merger agreement, Post Properties pays to MAA a termination fee, in a two-tiered amount of $75either approximately $58.5 million or $117 million, depending on when the termination occurs, and reimburses MAA for expenses (up to $10 million), which the ColonialPost Properties Board concluded was reasonable in the context of termination fees payable in comparable transactions and in light of the overall structure of the transaction and terms of the merger agreement, including the merger consideration;
the ability of the ColonialPost Properties Board, under certain circumstances not involving a Superior Proposal, to withhold, withdraw or modify its recommendation that ColonialPost Properties shareholders vote in favor of approval and adoption of the merger agreement and the parent merger, pursuantsubject in certain circumstances to the plan of merger and terminate the merger agreement upon payment to MAA of a termination fee in a two-tiered amount of $75either approximately $58.5 million or $117 million depending on when the termination occurs, and reimbursement of MAA for expenses (up to $10 million);
the fact that the merger agreement permits ColonialPost Properties to continue to pay its regular quarterly cash dividend, in an amount not to exceed $0.21the current dividend of $0.47 per Colonialshare of Post Properties common sharestock per quarter, its regular quarterly distribution in accordance with past practice at a rate not to exceed $1.0625 per quarter per share of Post Properties Series A preferred stock, as well as distributions in respect of limited partnership units held in ColonialPost LP;
the fact that the merger agreement would provide ColonialPost Properties with sufficient operating flexibility between the signing of the merger agreement and the completion of the parent merger for itPost Properties to conduct its business in the ordinary course of business consistent with past practice between the signing of the merger agreementpractice; and the completion of the parent merger; and
the fact that consent, approval or refinancing of Colonial’sPost Properties’ existing indebtedness and most ofor MAA’s existing indebtedness is not a condition to completion of the parent merger.
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Alternative Transactions. The Colonial Board also considered, as alternatives to the parent merger or to continued independent operations, Colonial’s prospects for a merger or sale transaction with a company other than MAA and the potential terms for such other transactions. After taking into account the possible detrimental effects on Colonial’s business, including such effects on, among other things, its employees, tenants, customers, financing sources and business prospects, the Colonial Board determined not to solicit proposals for other transactions, whether a merger or sale, through an auction process or otherwise. The Colonial Board’s consideration of potential alternatives to the parent merger was informed by, among other matters, its familiarity with the various indications of interest and preliminary discussions involving potential transaction partners communicated from time to time, including the unsolicited inquiries received from Company B and Company D and described in this joint proxy statement/prospectus under “The Parent Merger—Background of the Mergers.” The Colonial Board concluded that the MAA merger, as compared to potential alternative transactions, would be in the best interests of Colonial’s shareholders in light of the overall terms of the MAA merger and the timing, likelihood and risks of completing alternative transactions, including the business, competition, industry and market risks that would apply to Colonial.
In particular, in deciding to approve the merger agreement, rather than to attempt to pursue a transaction with Company B on the basis of Company B’s written proposal received in April 2013, the Colonial Board considered the following material factors:
the Colonial Board’s determination, based on its consideration of the business, strategic plan, operating results, and management team of the Combined Corporation, as well as cost synergies and other strategic benefits of a transaction with MAA described above, that it was in the best interests of the Colonial shareholders for Colonial to pursue a transaction with MAA, offering Colonial shareholders the prospect of continued participation in the long-term value creation of the Combined Corporation, rather than pursue an all-cash sale transaction with Company B at the all-cash price included in Company B’s proposal;
the less developed nature of Company B’s proposal and the risk of not being able to reach agreement on mutually acceptable terms with Company B with respect to a sale transaction due to, among other things:
the need for Company B to conduct diligence on Colonial (which had not yet been initiated);
the need for Company B to obtain substantial equity and debt financing, including from third party sources, which would be expected to conduct their own separate diligence investigation of Colonial;
the increased risk of information leaks and other significant adverse effects on Colonial, including on its personnel and operations, due to the larger number of third parties that would be involved in a lengthy diligence evaluation of Colonial and the distractions during the pendency of the multi-party diligence process;
the need to negotiate specific merger terms and the related definitive agreement, including (i) additional issues arising from the terms included in Company B’s written proposal, such as financing matters, closing conditions, and the termination provisions, and (ii) other matters not addressed in Company B’s written proposal, such as consequences of Company B’s failure to obtain the requisite third party financing or refusal to close the transaction after it signs a definitive agreement, including negotiation of remedies in certain circumstances if Company B failed or refused to complete the transaction; and
the additional complexity associated with Company B’s intention to negotiate with and retain a third party operator as a partner to operate Colonial properties, as well as the third party operator’s desire to acquire specific properties of Colonial.
uncertainty regarding the final all-cash purchase price to be offered by Company B and the concern, given that Company B’s all-cash purchase price proposal was based on only publicly available information, that the all cash price would be reduced during the diligence and negotiation process, particularly in light of the fact that, based on statements by the Company B chief financial officer in April 2013, the all-cash price of $26.50 had already been reduced by Company B’s investment committee based on valuation considerations associated with certain land recorded on Colonial’s financial statements, as discussed above under “The Parent Merger—Background of the Mergers”;
that, given the need for third party financing, a transaction with Company B would involve greater risk that the ability of the parties to complete the transaction on the terms negotiated may be adversely affected due to adverse market conditions or economic or other events outside the control of the parties, which would increase the risk that a closing may not ultimately occur on the terms negotiated with Company B or at all;
that, as discussed above, the provisions of the merger agreement with MAA would permit Colonial, under certain circumstances, to terminate the merger agreement in order to enter into an agreement providing for a superior proposal, provided that Colonial (i) complies with its obligations relating to the entering into of any such agreement and (ii) immediately prior to or concurrently with the termination of the merger agreement pays a termination fee of $75 million and reimburses MAA for expenses (up to $10 million); and
the risk that, during the time needed for Company B to finalize and present a final offer, including the time necessary to conduct diligence and assemble equity and debt financing and negotiate with a third party operator, the proposed transaction with MAA may no longer be available.
The ColonialPost Properties Board also considered a variety of risks and other potentially negative factors concerning the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, including the following material factors:
that, following completion of the parent merger, ColonialPost Properties would no longer exist as an independent public company and Colonial’sPost Properties shareholders would be able to participate in any future earnings growth of ColonialPost Properties solely through their ownership of MAA common stock;
the trading price of Colonialshares of Post Properties common shares;stock;
Colonial’sPost Properties’ operating results, particularly in light of the costs incurred in connection with the transaction; and
Colonial’sPost Properties’ ability to attract and retain key personnel, residents, commercial tenants, suppliers and customers;
that, under the terms of the merger agreement, ColonialPost Properties must pay MAA a termination fee in a two-tiered amount of $75either approximately $58.5 million or $117 million, depending on when the termination occurs, and/or reimburse certain expenses incurred by MAA in connection with the parent merger (up to $10 million) if the merger agreement is terminated under certain circumstances, which may deter other parties from proposing an alternative transaction that may be more advantageous to Colonial shareholders, or which may become payable following a termination of the merger agreement in circumstances where no alternative acquisition agreement or superior proposal is available to Colonial;
the risk that, although the terms of the merger agreement would permit Colonial,Post Properties, until approval of the parent merger by its shareholders, to furnish non-public information to, or engage in discussions or negotiations with, third parties making unsolicited acquisition proposals that the ColonialPost Properties Board determines are reasonably likely to lead to a superior proposalSuperior Proposal and to terminate the merger agreement to accept a superior proposal,Superior Proposal, subject to payment to MAA of a termination fee in a two-tiered amount of $75either approximately $58.5 million or $117 million, depending on when the termination occurs, and reimbursement of expenses (up to $10 million), other potential bidders may choose not to make an alternative transaction proposal and that, historically, the incidence of such superior proposals are relatively rare;
that the terms of the merger agreement place limitations on the ability of ColonialPost Properties to initiate, solicit or knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer by or with a third party with respect to an acquisition proposal;
the risk that MAA may receive a superior proposalSuperior Proposal and terminate the merger agreement upon payment of a termination fee to ColonialPost Properties in a two-tiered amount of $75either approximately $122.5 million or $245 million, depending on when the termination occurs, plus reimbursement of expenses incurred by ColonialPost Properties (up to $10 million) in accordance with the terms of the merger agreement;
the possibility that the parent merger may not be completed,consummated, or that completionconsummation may be unduly delayed, for reasons beyond the control of ColonialPost Properties or MAA, including because ColonialPost Properties shareholders and/or MAA shareholders may not approve the parent merger and the other transactions contemplated by the merger agreement, because approval of the unitholders of MAA LP may not be obtained, or because the required third party consents may not be obtained;
that Colonial is not permitted to terminate the merger agreement solely because of changes in the market price of MAA common stock and the risk that, because the merger consideration is MAA common stock and the exchange ratio is fixed, Colonial shareholders may be adversely affected by any decrease in the trading price of MAA common stock between the announcement of the transaction and the completion of the parent merger, which would not have been the case had the consideration been based solely on a fixed value (that is, a fixed dollar amount of value per share in all cases);
the risk that the cost savings, operational synergies and other benefits to the holders of Colonial common sharesPost Properties shareholders expected to result from the parent merger might not be fully realized or not realized at all, including as a result of possible changes in the real estate market or the multifamily industry affecting the markets in which the Combined Corporation will operate or as a result of potential difficulties integrating the two companies and their respective operations;
the restrictions on the conduct of Colonial’sPost Properties’ business prior to the completionconsummation of the parent merger, which could delay or prevent ColonialPost Properties from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of ColonialPost Properties absent the pending completion of the parent merger;
that ColonialPost Properties and MAA may be obligated to complete the parent mergermergers without having obtained appropriate consents, approvals or waivers from the counterparties under certain of Post Properties’ contracts that require consent or successfully refinanced,approval to consummate the outstanding
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that ifsuch consummation could trigger the Colonial Board had determined to pursue a saletermination of, the company and engaged in negotiations with a third party, including Company B, and reached agreement on the terms of a definitive sale transaction withor default under, such third party, the all-cash per share purchase price potentially could have been superior to the value of the merger consideration to be received by Colonial shareholders in the strategic combination merger with MAA;
that certain of Colonial’s trusteesPost Properties’ directors and executive officers have certain interests in the parent merger that might be different from the interests of Colonial’sPost Properties shareholders generally as described under the section entitled “The Parent Merger—“—Interests of Colonial’s TrusteesPost Properties Directors and Executive Officers in the Mergers” beginning on page 118;; and
the substantial costs to be incurred in connection with the transactions, including the transaction expenses arising from the mergers and the costs of integrating the businesses of ColonialPost Properties and MAA.
This discussion of the information and factors considered by the ColonialPost Properties Board in reaching its conclusion and recommendations is not intended to be exhaustive and is not provided in any specific order or ranking. In view of the wide variety of factors considered by the ColonialPost Properties Board in evaluating the merger agreement and the transactions contemplated by it, including the parent merger, and the complexity of these matters, the ColonialPost Properties Board did not find it practicable to, and did not attempt to, quantify, rank or otherwise assign relative weight to those factors. In addition, different members of the ColonialPost Properties Board may have given different weight to different factors. The ColonialPost Properties Board did not reach any specific conclusion with respect to any of the factors considered and instead conducted an overall review of such factors and determined that, in the aggregate, the potential benefits considered outweighed the potential risks or possible negative consequences of approving the merger agreement.
THE COLONIALPOST PROPERTIES BOARD UNANIMOUSLY RECOMMENDS THAT COLONIALPOST PROPERTIES SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT, THE PARENT MERGER PURSUANT TO THE PLAN OF MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, FOR THE ADVISORY VOTE ON EXECUTIVE COMPENSATION PROPOSAL AND FOR THE PROPOSAL TO ADJOURN.
The explanation of the reasoning of the ColonialPost Properties Board and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 44..
Opinion of MAA’s Financial Advisor
Pursuant to an engagement letter dated May 31, 2013, MAA has retained J.P. MorganCiti as its financial advisor in connection with the mergers. In connection with this engagement, MAA requested that Citi evaluate the fairness, from a financial point of view, of the exchange ratio of 0.71x provided for in the parent merger.
Atmerger as of the date of Citi’s opinion. On August 12, 2016, at a meeting of the MAA Board, on June 1, 2013, J.P. MorganCiti rendered its oral opinion to the MAA Board an oral opinion, which was subsequently confirmed by delivery of a written opinion, dated August 14, 2016, to the effect that, as of suchthat date and based uponon and subject to the factorsmatters, considerations and assumptionslimitations set forth in itsthe opinion, Citi’s work and other factors it deemed relevant, each as described in greater detail below, the exchange ratio of 0.71x provided for in the parent merger was fair, from a financial point of view, to MAA. J.P. Morgan has confirmed its June 1, 2013 oral
The full text of Citi’s written opinion, by delivering its written opiniondated August 14, 2016, to the MAA Board, dated June 1, 2013, that, as of such date, the exchange ratio in the parent merger was fair, from a financial point of view, to MAA. No limitations were imposed by the MAA Board upon J.P. Morgan with respect to the investigations made or procedures followed by it in rendering its opinions.
The full text of the written opinion of J.P. Morgan dated June 1, 2013, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitslimitations and qualifications on the scope of review undertaken, is attached as Annex F to this joint proxy statement/prospectus as Annex D and is incorporated hereininto this joint proxy statement/prospectus by reference.reference in its entirety. You are urged to read the opinion carefully and in its entirety. J.P. Morgan’s writtenCiti’s opinion, is addressedthe issuance of which was authorized by Citi’s fairness opinion committee, was provided to the MAA Board is directed only(in its capacity as such) in connection with its evaluation of the mergers and was limited to
the fairness, from a financial point of view, as of the date of the opinion, to MAA of the exchange ratio of 0.71x provided for in the parent mergermerger. Citi’s opinion does not address any other aspects or implications of the mergers and does not constitute a recommendation to any shareholder of MAA as to how such shareholder should vote ator act on any matters relating to the mergers. Citi’s opinion does not address the underlying business decision of MAA special meeting.to effect the mergers, the relative merits of the mergers as compared to any alternative business strategies that might exist for MAA or the effect of any other transaction in which MAA may engage. The following is a summary of Citi’s opinion and the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified inmethodology that Citi used to render its entirety by reference to the full text of such opinion.
In arriving at its opinions, J.P. Morgan,opinion, Citi, among other things:
reviewed a draft dated May 31, 2013 of the merger agreement;agreement, dated August 14, 2016;
reviewedexamined certain publicly available business and financial information concerningrelating to MAA and Colonial and the industries in which they operate;
comparedexamined certain financial forecasts and other information and data relating to MAA and Post Properties that were provided to or discussed with Citi by the financial and operating performancerespective managements of MAA and Colonial with publicly availablePost Properties, including information concerning certainrelating to the potential strategic implications and operational benefits (including the amount, timing and achievability thereof) anticipated by the management of MAA to result from the mergers;
reviewed certain internal financial analyses and forecasts prepared by the managementoperating data of MAA and used by J.P. Morgan atPost Properties, and the directioncapitalization and financial condition of MAA and Post Properties;
performed
J.P. Morgan also held discussions with certain members of the management of MAAIn rendering its opinion, Citi assumed and Colonial with respect to certain aspects of the parent merger, and the past and current business operations of MAA and Colonial, the financial condition and future prospects and operations of MAA and Colonial, the effects of the parent merger on the financial condition and future prospects of MAA, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.
J.P. Morgan relied, upon and assumed, without assuming responsibility or liability for independent verification, upon the accuracy and completeness of all financial and other information that wasand data publicly available or was furnishedprovided to or discussed with J.P. Morgan by MAA and Colonial or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not conductdiscussed with Citi and was not provided with any valuation or appraisalupon the assurances of any assets or liabilities (including real estate assets and liabilities), nor did J.P. Morgan evaluate the solvencyrespective managements of MAA or Colonial under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to it or derived therefrom, including the synergies referred to above, J.P. Morgan assumedPost Properties that they were not aware of any relevant information that was omitted or that remained undisclosed to Citi. With respect to financial forecasts and other information and data relating to MAA and Post Properties provided to or otherwise reviewed by or discussed with Citi, Citi was advised by the respective managements of MAA and Post Properties that such forecasts and other information and data were reasonably prepared based on assumptionsbases reflecting the best currently available estimates and judgments by managementof the respective managements of MAA and Colonial, as applicable,Post Properties as to the expected future results of operations and financial conditionperformance of MAA and ColonialPost Properties and the other matters covered thereby, and assumed, with MAA’s consent, that the financial results (including the potential strategic implications and operational benefits anticipated to whichresult from the mergers) reflected in such analyses or forecasts relate. J.P. Morgan expressed no viewand other information and data will be realized in the amounts and at the times projected. Citi relied, at MAA’s direction, upon the assessments of the respective managements of MAA and Post Properties as to such analysesthe ability to integrate the businesses and operations of MAA and Post Properties in accordance with these forecasts.
Citi assumed, with MAA’s consent, that the mergers would be consummated in accordance with their terms, without waiver, modification or forecasts (includingamendment of any material term, condition or agreement and that, in the synergies)course of obtaining the necessary regulatory or third party approvals, consents and releases for the mergers, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on MAA, Post Properties or the assumptions on which they were based. J.P. Morgancontemplated benefits of the mergers. Representatives of MAA advised Citi, and Citi further assumed, that the final terms of the definitive merger agreement would not vary in any material respect from those set forth in the draft Citi reviewed. Citi also assumed, with MAA’s consent, that, for United States federal income tax purposes, that the partnership merger willwould qualify as and constitute a tax-free “assets-over” form of merger governed by Treasury Regulations Section 1.708-1(c)(3)(i) and the parent merger willwould qualify as a tax-free reorganization,reorganization. Citi was advised by MAA and Post Properties that each of MAA and Post Properties has operated in each case willconformity with the requirements for qualification as a REIT for United States federal income tax purposes since its formation as a REIT and further assumed, at MAA’s direction, that the mergers would not adversely
affect such status or operations of MAA or Post Properties. Citi’s opinion related to the relative values of MAA and Post Properties. Citi did not express any opinion as to what the value of shares of MAA common stock actually would be consummatedwhen issued pursuant to the parent merger or the price at which shares of Post Properties common stock would trade at any time. Citi did not make, nor was it provided with, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of MAA or Post Properties nor did Citi make any physical inspection of the properties or assets of MAA or Post Properties. Citi expressed no view as describedto, and its opinion did not address, the underlying business decision of MAA to effect the mergers, the relative merits of the mergers as compared to any alternative business strategies or transactions that might exist for MAA or the effect of any other transaction in which MAA might engage. Citi also expressed no view as to, and its opinion did not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the mergers, or any class of such persons, relative to the exchange ratio of 0.71x provided for in the merger agreementparent merger. Citi’s opinion was necessarily based upon information available to Citi, and this joint proxy statement/prospectus,financial, stock market and thatother conditions and circumstances existing, as of the definitive merger agreement would not differ in any material respect from the draft thereof provided to J.P. Morgan. J.P. Morgandate of its opinion. The issuance of Citi’s opinion was authorized by Citi’s fairness opinion committee.
In preparing its opinion, Citi performed a variety of financial, comparative and other analyses, including those described below. The summary of these analyses is not a legal, regulatorycomplete description of Citi’s opinion or tax expertthe analyses underlying, and reliedfactors considered in connection with, Citi’s opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. Citi arrived at its ultimate opinion based on the assessments maderesults of all analyses undertaken by advisorsit and assessed as a whole, and did not draw, in isolation, conclusions from or with regard to MAA with respect to such issues. J.P. Morgan further assumedany one factor or method of analysis for purposes of its opinion. Accordingly, Citi believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all material governmental, regulatoryanalyses and factors or other consents and approvals necessary for the consummationnarrative description of the parent merger will be obtained without any adverse effect on MAAanalyses, could create a misleading or Colonial or on the contemplated benefitsincomplete view of the parent merger.processes underlying such analyses and its opinion.
The projectionsfinancial forecasts furnished to J.P. MorganCiti for MAA and Colonial were prepared by the management of MAA and the financial forecasts furnished to Citi for Post Properties were prepared by Post Properties management and provided by Post Properties management to MAA, and, in each case, were used by J.P. MorganCiti at the direction of the management of MAA. MAA does not publicly disclose internal management projectionsfinancial forecasts of the type provided to J.P. MorganCiti in connection with J.P. Morgan’sCiti’s analysis of the parent merger,mergers, and such projections were not prepared with a view toward public disclosure. These projections
were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such projections. For more information on the projections provided to J.P. Morgan,Citi, see “—Certain MAA Unaudited Prospective Financial Information”Projections Utilized by the Companies’ Boards and Financial Advisors” beginning on page 112109 and “—Certain Colonial Unaudited ProspectivePost Properties Financial Information”Projections Utilized by the Companies’ Boards and Financial Advisors” beginning on page 115.112.
J.P. Morgan’s opinion is based onIn its analyses, Citi considered industry performance, general business, economic, market and financial conditions and other conditions as in effect on, and the information made available to J.P. Morganmatters existing as of the date of such opinion. Subsequent developmentsits opinion, many of which are beyond the control of MAA and Post Properties. No company, business or transaction used in those analyses as a comparison is identical or directly comparable to MAA, Post Properties or the mergers and an evaluation of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, business segments reviewed or transactions analyzed.
The estimates contained in Citi’s analyses and the valuation ranges resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may affect J.P. Morgan’s written opinion dated June 1, 2013, and J.P. Morgan does not have any obligation to update, revise,be significantly more or reaffirm such opinion. J.P. Morgan’s opinion is limitedless favorable than those suggested by its analyses. In addition, analyses relating to the fairness,value of
businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the results derived from, a financial pointCiti’s analyses are inherently subject to substantial uncertainty.
Citi was not requested to, and it did not, recommend the specific consideration payable in the mergers. The type and amount of view,consideration payable in the mergers was determined through negotiations between MAA and Post Properties and the decision to enter into the mergers was solely that of the exchange ratioMAA Board. Citi’s opinion was only one of many factors considered by the MAA Board in its evaluation of the mergers and should not be viewed as determinative of the views of the MAA Board or MAA’s management with respect to the mergers or the consideration payable in the parent merger, and J.P. Morgan has expressed no opinion as to the fairness of the parent merger to, or any consideration of, the holders of any class of securities, creditors or other constituencies of MAA or the underlying decision by MAA to engage in the parent merger. J.P. Morgan expressed no opinion as to the price at which shares of MAA’s common stock or Colonial’s common shares will trade at any future time, whether before or after the closing of the parent merger.mergers.
In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with providing its opinion.
Public Trading Multiples. Using publicly available information, including published equity research analysts’ estimates of Funds From Operations, which we refer to as FFO, per share and Adjusted Funds From Operations, which we refer to as AFFO, per share for calendar year 2014, which we refer to as CY14, J.P. Morgan analyzed certain trading multiples of other selected publicly traded REITs. None of the selected REITs are identical to MAA or Colonial. However, the selected REITs were chosen because they are publicly traded REITs with operations that, for purposes of the analysis of J.P. Morgan, may be considered similar to those of MAA and Colonial, including primarily the ownership of multifamily real estate.
For each of the selected REITs, J.P. Morgan calculated the multiple of equity market price per sharepresented to the median estimate of CY14 FFO per share and AFFO per share, as reported by equity research analysts as of May 30, 2013. J.P. Morgan also calculated the same trading multiples for MAA and Colonial based on equity research analyst data and data provided by MAA management. In J.P. Morgan’s view, the FFO and AFFO metrics used by equity research analysts and MAA management were sufficiently similar so as not to materially affect this analysis.
The following presents the results of this analysis:
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J.P. Morgan also calculated the trading multiples above for Colonial taking into account adjustments for $217 million of assets under letters of intent or recently completed property divestitures and $108 million for the value of land. Factoring in these adjustments, the Colonial CY14 FFO and AFFO per share would be 12.4x and 15.5x, respectively, based on equity research estimates, and 13.6x and 15.3x, respectively, based on MAA management estimates.
Based on the above analysis and other factors J.P. Morgan considered appropriate, J.P. Morgan then applied a multiple reference range of 13.0x to 16.0x for CY14 FFO per share and 15.0x to 19.0x for CY14 AFFO per share. The analysis indicated the following equity values per share of MAA common stock and Colonial common share.
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Net Asset Value Analysis. J.P. Morgan prepared a per share net asset value analysis for MAA using 2013 estimated cash net operating income and asset and liability balances as of March 31, 2013. Capitalization rate ranges varied by property based on the type of property, property age, location, property quality and other factors. J.P. Morgan applied a range of capitalization rates, which differed by asset, of 5.00%, at the low end, to 7.50%, at the high end, to the 2013 estimated cash net operating income for each property in MAA’s portfolio to arrive at an aggregate value for the property portfolio at March 31, 2013. The capitalization rate range represented estimated private market capitalization rates by property type, market size and quality based on research analyst estimates. To this aggregate value amount, J.P. Morgan added the value of other tangible real estate and non-real estate assets, including land and capital improvement projects. From gross asset value, J.P. Morgan deducted debt balances, other tangible liabilities, a debt mark-to-market adjustment and a swap mark-to-market adjustment.
J.P. Morgan prepared a per share net asset value analysis for Colonial using 2013 estimated cash net operating income and asset and liability balances as of March 31, 2013. Capitalization rate ranges varied by property based on the type of property, property age, location, property quality and other factors. J.P. Morgan applied a range of capitalization rates, which differed by asset, of 4.25%, at the low end, to 7.00%, at the high end, to the 2013 estimated cash net operating income for each multifamily property in Colonial’s portfolio to arrive at an aggregate value for the property portfolio at March 31, 2013. Similarly, J.P. Morgan applied a range of capitalization rates, which differed by asset, of 6.50%, at the low end, to 9.00%, at the high end, to the 2013 estimated cash net operating income for each commercial property in Colonial’s portfolio to arrive at an aggregate value for the property portfolio at March 31, 2013. The capitalization rate range represented the estimated private market capitalization rates by property type, market size and quality based on research analyst estimates. To this aggregate value amount, J.P. Morgan added the value of other tangible real estate and non-real estate assets, including land and capital improvement projects. From gross asset value, J.P. Morgan deducted debt balances, other tangible liabilities, a debt mark-to-market adjustment and a swap mark-to-market adjustment. Synergies were not taken into account in the net asset value analysis for either MAA or Colonial. The analysis indicated the following equity values per share of MAA common stock and Colonial common share.
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Discounted Cash Flow Analysis. J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining the fully diluted equity value per share for each of MAA’s common stock and Colonial’s common shares. J.P. Morgan calculated the unlevered free cash flows that MAA and Colonial are expected to generate during fiscal years 2013 through 2022 based on projections and extrapolations provided by MAA’s management through 2017 and additional extrapolations reviewed and approved by MAA’s management. For purposes of the J.P. Morgan opinion, “unlevered free cash” was calculated by taking the Earnings Before Interest, Taxes, Depreciation and Amortization (including cost of stock-based compensation treated as a cash expense), subtracting capital expenditures, subtracting property acquisition costs, adding property or joint venture disposition proceeds, subtracting development spending and adjusting for changes in working capital.
The following table presents the sum of capital expenditures, property acquisition costs, property or joint venture disposition proceeds and development spending, adjusted for changes in working capital, as projected by MAA management for fiscal years 2013 through 2017 and provided by MAA management to J.P. Morgan:
($ in million) | 2013 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||
MAA | $ | (277 | ) | $ | (334 | ) | $ | (322 | ) | $ | (325 | ) | $ | (330 | ) | |||||
Colonial | $ | (106 | ) | $ | (170 | ) | $ | (13 | ) | $ | (55 | ) | $ | (60 | ) | |||||
J.P. Morgan also calculated a range of terminal asset values of each of MAA and Colonial at the end of the 10-year period ending December 31, 2022 by applying a perpetual growth rate ranging from 2.25% to 2.75% of the unlevered free cash flow of each company during the final year of the 10-year period. The unlevered free cash flows and the range of terminal asset values were then discounted to present values using a range of discount rates from 7.5% to 8.0%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of selected REITs, which were chosen because they are publicly traded REITs with operations that, for purposes of the analysis of J.P. Morgan, may be considered similar to those of MAA and Colonial, including primarily the ownership of multifamily real estate. The present value of the unlevered free cash flows and the range of terminal asset values were then adjusted for each company’s cash and debt balances as of March 31, 2013. The Colonial value was further adjusted based on the value of assets under letters of intent or recently completed property divestitures of $217 million and the value of land not developed by 2022 of $51 million, based on estimates derived from information provided by Colonial management. The analysis indicated the following equity values per share of MAA common stock and Colonial common share.
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Relative Value Analysis. Based upon a comparison of the range of implied equity values for each of MAA and Colonial calculated pursuant to the trading multiples analysis, net asset value analysis and discounted cash flow analysis, J.P. Morgan calculated a range of implied exchange ratios for the transaction. This analysis indicated the following implied exchange ratios:
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J.P. Morgan then compared the range of implied exchange ratios above to the natural exchange ratio of 0.325x (calculated as Colonial’s market price divided by MAA’s market price as of May 30, 2013) and the exchange ratio of 0.360x.
Value Creation Analysis—Intrinsic Value Approach. J.P. Morgan prepared a value creation analysis that compared the implied equity value of MAA’s common stock per share based on the discounted cash flow analysis to the pro forma Combined Corporation equity value per share. The pro forma Combined Corporation equity value was equal to: (1) (a) the mid-point equity value of MAA using discounted cash flow analysis at a discount rate of 7.75%, plus (b) the mid-point equity value of Colonial using discounted cash flow analysis at a discount rate of 7.75%, plus (c) the net present value of expected synergies calculated by discounting the expected cash flows from MAA management’s estimated synergies at a discount rate of 7.75%, less (d) an estimated $60 million of costs to achieve such synergies and transaction-related expenses; divided by (2) pro forma diluted shares outstanding of the Combined Corporation common stock. There can be no assurance that the synergies, estimated cost to achieve such synergies or estimated transaction-related expenses will not be
substantially greater or less than MAA management’s estimates. Similarly, there can be no assurance that the discount rate will not be substantially greater or less than J.P. Morgan’s estimates. This analysis, at the exchange ratio of 0.360x provided for in the parent merger, resulted in an implied value creation to the holders of MAA common stock of 8.2%.
Other Analyses. J.P. Morgan also noted the historical exchange ratio and accretion/dilution analyses described below for reference purposes only and not as a component of its fairness analysis. These analyses did not form a basis for, and were not relied on in forming, J.P. Morgan’s opinion.
J.P. Morgan calculated (1) the implied historical exchange ratios during the one-year period ended May 30, 2013 by dividing the daily closing price per Colonial common share by that of a share of MAA common stock for each trading day during that period and (2) the average of those daily implied historical exchange ratios for the ten-days, one-month, three-months, six-months, and one-year periods ending May 30, 2013. J.P. Morgan also noted the low and high exchange ratios for each period referenced in clause (2) above and the resulting premiums of the proposed exchange ratio to the average exchange ratios for each such period. The analysis resulted in the following implied exchange ratios for the periods indicated, as compared to the exchange ratio of 0.360x provided for in the parent merger:
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J.P. Morgan reviewed the potential pro forma financial effects of the parent merger, taking into account, among other things, MAA management’s estimated synergies, on the Combined Corporation’s estimated FFO and AFFO during calendar years 2014 and 2015. Based on the exchange ratio in the parent merger, this analysis indicated that, on a pro forma basis, the parent merger could be accretive relative to the Combined Corporation’s estimated FFO during calendar years 2014 and 2015 and dilutive relative to the Combined Corporation’s estimated AFFO during calendar years 2014 and 2015.
The following presents the results of this analysis:
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FFO per share accretion/dilution | ||||||||
2014E | $ | 0.12 | 2.3 | % | ||||
2015E | $ | 0.09 | 1.7 | % | ||||
AFFO per share accretion/dilution | ||||||||
2014E | ($ | 0.08 | ) | (1.7 | %) | |||
2015E | ($ | 0.03 | ) | (0.7 | %) | |||
The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. None of
the selected companies reviewed as described in the above summary is identical to MAA or Colonial. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of MAA or Colonial. The analysis necessarily involves complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to MAA or Colonial.
As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. J.P. Morgan was selected to advise MAA with respect to the parent merger on the basis of such experience and its familiarity with MAA.
For services renderedBoard in connection with the parent merger, MAA has agreed to pay J.P. Morgan a feedelivery of $12 million, $2 millionCiti’s opinion. Some of which was payable upon delivery by J.P. Morgan of its opinion and the remainder of which will be payable contingent upon closing of the parent merger. In additionthese analyses included public information, including observed multiples, that had been updated to the transaction fee, MAA may, at its sole discretion, pay J.P. Morgan an additional discretionary fee at closing of $2 million, based on MAA’s assessment of J.P. Morgan’s performance of its services rendered in connection with the parent merger. In addition, MAA has agreed to reimburse J.P. Morgan for its reasonable expenses incurred in connection with its services, including the reasonable fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities, including liabilities arising under the Federal securities laws.
During the two years preceding the date of its oral opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with MAA, for which J.P. Morgan and its affiliates received compensation in the aggregate amount of approximately $2.5 million, of which $2.0 million represents the compensation paid to J.P. Morgan upon delivery of its fairness opinion. Such services during such period have included acting as co-lead arranger on MAA’s term loan credit facility in March of 2012 and acting as joint bookrunner on MAA’s equity offering in March of 2013. In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under certain outstanding credit facilities of MAA. In June 2013, following delivery of its oral opinion, J.P. Morgan’s commercial banking affiliate also agreed to act as administrative agent, lead arranger and lender under MAA’s new term loan credit facility. During such period, neither J.P. Morgan nor its affiliates have had any material financial advisory or other material commercial or investment banking relationships with Colonial. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of MAA or Colonial for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities.
Opinion of Colonial’s Financial Advisor
Colonial has retained BofA Merrill Lynch to act as Colonial’s financial advisor in connection with the mergers. BofA Merrill Lynch is an internationally recognized investment banking firm, which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Colonial selected BofA Merrill Lynch to act as Colonial’s financial advisor on the basis of BofA Merrill Lynch’s experience in similar transactions, its reputation in the investment community and its familiarity with Colonial and its business.
At a June 2, 2013 meeting of the Colonial Board held to evaluate the parent merger, BofA Merrill Lynch rendered to the Colonial Board an oral opinion, confirmed by delivery of a written opinion dated June 2, 2013, to the effect that, as of that date and based on and subject to various assumptions and limitations described in the opinion, the exchange ratio provided for in the parent merger was fair, from a financial point of view, to the holders of Colonial common shares.
The full text of BofA Merrill Lynch’s written opinion, dated June 2, 2013, is attached as Annex G to this joint proxy statement/prospectus and is incorporated in this document by reference. The written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken by BofA Merrill Lynch in rendering its opinion. The following summary of BofA Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. BofA Merrill Lynch delivered its opinion to the Colonial Board for the benefit and use of the Colonial Board (in its capacity as such) in connection with and for purposes of its evaluation of the exchange ratio provided for in the parent merger from a financial point of view. BofA Merrill Lynch’s opinion did not address any other aspect of the mergers and no opinion or view was expressed as to the relative merits of the mergers in comparison to other strategies or transactions that might belatest available to Colonial or in which Colonial might engage or as to the underlying business decision of Colonial to proceed with or effect the mergers. BofA Merrill Lynch also expressed no opinion or recommendation as to how any shareholder should vote or act in connection with the mergers or any other matter.
In connection with its opinion, BofA Merrill Lynch, among other things:
reviewed certain publicly available business and financial information relating to Colonial and MAA;
reviewed certain internal financial and operating information with respect to the business, operations and prospects of Colonial furnished to or discussed with BofA Merrill Lynch by Colonial’s management, including certain financial forecasts relating to Colonial prepared by Colonial management, referred to as the Colonial forecasts;
reviewed certain internal financial and operating information with respect to the business, operations and prospects of MAA furnished to or discussed with BofA Merrill Lynch by MAA’s management, including certain financial forecasts relating to MAA prepared by such management, referred to as the MAA forecasts;
reviewed certain estimates as to the amount and timing of cost savings, referred to as the cost savings, anticipated by the managements of Colonial and MAA to result from the mergers;
discussed with the management of Colonial and MAA the past and current business, operations, financial condition and prospects of Colonial and MAA;
reviewed the potential pro forma financial impact of the transaction to be effected by the mergers on the future financial performance of MAA after taking into account potential cost savings, including the potential effect on MAA’s estimated funds from operations and adjusted funds from operations;
reviewed the trading histories for Colonial common shares and shares of MAA common stock and a comparison of such trading histories with each other and with the trading histories of other companies BofA Merrill Lynch deemed relevant;
compared certain financial and stock market information of Colonial and MAA with similar information of other companies BofA Merrill Lynch deemed relevant;
compared certain financial terms of the parent merger to financial terms, to the extent publicly available, of other transactions BofA Merrill Lynch deemed relevant;
reviewed the relative financial contributions of Colonial and MAA to the future financial performance of the Combined Corporation on a pro forma basis;
reviewed a draft dated June 2, 2013 of the merger agreement; and
performed such other analyses and studies and considered such other information and factors as BofA Merrill Lynch deemed appropriate.
In arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with BofA Merrill Lynch and relied upon assurances of the managements
of Colonial and MAA that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the Colonial forecasts, the MAA forecasts and the cost savings, BofA Merrill Lynch was advised by the managements of Colonial and MAA, and BofA Merrill Lynch assumed, with Colonial’s consent, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of such managements as to the future financial performance of Colonial and MAA and the other matters covered thereby, and further assumed, with Colonial’s consent, that such cost savings would be realized in the amounts and at the times projected. BofA Merrill Lynch relied, at Colonial’s direction, upon the assessments of the managements of Colonial and MAA as to the ability to integrate the businesses and operations of Colonial and MAA.
BofA Merrill Lynch did not make and was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Colonial, MAA or any other entity, nor did BofA Merrill Lynch make any physical inspection of the properties or assets of Colonial, MAA or any other entity. BofA Merrill Lynch did not evaluate the solvency or fair value of Colonial, MAA or any other entity under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch assumed, at Colonial’s direction, that the mergers would be consummated in accordance with their terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the mergers, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on Colonial, MAA or the mergers (including the contemplated benefits thereof) and that no such adverse effect would result in the event that the mergers were effected through an alternative structure as permitted under the terms of the merger agreement. BofA Merrill Lynch also assumed, at Colonial’s direction, that the final executed merger agreement would not differ in any material respect from the draft merger agreement reviewed by BofA Merrill Lynch. BofA Merrill Lynch further assumed, at Colonial’s direction, that the parent merger would qualify for U.S. federal income tax purposes as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended, and that the partnership merger would qualify as an “asset-over” form of merger under Treasury Regulations Section 1.708-1(c)(3)(i). BofA Merrill Lynch was advised by Colonial and MAA that each of Colonial and MAA had operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes since its formation as a REIT and further assumed, at Colonial’s direction, that the mergers would not adversely affect such status or operations of Colonial or MAA.
BofA Merrill Lynch expressed no view or opinion as to any terms or other aspects or implications of the mergers (other than the exchange ratio provided for in the parent merger to the extent expressly specified in its opinion), including, without limitation, the form or structure of the mergers, any terms, aspects or implications of the partnership merger (including any consideration payable in such partnership merger), any transfer of assets contemplated to be undertaken in connection with the mergers or any other arrangements, agreements or understandings entered into in connection with or related to the mergers or otherwise. BofA Merrill Lynch was not requested to, and it did not, solicit indications of interest or proposals from third parties regarding a possible acquisition of all or any part of Colonial or any alternative transaction; however, at Colonial’s direction, BofA Merrill Lynch held preliminary discussions with selected third parties that had contacted, or had been contacted by, Colonial. BofA Merrill Lynch’s opinion was limited to the fairness, from a financial point of view, of the exchange ratio provided for in the parent merger to the holders of Colonial common stock and no opinion or view was expressed with respect to any consideration received in connection with the mergers by the holders of any class of securities, creditors or other constituencies of any party. In addition, BofA Merrill Lynch expressed no opinion or view with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any officers, directors, trustees or employees of any party to the mergers, or class of such persons, relative to the exchange ratio or otherwise. BofA Merrill Lynch also expressed no view or opinion with respect to, and relied, with Colonial’s consent, upon the assessments of Colonial’s representatives regarding, legal, regulatory, accounting, tax and similar matters relating to Colonial, MAA and the mergers (including the contemplated benefits thereof) as to which BofA Merrill Lynch understood that Colonial obtained such advice as it deemed necessary from qualified professionals. BofA Merrill Lynch further did not express any opinion as to
what the value of the shares of MAA common stock actually would be when issued or the prices at which Colonial common shares or MAA common stock would trade at any time, including following announcement or consummation of the mergers.
BofA Merrill Lynch’s opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Merrill Lynch as of the date of its opinion. The credit, financial and stock markets have been experiencing unusual volatility and BofA Merrill Lynch expressed no opinion or view as to any potential effects of such volatility on Colonial, MAA or the mergers. Although subsequent developments may affect BofA Merrill Lynch’s opinion, BofA Merrill Lynch does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Merrill Lynch’s opinion was approved by BofA Merrill Lynch’s Americas Fairness Opinion Review Committee. Except as described in this summary, Colonial imposed no other instructions or limitations on the investigations made or procedures followed by BofA Merrill Lynch in rendering its opinion.
The following is a brief summarytime of the material financial analyses provided by BofA Merrill Lynchpresentation and which were presented orally to the ColonialMAA Board in connection withat its opinion, dated June 2, 2013.meeting on August 12, 2016. The financial analyses summarized below include information presented in tabular format. In order to fully understand theCiti’s financial analyses, performed by BofA Merrill Lynch, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Merrill Lynch.analyses. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Citi’s financial analyses. All of the equity reference ranges, other than with respect to the historical trading analysis, have been rounded to the nearest dollar unless indicated otherwise.
Selected Public Companies Analyses
Using publicly available information, including (a) published equity research analysts’ estimates of calendar year 2017 funds from operations, which we refer to as FFO, per share, (b) published equity research analysts’ estimates of calendar year 2017 earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, and (c) published equity research analysts’ estimates for net asset value per share, Citi analyzed certain trading multiples for FFO and EBITDA and/or premium or discount to net asset value of the following publicly traded REITs:
For each of the selected REITs, using information as of August 12, 2016, Citi calculated (i) the multiple of equity market price per share to the mean estimate of 2017 FFO per share, as reported by equity research analysts, (ii) the multiple of equity market price per share to the mean estimate of 2017 EBITDA per share, as reported by equity research analysts and (iii) the premium or discount to the mean net asset value per share, as reported by equity research analysts.
Based on the above analysis, Citi then applied a multiple reference range of 18.8x to 23.6x for 2017E EBITDA per share, 18.1x to 20.9x for 2017E FFO per share and a discount range of (6.8%) to (2.5%) to the net asset value per share (which ranges were selected based on the maximum and minimum per share multiple or premium/(discount) calculated in the analysis using the selected publicly traded REITs referenced above). The analysis indicated the following equity values per share for MAA common stock and Post Properties common stock:
| Equity Value per MAA Share | Equity Value per Post Properties Share | |||||||
Price / 2017E EBITDA per share multiple | $ | 108.83 – $148.29 | $ | 60.63 – $81.29 | ||||
Price / 2017E FFO per share multiple | $ | 113.99 – $131.25 | $ | 61.13 – $70.39 | ||||
Price / Premium / (Discount) to net asset value per share | $ | 95.82 – $100.23 | $ | 67.02 – $70.10 | ||||
Net Asset Value Analysis
Citi prepared a per share net asset value analysis for MAA using estimated 2016 adjusted net operating income and asset and liability balances as of August 12, 2016. Capitalization rates ranges varied by property based on the type of property, property age, location, property quality and other factors. Citi applied a range of capitalization rates, which differed by asset and which were based on guidance from MAA management, of 4.95% to 5.45% to the estimated 2016 adjusted net operating income for each property in MAA’s portfolio (after adjusting the property’s net operating income to account for capital expenditures of $350 per unit and a management fee of 3.0% of net operating income) to arrive at an aggregate value for the property portfolio. To this aggregate value amount, Citi added the value of other tangible real estate and non-real estate assets, including land and cash and cash equivalents. From gross asset value, Citi deducted debt balances, capitalized franchise and income taxes, accounts payable, accrued expenses, other tangible liabilities and a debt mark-to-market adjustment.
Citi prepared a per share net asset value analysis for Post Properties using 2016 estimated adjusted net operating income and asset and liability balances as of August 12, 2016. Capitalization rates ranges varied by property based on the type of property, property age, location, property quality and other factors. Citi applied a range of capitalization rates, which differed by asset and which were based on guidance from MAA management, of 4.67% to 6.64% to the 2016 estimated adjusted net operating income, which was based on guidance from Post Properties management, for each property in Post Properties’ portfolio (after adjusting the property’s net operating income to account for capital expenditures of $300 per unit and a management fee of 2.75% of net operating income) to arrive at an aggregate value for the property portfolio. To this aggregate value amount, Citi added the value of other tangible real estate and non-real estate assets, including land, cash and cash equivalents and other assets from unconsolidated entities. From gross asset value, Citi deducted debt balances, preferred equity, other tangible liabilities, liabilities from unconsolidated entities and a debt mark-to-market adjustment.
The analysis indicated the following equity values per share of MAA common stock and Post Properties common stock:
| Equity Value per MAA Share | Equity Value per Post Properties Share | |||||||
Net asset valuation analysis | $ | 96.28 – $110.07 | $ | 67.41 – $76.93 | ||||
Discounted Cash Flow Analyses
Citi performed a discounted cash flow analysis of each of MAA and Post Properties in which Citi calculated the estimated present value of the stand-alone unlevered free cash flows that MAA and Post Properties were forecasted to generate during the second half of the calendar year ending December 31, 2016 through the full calendar year ending December 31, 2021. Financial data used in this analysis was based on the respective management forecasts of MAA and Post Properties.
With respect to Citi’s discounted cash flow analysis of MAA, unlevered free cash flow was calculated by taking EBITDA, adding property or joint venture disposition proceeds, subtracting property acquisition costs, subtracting capital expenditures and subtracting certain cash income taxes. Citi also calculated a range of terminal asset values of MAA at the end of the forecast period ending December 31, 2021 by applying a one-year growth rate to the unlevered free cash flow of MAA during the final year of the forecast period and a selected range of terminal multiples of 16.5x to 17.5x (which is based on the trading range for MAA over the last 12 months). The unlevered free cash flows and the range of terminal asset values were then discounted to present values using a range of discount rates from 5.4% to 6.1% based on an estimate of MAA’s weighted average cost of capital. The present value of the unlevered free cash flows and the range of terminal asset values were then adjusted for MAA’s cash and debt balances as of June 30, 2016.
With respect to Citi’s discounted cash flow analysis of Post Properties, unlevered free cash flow was calculated by taking EBITDA, subtracting capital expenditures, subtracting property and minority interest acquisition costs, and adding joint venture disposition proceeds. Citi also calculated a range of terminal asset values of Post Properties at the end of the forecast period ending December 31, 2021 by applying a one-year growth rate to the unlevered free cash flow of Post Properties during the final year of the forecast period and a selected range of terminal multiples of 19.0x to 20.0x (which is based on the trading range for Post Properties over the last 12 months). The unlevered free cash flows and the range of terminal asset values were then discounted to present values using a range of discount rates from 5.7% to 6.6% based on an estimate of Post Properties’ weighted average cost of capital. The present value of the unlevered free cash flows and the range of terminal asset values were then adjusted for Post Properties’ cash and debt balances as of June 30, 2016.
| Equity Value per MAA Share | Equity Value per Post Properties Share | |||||||
Discounted cash flow analysis | $ | 96.96 – $109.53 | $ | 63.95 – $71.89 | ||||
Selected Precedent Transactions Analysis
Using public filings and publicly available information, Citi reviewed financial data for the selected transactions set forth in the table below. These transactions were selected because they involved publicly traded REITs with, based on Citi’s experience with mergers and acquisitions, certain financial, operational or business characteristics that, in Citi’s view, made them sufficiently comparable to MAA, Post Properties and the mergers or otherwise relevant for purposes of the comparison.
For each of the transactions, Citi reviewed, among other things, (a) the transaction value in each transaction as a multiple of the target company’s EBITDA for the next twelve months as of the time of the transaction and (b) the per share consideration paid relative to the target company’s net asset value per share.
Announcement | Acquiror | Target | ||
September 2015 | Starwood Capital Group / Milestone Apartment REIT | Landmark Apartment Trust | ||
June 2015 | Lone Star Funds | Home Properties | ||
April 2015 | Brookfield Asset Management | Associated Estates Realty Corporation | ||
December 2013 | Essex Property Trust | BRE Properties | ||
June 2013 | Mid-America Apartment Communities | Colonial Properties Trust |
Based on the above analysis, Citi then applied a multiple reference range of 17.5x to 22.5x for EBITDA over the next twelve month period, which we refer to as NTM EBITDA, and a premium / (discount) ranging from (8.4%) to 14.4% for net asset value per share (which ranges were selected based on the maximum and minimum per share multiple or premium/(discount) calculated in the analysis for the above referenced transactions) to Post Properties’ NTM EBITDA and net asset value per share, in each case based on balance sheet information as of June 30, 2016. The analysis indicated the following equity values per share for Post Properties common stock:
| Equity Value per Post Properties Share | ||||
Price / NTM EBITDA per share multiple | $ | 53.26 – $74.15 | ||
Price / Premium/(Discount) to net asset value per share | $ | 65.92 – $82.26 | ||
Relative Value Analysis
Based upon a comparison of the range of implied equity values for each of MAA and Post Properties calculated pursuant to the trading multiples analysis, net asset value analysis, discounted cash flow analysis and precedent transaction analysis, Citi calculated a range of implied exchange ratios for the mergers. This analysis indicated the following implied exchange ratios:
| Range of Implied Exchange Ratios | ||||
Public trading multiple | ||||
Price / 2017E EBITDA per share multiple | 0.41x – 0.75x | |||
Price / 2017E FFO per share multiple | 0.47x – 0.62x | |||
Price / Premium/(Discount) to net asset value per share | 0.67x – 0.73x | |||
Net asset value analysis | 0.61x – 0.80x | |||
Discounted cash flow analysis | 0.58x – 0.74x | |||
Precedent transaction analysis(1) | ||||
Price / NTM EBITDA per share multiple | 0.52x – 0.73x | |||
Price / Premium/(Discount) to net asset value per share | 0.65x – 0.81x | |||
| (1) | To calculate the range of implied exchange ratios in the precedent transaction analysis, Citi used the closing price of MAA common stock on the NYSE on August 12, 2016 of $102.15. |
Citi then compared the range of implied exchange ratios above to the exchange ratio of 0.71x provided for in the parent merger.
Other Information
Citi also observed certain additional information that was not considered part of Citi’s financial analyses with respect to its opinion, but was referenced for informational purposes, including, among other things:
Miscellaneous
Under the terms of Citi’s engagement in connection with the mergers, MAA has agreed to pay Citi an aggregate fee of $11 million, $1 million of which was payable upon delivery by Citi of its opinion and the
remainder of which is payable contingent upon consummation of the mergers. In addition to the amount payable upon delivery by Citi of its opinion, in the event that the mergers are not consummated and MAA receives a termination fee from Post Properties, Citi may receive a fee of either $2.5 million or $5.0 million depending on the size of the termination fee received by MAA. In addition, subject to certain limitations, MAA has agreed to reimburse Citi for certain expenses, including reasonable travel and other expenses incurred by Citi in performing its services, including reasonable fees and expenses of its legal counsel, and to indemnify Citi and related parties against liabilities, including liabilities under federal securities laws, arising from Citi’s engagement.
Citi and its affiliates in the past have provided, and currently provide, services to MAA unrelated to the proposed mergers, for which services Citi and its affiliates have received and expect to receive compensation, including, having acted as (i) co-manager on MAA’s $400 million bond issuance in June 2014, (ii) book-runner on MAA’s $400 million bond issuance in November 2015 and (iii) a lender under MAA’s $750 million revolving credit facility. During the two-year period prior to the date of Citi’s opinion, Citi and its affiliates received aggregate fees of less than $1 million from MAA for investment banking services to MAA during such period. During such period, neither Citi nor its affiliates provided any investment banking services to Post Properties. In the ordinary course of business, Citi and its affiliates may actively trade or hold the securities of MAA and Post Properties for Citi’s and its affiliates’ own account or for the account of customers and, accordingly, may at any time hold a long or short position in such securities. In addition, Citi and its affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with MAA, Post Properties and their respective affiliates.
MAA selected Citi to act as its financial advisor in connection with the mergers based on Citi’s reputation, experience and familiarity with MAA and its business. Citi is an internationally recognized investment banking firm that regularly engages in the valuation of businesses and their securities in connection with transactions and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes.
Opinion of Post Properties’ Financial Advisor
Pursuant to an engagement letter dated July 30, 2016, Post Properties retained J.P. Morgan as its financial advisor in connection with the parent merger. At the meeting of the Post Properties Board held on August 14, 2016 at which the parent merger was approved, J.P. Morgan rendered to the Post Properties Board an oral opinion, later confirmed by delivery of a written opinion, dated August 14, 2016, to the effect that, as of such date and based upon and subject to the various factors, assumptions, qualifications and limitations set forth in such written opinion, the exchange ratio in the proposed parent merger was fair, from a financial point of view, to the holders of shares of Post Properties common stock.
The full text of the written opinion of J.P. Morgan, dated August 14, 2016, which sets forth, among other things, the assumptions made, matters considered, and qualifications and any limitations on the opinion and the review undertaken by J.P. Morgan in connection with rendering its opinion, is attached as Annex E to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Post Properties shareholders are urged to read the opinion carefully and in its entirety. J.P. Morgan’s written opinion was addressed to the Post Properties Board (in its capacity as such) in connection with and for the purposes of its evaluation of the parent merger, was directed only to the fairness, from a financial point of view, to the holders of Post Properties common stock of the exchange ratio in the parent merger and did not address any other aspect of the parent merger or the other transactions contemplated by the merger agreement. J.P. Morgan was not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of Post Properties or any alternative transaction. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any shareholder of Post Properties as to how such shareholder should vote with respect to the parent merger or any other matter.
In arriving at its opinion, J.P. Morgan, among other things:
In addition, J.P. Morgan held discussions with certain members of the management of Post Properties and MAA with respect to certain aspects of the proposed parent merger, and the past and current business operations of Post Properties and MAA, the financial condition and future prospects and operations of Post Properties and MAA, the effects of the parent merger on the financial condition and future prospects of Post Properties and MAA, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry. J.P. Morgan also noted that each issued and outstanding share of the Post Properties preferred stock would convert into a share of newly issued MAA preferred stock having terms substantially the same as those of the Post Properties preferred stock and that Post LP would merge with and into MAA LP with MAA LP continuing as the surviving entity.
In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by BofA Merrill Lynch.Post Properties and MAA or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to its engagement letter with Post Properties, did not assume any obligation to undertake such independent verification. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Post Properties or MAA under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, including the Synergies, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Post Properties and MAA to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts (including the Synergies) or the assumptions on which they were based. J.P. Morgan also assumed that the parent merger and the other transactions contemplated by the merger agreement would qualify as a tax-free reorganization for United States federal income tax purposes and would be consummated as described in the merger agreement, and that the definitive merger agreement would not differ in any material respects from the draft thereof furnished to J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by Post Properties and MAA in the merger agreement and the related agreements were and will be true and correct in all respects material to J.P. Morgan’s analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to Post Properties with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the proposed parent merger would be obtained without any adverse effect on Post Properties or MAA or on the contemplated benefits of the proposed parent merger.
J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of the opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm its opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, to the holders of shares of Post Properties common stock of the exchange ratio in the parent merger and J.P. Morgan expressed no opinion as to the fairness of any consideration to be paid in connection with the parent merger to the holders of any other class of securities, creditors or other constituencies of Post Properties or as to the underlying decision by Post Properties to engage in the parent merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the parent merger, or any class of such persons relative to the exchange ratio applicable to the holders of shares of Post Properties common stock in the parent merger or with respect to the fairness of any such compensation. For purposesJ.P. Morgan expressed no opinion as to the price at which the shares of Post Properties common stock or MAA common stock will trade at any future time.
The terms of the merger agreement, including the exchange ratio, were determined through arm’s length negotiations between Post Properties and MAA, and the decision to enter into the merger agreement was solely that of the Post Properties Board and MAA Board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Post Properties Board in its evaluation of the proposed parent merger and should not be viewed as determinative of the views of the Post Properties Board or management with respect to the proposed parent merger or the exchange ratio.
In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methods in connection with its opinion. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with rendering its opinion to the Post Properties Board on August 14, 2016 and contained in the presentation delivered to the Post Properties Board on such date in connection with the rendering of such opinion and does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses summarized below, the term “implied merger consideration value” refersinclude information presented in tabular format. The tables are not intended to $24.47 per share calculated as the implied value of the merger consideration based on the 0.360 fixed exchange ratiostand alone, and MAA’s closing stock price of $67.97 per share on May 31, 2013. Implied equity value reference ranges derived for Colonial from the analyses described below generally were rounded to the nearest $0.25. In calculating implied exchange ratio reference ranges as reflected in such analyses, BofA Merrill Lynch (i) compared the low-end of the approximate implied per share equity value reference ranges for Colonial to the high-end of the approximate implied per share equity value reference ranges for MAA in order to derivemore fully understand the low-endfinancial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.
52-Week Historical Exchange Ratio Trading Analysis
J.P. Morgan reviewed the 52-week intraday trading range of the Post Properties common stock price and the MAA common stock price for the period ending August 12, 2016. The reference ranges were as follows:
Post Properties | ||||
52-week high | $ | 67.61 | ||
52-week low | $ | 52.08 | ||
MAA | ||||
52-week high | $ | 110.01 | ||
52-week low | $ | 75.00 | ||
J.P. Morgan calculated the implied exchange ratio reference rangesbased on the closing stock price for Post Properties and (ii) comparedMAA for each day over the high-end of the approximate implied per share equity reference ranges for Colonial to the low-end of the approximate implied per share equity reference ranges for MAA in order to derive the high-end of thelast 52 weeks. The lowest implied exchange ratio was 0.558x, and the highest implied exchange ratio was 0.730x, in each case as compared to the exchange ratio of 0.710x in the proposed parent merger.
J.P. Morgan noted that the historical trading analysis was presented merely for reference ranges.purposes only, and was not relied upon for valuation purposes.
Public Trading Multiples Analysis
Using publicly available information, J.P. Morgan compared selected financial and market data of Post Properties and MAA with similar data for Colonial utilized in the financial analyses described below were pro forma for the sale of Colonial’s Three Ravinia Class A office asset.
Selected Public Companies Analysis.BofA Merrill Lynch reviewedcertain large cap and mid cap/regional publicly available financial and stock market information of Colonial, MAA and the following sixtraded REITs which in its professional judgment, BofA Merrill Lynch generally considered relevant for purposes of its analysisJ.P. Morgan judged to be sufficiently analogous to Post Properties and MAA, respectively. The companies were as U.S. publicly traded multifamily REITs, referred to as the selected companies:follows:
UDR, Inc.
Post Properties | MAA | |
| AIMCO | AIMCO | |
| AvalonBay | AvalonBay | |
| Camden Property Trust | Camden Property Trust | |
| Equity Residential | Equity Residential
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| Essex Property Trust | Essex Property Trust | |
| MAA | Post Properties | |
| UDR | UDR |
These companies were selected for each of Post Properties and MAA, among other reasons, because they are publicly traded REITs with operations that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Post Properties and MAA based on the nature of their assets and operations and the form and geographic location of their operations. However, certain of these companies may have characteristics that are materially different from those of Post Properties and MAA. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect Post Properties or MAA.
For each company listed above (other than Post Properties and MAA), J.P. Morgan calculated and compared the multiple of equity market price per share to research analysts’ consensus estimates for funds from operations, or FFO, and adjusted funds from operations, or AFFO, for the calendar year 2016, or P / 2016E FFO or P / 2016E AFFO, based on public filings, FactSet market prices, SNL Financial data, Green Street Advisors, or GSA market data and other publicly available information as of August 12, 2016. With respect to Post Properties and MAA, the estimated FFO and AFFO for the calendar year 2016 were based on financial forecasts for Post Properties prepared by Post Properties management and financial forecasts for MAA prepared by MAA management and provided by MAA management to Post Properties and adjusted and approved for J.P. Morgan use by Post Properties management.
Results of the analysis are as follows:
| P / 2016E FFO | P / 2016E AFFO | |||||||
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| 21.6x | 24.1x | ||||||
AvalonBay | 21.9x | 23.1x | ||||||
Large cap mean | 21.8x | 23.6x | ||||||
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Essex Property Trust | 20.9x | 22.7x | ||||||
UDR | 20.7x | 22.7x | ||||||
Camden Property Trust | 19.1x | 22.1x | ||||||
AIMCO | 19.4x | 22.8x | ||||||
Mid cap / regional mean | 20.0x | 22.6x | ||||||
Overall mean | 20.6x | 22.9x | ||||||
Overall median | 20.8x | 22.7x | ||||||
Post Properties | 19.1x | 22.3x | ||||||
MAA | 17.5x | 19.9x | ||||||
Based on the results of this analysis, J.P. Morgan derived multiple reference ranges for P / 2016E FFO of 18.5x – 20.5x for Post Properties and 17.0x – 19.0x for MAA, and for P / 2016E AFFO of 21.0x – 23.0x for Post Properties and 19.5x – 21.5x for MAA.
After applying such ranges to the respective estimated 2016 FFO and 2016 AFFO for each of Post Properties and MAA, the analysis indicated the following implied equity value per share ranges for Post Properties common stock and MAA common stock (rounded to the nearest $0.25):
Public Trading Multiples Analysis | Implied equity value Post Properties share
| Implied equity value per MAA | ||||||
P / 2016E FFO | $ | 60.50 – $67.00 | $ | 99.25 – $111.00 | ||||
P / 2016E AFFO | $ | 58.50 – $64.00 | $ | 100.25 – $110.50 | ||||
The range of implied equity value per share for Post Properties was compared to Post Properties’ closing share price of $62.22 on August 12, 2016, and an implied parent merger price based on the exchange ratio of $72.53 per share, and the range of implied equity value per share for MAA was compared to MAA’s closing share price of $102.15 on August 12, 2016.
J.P. Morgan then calculated (1) the ratio of the highest implied equity value per share for Post Properties to the lowest implied equity value per share for MAA, and (2) the ratio of the lowest implied equity value per share for Post Properties to the highest implied equity value per share for MAA to derive implied exchange ratio ranges. The range of implied exchange ratios was 0.544x to 0.673x for P / 2016E FFO, and the range of implied exchange ratios was 0.529x to 0.639x for P / 2016E AFFO, as compared to the exchange ratio in the parent merger of 0.71x.
Contribution Analysis
J.P. Morgan analyzed the contribution of each of Post Properties and MAA to the pro forma combined company with respect to equity value and management net asset value, and estimated EBITDA (defined as earnings before interest, taxes, depreciation and amortization), estimated FFO and estimated AFFO for calendar years 2016 and 2017, based on financial forecasts for Post Properties prepared by Post Properties management and financial forecasts for MAA prepared by MAA management and provided by MAA management to Post Properties and adjusted and approved for J.P. Morgan use by Post Properties management. For purposes of the contribution analysis, J.P. Morgan assumed that the contribution with respect to EBITDA reflected each company’s contribution to the combined company’s pro forma firm value and equity value contributions were derived by adjusting firm value contributions for outstanding net debt and preferred equity of Post Properties and outstanding net debt of MAA. J.P. Morgan further assumed that the contributions with respect to management net asset value, FFO and AFFO reflected each company’s contribution to the Combined Corporation pro forma equity value. Synergies were not taken into account in the contribution analysis. The analyses yielded an implied exchange ratio of 0.609x, with respect to equity value, and of 0.733x, with respect to management net asset value, as compared to the exchange ratio of 0.71x in the parent merger. The analyses yielded a range of implied exchange ratios of 0.530x to 0.569x, as compared to the exchange ratio of 0.71x in the parent merger, with respect to EBITDA, FFO and AFFO.
The contribution analysis was presented merely for reference purposes only, and was not relied upon for valuation purposes.
Management Net Asset Value Analysis
J.P. Morgan prepared a per share net asset value analysis for each of Post Properties and MAA based on Post Properties’ and MAA’s economic capitalization rates provided by Post Properties management to J.P. Morgan for its use in connection with its analyses and opinion. J.P. Morgan applied the range of economic capitalization rates provided to it of 4.77% to 5.27% for Post Properties and 5.20% to 5.70% for MAA to the
calendar year 2016 estimated economic net operating income (based on 2.75% management fees and $300 capex per unit, as per Post Properties management) of each company, in each case as provided to J.P. Morgan, in order to arrive at an aggregate value for each company’s real estate as of August 12, 2016. J.P. Morgan then added the value of land, construction in progress, and other tangible assets, and deducted debt, fair market value adjustments, and other tangible liabilities from these aggregate values as reviewed and approved by Post Properties’ management, in order to arrive at a range of implied net asset equity values for each company. The implied net asset equity values for Post Properties and MAA were divided by the number of shares outstanding at Post Properties and MAA, respectively, to arrive at a range of implied net asset values per share of Post Properties and MAA common stock.
The analysis indicated the following implied net asset value per share ranges for Post Properties and MAA common stock (rounded to the nearest $0.25):
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No company used in this analysis is identical or directly comparable to Colonial or MAA. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Colonial and
Selected Precedent Transactions Analysis.BofA Merrill Lynch reviewed publicly available financial information relating to the following five selected transactions which, in its professional judgment, BofA Merrill Lynch generally considered relevant for purposes of its analysis as transactions involving target companies that were U.S. publicly traded multifamily REITs, referred to as the selected transactions:
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BofA Merrill Lynch reviewed transaction values, based on the consideration payable in the selected transactions, as a multiple of the target company’s one-year forward FFO per share. The observed low, median, mean and high one-year forward FFO per share multiples for the selected transactions were 12.9x, 20.1x, 19.3x and 24.6x, respectively. BofA Merrill Lynch then applied a selected range of one-year forward FFO per share multiples derived from the selected transactions of 17.5x to 21.0x to Colonial’s calendar year 2013 estimated FFO per share. Financial data of the selected transactions were based on publicly available research analysts’ reports and financial data of Colonial were based on internal forecasts and estimates of Colonial’s management. This analysis indicated the following approximate implied per share equity value reference ranges for Colonial, as compared to the implied merger consideration value:
Implied Per Share Equity Value Reference Range for Colonial | Implied Merger Consideration Value | |||||
$23.50 – $28.00 | $ | 24.47 | ||||
No company, business or transaction used in this analysis is identical or directly comparable to Colonial or the parent merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which Colonial and the parent merger were compared.
Management Net Asset Value Analysis. BofA Merrill Lynch performed separate net asset value analyses of Colonial and MAA by calculating the estimated values by asset of Colonial’s and MAA’s respective operating real estate taking into account the estimated value of active developments, vacant land and other tangible assets less the estimated value of outstanding indebtedness and other tangible liabilities. The estimated fair market value of such operating real estate was calculated by applying to Colonial’s and MAA’s respective calendar year 2013 estimated net operating income from operating real estate selected capitalization rates ranging from 5.85% to 6.25% for Colonial’s operating real estate and 5.95% to 6.35% for MAA’s operating real estate based on a weighted average of capitalization rates that varied depending on, among other factors, property location, age, quality and rent profile. Financial data of Colonial and MAA were based on internal forecasts and estimates of the respective managements of Colonial and MAA. This analysis indicated approximate implied per share net asset value reference ranges for Colonial of $22.25 to $25.00 and for MAA of $63.00 to $69.75.Analysis
Based upon the approximate implied per share net asset value reference ranges for Colonial and MAA described above, BofA Merrill Lynch calculated the following approximate implied exchange ratio reference range, as compared to the exchange ratio provided for in the parent merger:
| $ | 68.25 – $76.75 | $ | 92.50 – $105.25 | |||||||||
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The range of implied net asset value per share for Post Properties was compared to Post Properties’ closing share price of $62.22 on August 12, 2016, and an implied parent merger price based on the exchange ratio of $72.53 per share, and the range of implied net asset value per share for MAA was compared to MAA’s closing share price of $102.15 on August 12, 2016.
J.P. Morgan then calculated (1) the ratio of the highest implied equity value per share for Post Properties to the lowest implied equity value per share for MAA, and (2) the ratio of the lowest implied equity value per share for Post Properties to the highest implied equity value per share for MAA to derive implied exchange ratio ranges. The range of implied exchange ratios was 0.648x to 0.829x, as compared to the exchange ratio in the parent merger of 0.710x. J.P. Morgan also observed that net asset value calculations by GSA and the mean of analyst consensus estimates of net asset value, in each case for both companies, produced an implied exchange ratio of 0.742x and 0.678x, respectively. The GSA and the mean of analyst consensus exchange ratio analysis were presented merely for reference purposes only, and were not relied upon for valuation purposes.
Discounted Cash Flow Analysis
J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied equity value per share for Post Properties common stock and MAA common stock. A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” The “unlevered free cash flows” refers to a calculation of the future cash flows of an asset without including in such calculation any debt servicing costs “Present value” refers to the current value of one or more future cash payments from the asset, which is referred to as that asset’s cash flows, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other appropriate factors. “Terminal value” refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period.
J.P. Morgan calculated the present value of unlevered free cash flows that each of Post Properties and MAA is expected to generate during the period from the second half of calendar year 2016 through the end of 2025 using financial forecasts for Post Properties prepared by Post Properties management for the second half of calendar year 2016 through the end of 2021 and extrapolated by Post Properties’ management for years 2022 through the end of 2025 and using financial forecasts for MAA prepared by MAA management for the second half of calendar year 2016 through the end of 2021 and provided by MAA management to Post Properties and extrapolated by Post Properties’ management for years 2022 through the end of 2025 and adjusted and approved for J.P. Morgan use by Post Properties management.
J.P. Morgan also calculated a range of terminal values for each of Post Properties and MAA at December 31, 2025 by applying a perpetuity growth rate ranging from 1.75% to 2.25% to the financial forecasts for each of Post Properties and MAA during 2025 to derive terminal period unlevered free cash flows for each of Post Properties and MAA. The unlevered free cash flows and range of terminal values for each company were then discounted to present values using a discount rate range of 6.25% to 6.75%, which range was chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Post Properties and MAA, which included its analysis of the companies listed under the “Public Trading Multiples Analysis” described above. The present value of the unlevered free cash flows and the range of terminal values for each company were then adjusted for net debt and preferred equity to indicate the range of implied equity values set forth in the table below (rounded to the nearest $0.25):
| Implied equity value per share | ||||
Discounted Cash Flow Analysis. BofA Merrill Lynch performed separate discounted cash flow analyses of Colonial and Post Properties
MAA by calculating the estimated present value of the standalone unlevered, after-tax free cash flows that Colonial and MAA were each forecasted to generate during the nine months ending December 31, 2013 through the full calendar year ending December 31, 2017 based on internal forecasts and estimates of the respective managements of Colonial and MAA. BofA Merrill Lynch calculated terminal values for Colonial and MAA by applying to the respective calendar year 2018 estimated EBITDA of Colonial and MAA a selected range of terminal value EBITDA multiples for Colonial of 16.0x to 17.0x and for MAA of 15.5x to 16.5x. The unlevered, after-tax free cash flows and terminal values were then discounted to present value (as of March 31, 2013) using discount rates ranging from 7.0% to 8.0% for Colonial and 6.5% to 7.5% for MAA derived from a weighted average cost of capital calculation. For purposes of this analysis, unlevered after-tax free cash flows generally were calculated as EBITDA (as defined by the respective company) less capital expenditures, tenant improvements and leasing commissions, straight-line and above or below market rent adjustments, taxes, and
development and acquisition funding plus disposition proceeds. Stock-based compensation was treated as a non-cash expense for Colonial and as a cash expense for MAA consistent with the treatment of stock-based compensation by each of Colonial and MAA. This analysis indicated approximate implied per share equity value reference ranges for Colonial of $23.50 to $27.25 and for MAA of $64.50 to $76.00.
Based upon the approximate implied per share equity value reference ranges for Colonial and MAA described above, BofA Merrill Lynch calculated the following approximate implied exchange ratio reference range, as compared to the exchange ratio provided for in the parent merger:
| $ | 106.25 - $139.50 | |||||||
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The range of implied equity value per share for Post Properties was compared to Post Properties’ closing share price of $62.22 on August 12, 2016, and an implied parent merger price based on the exchange ratio of $72.53 per share, and the range of implied net asset value per share for MAA was compared to MAA’s closing share price of $102.15 on August 12, 2016.
J.P. Morgan then calculated (1) the ratio of the highest implied equity value per share for Post Properties to the lowest implied equity value per share for MAA, and (2) the ratio of the lowest implied equity value per share for Post Properties to the highest implied equity value per share for MAA to derive implied exchange ratio ranges. The range of implied exchange ratios was 0.413x to 0.718x, as compared to the exchange ratio in the parent merger of 0.710x.
Other
Historical Exchange Ratio Analysis
J.P. Morgan reviewed the per share daily closing market prices of Post Properties common stock and MAA common stock for the three-year period ending on August 12, 2016 and calculated the implied historical exchange ratios during this period. Specifically, for each trading day, J.P. Morgan divided the daily closing price per share of Post Properties common stock by that of MAA common stock. J.P. Morgan calculated the average of the implied historical exchange ratios for the three-month, six-month, one-year, two-year and three-year periods. The analysis resulted in the following average implied exchange ratios for the dates and periods indicated, all as compared to the exchange ratio in the proposed merger of 0.710x:
| Average exchange ratio | High exchange ratio | Low exchange ratio | ||||||||||
Relative Contribution Analysis.BofA Merrill Lynch reviewed the relative financial contributionsCurrent
(as of Colonial and MAA to the pro forma Combined Corporation based on Colonial’s and MAA’s calendar8/12/2016)
3 months
6 months
1 year
2 year
3 years 2013 and 2014 estimated EBITDA, FFO and adjusted FFO, referred to as AFFO, utilizing internal forecasts and estimates of the respective managements of Colonial and MAA. BofA Merrill Lynch calculated overall aggregate equity ownership percentages of Colonial and MAA in the pro forma Combined Corporation based on these relative contributions and the respective debt, cash and non-controlling interests of Colonial and MAA, as applicable, which indicated an approximate implied overall contribution percentage reference range for Colonial of 35.5% to 40.9% as compared to the aggregate pro forma equity ownership percentage of Colonial’s shareholders in the Combined Corporation, based on the exchange ratio, of 43.8% immediately upon consummation of the mergers. Based on Colonial’s and MAA’s relative contributions to the pro forma Combined Corporation of the financial metrics described above, BofA Merrill Lynch calculated the following implied exchange ratio reference range, as compared to the exchange ratio provided for in the parent merger:
| 0.709x | 0.803x | 0.558x | ||||||||||||||
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Other Factors. BofA Merrill Lynch observed certain additional factors that were not considered part of BofA Merrill Lynch’s financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:
historical trading performance of Colonial common shares and shares of MAA common stock during the 52-week period ended May 31, 2013, which reflected low to high trading prices for Colonial common shares and the shares of MAA common stock during such period of approximately $19.75 to $25.00 and $60.50 to $75.00 per share, respectively;
publicly available Wall Street research analysts’ stock price targets for Colonial and MAA, which indicated ranges of target stock prices for Colonial and MAA of $20.00 to $26.00 per share and $70.00 to $76.00 per share, respectively; and
potential pro forma effects of the mergers on the Combined Corporation’s calendar years 2014 and 2015 estimated FFO per share, FFO per share excluding merger accounting adjustments, and AFFO per share based on internal forecasts and estimates of the respective managements of Colonial and MAA and after taking into account potential cost savings anticipated by such managements to result from the mergers, which indicated that the mergers could be (i) in the case of FFO per share, dilutive in calendar year 2014 by approximately (1.9)% and accretive in calendar year 2015 by approximately 0.3%, (ii) in the case of FFO per share excluding merger accounting adjustments, dilutive in calendar years 2014 and 2015 by approximately (6.5)% and (3.3)%, respectively, and (iii) in the case of AFFO per share, dilutive in calendar years 2014 and 2015 by approximately (3.8)% and (0.2)%, respectively. The actual results achieved by the Combined Corporation may vary from forecasted results and the variations may be material.
Miscellaneous
As noted above, the discussion set forth above is a summary of the material financial analyses provided by BofA Merrill Lynch to the Colonial Board in connection with its opinion and is not a comprehensive description of all analyses undertaken or factors considered by BofA Merrill Lynch in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Merrill Lynch believes that the analyses summarized above must be considered as a whole. BofA Merrill Lynch further believes that selecting portions of its analyses or factors considered or focusing on information presented in tabular format, without considering all analyses or factors or the narrative description of such analyses or factors, could create a misleading or incomplete view of the processes underlying BofA Merrill Lynch’s analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.
In performing its analyses, BofA Merrill Lynch considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Colonial and MAA. The estimates of the future performance of Colonial and MAA in or underlying BofA Merrill Lynch’s analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Merrill Lynch’s analyses. These analyses were prepared solely as part of BofA Merrill Lynch’s analysis of the fairness, from a financial point of view, of the exchange ratio provided for in the parent merger and were provided to the Colonial Board in connection with the delivery of BofA Merrill Lynch’s opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or acquired or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Merrill Lynch’s view of the actual value of Colonial or MAA.
The type and amount of consideration payable in the mergers was determined through negotiations between Colonial and MAA, rather than by any financial advisor, and was approved by the Colonial Board. The decision to enter into the merger agreement was solely that of the Colonial Board. As described above, BofA Merrill Lynch’s opinion and analyses were only one of many factors considered by the Colonial Board and should not be viewed as determinative of the views of the Colonial Board, management or any other party with respect to the consideration payable in the parent merger or otherwise.
In connection with BofA Merrill Lynch’s services as Colonial’s financial advisor, Colonial has agreed to pay BofA Merrill Lynch an aggregate fee of $11.5 million, $1.0 million of which was payable upon delivery of its opinion and $10.5 million of which is contingent upon consummation of the mergers. Colonial also has agreed to reimburse BofA Merrill Lynch for its expenses incurred in connection with BofA Merrill Lynch’s engagement and to indemnify BofA Merrill Lynch, any controlling person of BofA Merrill Lynch and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws, arising from BofA Merrill Lynch’s engagement.
BofA Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of business, BofA Merrill Lynch and its affiliates may invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of Colonial, MAA and certain of their respective affiliates.
BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Colonial and have received or in the future may receive compensation for the rendering of these services, including (i) having acted or acting as joint lead arranger and bookrunner for, and/or as a lender under, certain letters of credit, and credit and leasing facilities of Colonial, including Colonial’s $500 million unsecured revolving credit facility due 2016, and (ii) having acted or acting as a joint sales agent in connection with certain “at-the-market” common equity offerings of Colonial. From January 1, 2011 through May 31, 2013, BofA Merrill Lynch and its affiliates derived aggregate revenues of approximately $3.1 million from Colonial for corporate, commercial and investment banking services unrelated to the mergers.
BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to MAA and have received or in the future may receive compensation for the rendering of these services, including (i) having acted or acting as a lender under certain leasing facilities of MAA, and (ii) having acted or acting as a joint sales agent in connection with certain “at-the-market” common equity offerings of MAA. From January 1, 2011 through May 31, 2013, BofA Merrill Lynch and its affiliates derived aggregate revenues of approximately $1.6 million from MAA for corporate, commercial and investment banking services unrelated to the mergers.
Certain MAA Unaudited Prospective Financial Information
MAA does not as a matter of course make public long-term projections as to future revenues, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, MAA is including certain unaudited prospective financial information that was made available to the MAA Board and the Colonial Board in connection with the evaluation of the mergers. This information also was provided to MAA’s and Colonial’s respective financial advisors. The inclusion of this information should not be regarded as an indication that any of MAA, Colonial, their respective affiliates, advisors or other representatives or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.
The unaudited prospective financial information was, in general, prepared solely for internal use and is subjective in many respects. As a result, the prospective results may not be realized and the actual results may be significantly higher or lower than estimated. Since the unaudited prospective financial information covers multiple years, that information by its nature becomes less predictive with each successive year. You are encouraged to review the risks and uncertainties described under the headings “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 32 and “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 44 and the risks described in the periodic reports filed by MAA with the SEC, which reports can be found as described under the heading “Where You Can Find More Information” beginning on page 205. The unaudited prospective financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. In addition, the unaudited prospective financial information requires significant estimates and assumptions that make it inherently less comparable to the similarly titled GAAP measures in MAA’s historical GAAP financial statements. Neither MAA’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on the information or its achievability. Neither MAA independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
The report of MAA’s independent registered public accounting firm of MAA contained in the Annual Report on Form 10-K for the year ended December 31, 2012, which is incorporated by reference into this joint proxy statement/prospectus, relates to MAA’s historical financial information. It does not extend to the unaudited prospective financial information and should not be read to do so. Furthermore, the unaudited prospective financial information does not take into account any circumstances or events occurring after the date it was prepared.
The following table presents selected unaudited prospective financial data for the fiscal years ending 2013 through 2017 for MAA on a standalone basis.
| 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||
| ($ in millions, except per share values) | ||||||||||||||||||||
Net Operating Income (NOI) | $ | 324.5 | $ | 345.8 | $ | 374.8 | $ | 406.5 | $ | 438.3 | ||||||||||
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) | $ | 292.6 | $ | 312.0 | $ | 339.3 | $ | 369.3 | $ | 399.2 | ||||||||||
Funds from Operations (FFO) per share | $ | 4.87 | $ | 5.14 | $ | 5.48 | $ | 5.86 | $ | 6.19 | ||||||||||
Adjusted Funds from Operations (AFFO) per share | $ | 4.22 | $ | 4.46 | $ | 4.78 | $ | 5.15 | $ | 5.45 | ||||||||||
The historical exchange ratio analysis was presented merely for reference purposes only, and was not relied upon for valuation purposes.
Analyst Price Targets
J.P. Morgan reviewed the price targets for Post Properties and MAA published by 9 and 10 equity research analysts, respectively, covering Post Properties and MAA. The price targets presented were in the following ranges: the price target range for Post Properties was $57.00 to $65.00, as compared to Post Properties’ closing share price of $62.22 on August 12, 2016 and an implied parent merger price based on the exchange ratio of $72.53 per share, and for MAA was $99.00 to $120.00, as compared to MAA’s closing share price of $102.15 on August 12, 2016.
The analyst price targets were presented merely for reference purposes only, and were not relied upon for valuation purposes.
Selected Analyst Net Asset Value Estimates
J.P. Morgan reviewed the net asset value price per share estimates for Post Properties and MAA published by selected equity research analysts covering Post Properties and MAA. The net asset value price per share estimates presented (rounded to the nearest $0.25) were in the following ranges: the range for Post Properties was $61.25 to $72.75, as compared to Post Properties’ closing share price of $62.22 on August 12, 2016 and an implied parent merger price based on the exchange ratio of $72.53 per share, and for MAA was $88.50 to $107.00, as compared to MAA’s closing share price of $102.15 on August 12, 2016.
The analyst net asset value estimates were presented merely for reference purposes only, and were not relied upon for valuation purposes.
Illustrative Value Creation Analysis
J.P. Morgan conducted an illustrative value creation analysis, based on financial forecasts for Post Properties prepared by Post Properties management and financial forecasts for MAA prepared by MAA management and provided by MAA management to Post Properties and adjusted and approved by Post Properties management and provided to J.P. Morgan for use in its analysis and delivery of its opinion, that compared the implied equity value per share of Post Properties common stock derived from a discounted cash flow valuation on a standalone basis to the pro forma combined company implied equity value per share, adjusted for the proposed exchange ratio of 0.710x. J.P. Morgan determined the pro forma combined company implied equity value per share by calculating: (i) the sum of (a) the implied equity value of each of Post Properties and MAA using the midpoint value of each as determined in J.P. Morgan’s discounted cash flow analysis described above in “—Discounted Cash Flow Analysis” and (b) 100% of the estimated discounted present value of the run-rate synergies of $20 million (as prepared by management of MAA and provided to J.P. Morgan by management of Post Properties and reviewed and approved for use by J.P. Morgan by management of Post Properties), applying the midpoint of a perpetuity growth rate range of 1.75% to 2.25%, net of estimated transaction and integration costs, discounted to present value using the midpoint of a discount rate range of 6.25% to 6.75%, and divided by (ii) the pro forma number of shares outstanding based upon the exchange ratio provided for in the proposed parent merger (i.e., 0.710x). The estimated discounted present value of the run-rate synergies assumed 50% of run-rate synergies were realized on a net basis in 2017 and 100% in 2018 and further that the run-rate of $20 million grew at 2.00% per annum after 2017. The analysis indicated, on an illustrative basis, that the merger created hypothetical incremental implied value for the holders of Post Properties common stock of 24%.
J.P. Morgan noted that the value creation analysis was a hypothetical, illustrative analysis only and was not a prediction as to future share trading.
Illustrative Pro Forma Trading Analysis
J.P. Morgan conducted an illustrative pro forma trading analysis that compared the share price of Post Properties common stock as of August 12, 2016 to the implied pro forma equity value per share to holders of Post Properties common stock derived from pro forma 2016E AFFO, and current and blended P / 2016E AFFO multiples for Post Properties and MAA, based on financial forecasts for Post Properties prepared by Post Properties management and financial forecasts for MAA prepared by MAA management and provided by MAA management to Post Properties and adjusted and approved by Post Properties management and provided to J.P. Morgan for use in its analysis and delivery of its opinion, including $20 million in run-rate synergies and $1 million incremental interest expense, as estimated by management of MAA and provided to J.P. Morgan by management of Post Properties. Such analysis indicated a potential illustrative range of implied value creation to the Post Properties shareholders of 11.3% based on MAA’s P / 2016E AFFO multiple, 14.9% on a blended P / 2016E AFFO multiple and 25.0% based on current Post Properties P / 2016E AFFO multiple.
J.P. Morgan noted that the pro forma trading analysis was a hypothetical, illustrative analysis only and was not a prediction as to future share trading. The pro forma trading analysis was presented merely for reference purposes only, and was not relied upon for valuation purposes.
Miscellaneous
The foregoing summary of certain financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole and the narrative description of the analyses, could create an incomplete view of the processes underlying its analyses and opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of Post Properties or MAA. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.
Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or performed by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the selected companies reviewed as described in the above summary is identical to Post Properties or MAA. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analyses, may be considered similar to those of Post Properties and MAA. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to Post Properties and MAA.
As part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. J.P. Morgan was selected by Post Properties as its financial advisor with respect to the parent merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with Post Properties, MAA and the industries in which they operate.
For services rendered in connection with the parent merger (including the delivery of its opinion), Post Properties has agreed to pay J.P. Morgan a fee of 0.375% of the total consideration in the parent merger, which includes the consideration to be paid to holders of Post Properties common stock and equity awards and amount of indebtedness for borrowed money of Post Properties at the closing of the parent merger. Based on the closing price of MAA common stock on September 27, 2016 and the amount of indebtedness currently expected to be outstanding on the closing of the parent merger, J.P. Morgan’s fee would be approximately $18 million, $4 million of which was payable at the time J.P. Morgan delivered its opinion. J.P. Morgan may also receive an additional fee of up to $5 million from Post Properties upon closing of the parent merger at the sole discretion of Post Properties. In the event that Post Properties or any of its affiliates is paid a break-up, termination or similar fee in connection with the termination, abandonment or failure to occur of the parent merger, Post Properties has agreed to pay J.P. Morgan a fee equal to 20% of such amount, which fee will not exceed the aggregate fee payable to J.P. Morgan in connection with the parent merger and against which any of the foregoing fees paid by Post Properties will be credited. In addition, Post Properties has agreed to indemnify J.P. Morgan for certain liabilities arising out of J.P. Morgan’s engagement.
During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Post Properties and MAA for which J.P. Morgan and such affiliates have received customary compensation. Such services during such period have included acting as joint lead arranger and joint book runner on Post Properties’ facility agreement in January 2015 and joint lead arranger and joint bookrunner on MAA’s facility agreements in October 2015 and as joint bookrunner on MAA’s offering of debt securities in November 2015. During such two year period, the aggregate fees received by J.P. Morgan from Post Properties for such services were approximately $510,000 and from MAA were approximately $940,000. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of each of the outstanding Post Properties common stock and MAA common stock. In the ordinary course of J.P. Morgan’s businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of Post Properties or MAA for its own account or for the accounts of customers and, accordingly, J.P. Morgan may at any time hold long or short positions in such securities or other financial instruments.
Certain MAA Financial Projections Utilized by the Companies’ Boards and Financial Advisors
MAA does not as a matter of course make public long-term projections as to future revenues, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, MAA is including certain non-public unaudited prospective financial information that was made available to the MAA Board and the Post Properties Board in connection with the evaluation of the mergers. This information also was provided to MAA’s and Post Properties’ respective financial advisors. The inclusion of this information should not be regarded as an indication that any of MAA, Post Properties, their respective affiliates, advisors or other representatives or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.
These internal financial projections were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with GAAP, published guidelines of the SEC including with respect to non-GAAP financial measures, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. In addition, the unaudited prospective financial information requires significant estimates and assumptions that make it inherently less comparable to the similarly titled GAAP measures in MAA’s historical GAAP financial statements. Neither MAA’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on the information or its achievability, and they assume no responsibility for, and disclaim any association with, the prospective financial information.
The unaudited prospective financial information was, in general, prepared solely for internal use and is subjective in many respects. As a result, the prospective results may not be realized and the actual results may be significantly higher or lower than estimated. Since the unaudited prospective financial information covers multiple years, that information by its nature becomes less predictive with each successive year. You are encouraged to review the risks and uncertainties described under the headings “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 36 and “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 49 and the risks described in the periodic reports filed by MAA with the SEC, which reports can be found as described under the heading “Where You Can Find More Information” beginning on page 201.
The report of MAA’s independent registered public accounting firm contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is incorporated by reference into this joint proxy statement/prospectus, relates to MAA’s historical financial information. It does not extend to the unaudited prospective financial information and should not be read to do so. Furthermore, the unaudited prospective financial information does not take into account any circumstances or events occurring after the date it was prepared.
The following table presents selected unaudited prospective financial data for the fiscal years ending 2016 through 2020 for MAA on a standalone basis.
| 2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||
| (Dollars in thousands, except per share values) | ||||||||||||||||||||
Net Income | $ | 261,366 | $ | 257,418 | $ | 274,183 | $ | 285,481 | $ | 301,697 | ||||||||||
Net Operating Income (NOI) | $ | 677,783 | $ | 710,847 | $ | 747,920 | $ | 780,011 | $ | 818,516 | ||||||||||
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) | $ | 614,899 | $ | 646,262 | $ | 680,977 | $ | 710,549 | $ | 746,435 | ||||||||||
Funds from Operations (FFO) per share | $ | 6.03 | $ | 6.29 | $ | 6.65 | $ | 6.93 | $ | 7.30 | ||||||||||
For purposes of the unaudited prospective financial information presented herein, NOI is a non-GAAP financial performance measure that represents total property revenues less total property operating expenses, excluding depreciation, and amortization, for all properties held during the period, regardless of their status as held for sale. EBITDA is a non-GAAP financial performance measure composed of net income before net gain on asset sales and insurance and other settlement proceeds, and gain or loss on debt extinguishment, plus depreciation, interest expense, and amortization of deferred financing costs. FFO is a non-GAAP financial performance measure which MAA calculates in accordance with the definition published by the National Association of Real Estate Investment Trusts, or NAREIT, and which represents net income available for common shareholders (computed in accordance with GAAP) excluding extraordinary items, asset impairment, gains or losses on disposition of real estate assets, plus net income attributable to noncontrolling interest, depreciation of real estate, and adjustments for joint ventures to reflect FFO on the same basis. Non-GAAP financial measures, including NOI, EBITDA and FFO, should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP.
Post Properties and MAA calculate certain non-GAAP financial metrics including NOI, EBITDA and FFO using different methodologies. Consequently, the financial metrics presented in each company’s prospective financial information disclosures and in the sections of this joint proxy statement/prospectus with respect to the opinions of the financial advisors to MAA and Post Properties may not be directly comparable to one another.
In preparing the foregoing unaudited projected financial information, MAA made a number of assumptions regarding, among other things, interest rates, corporate financing activities, annual dividend levels, occupancy and customer retention levels, changes in rent, the amount, timing and cost of existing and planned development properties, lease-up rates of existing and planned developments, the amount and timing of asset sales and asset acquisitions, including the return on those acquisitions, the amount of income taxes paid, and the amount of general and administrative costs.
Among the particular assumptions made available to the MAA Board, the Post Properties Board and MAA’s and Post Properties’ respective financial advisors, MAA assumed that for the fiscal years ending 2016 through 2020, MAA, on a standalone basis, would have total capital expenditures and recurring capital expenditures as set forth on the following table:
| 2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
Total Capital Expenditures | $ | 113,522 | $ | 116,134 | $ | 118,809 | $ | 121,548 | $ | 124,353 | ||||||||||
Recurring Capital Expenditures | $ | 55,802 | $ | 56,918 | $ | 58,056 | $ | 59,217 | $ | 60,402 | ||||||||||
The assumptions set forth in the preceding table are only representative of a small number of the assumptions and estimates made by MAA in preparing the foregoing unaudited prospective financial information. As described above, MAA made numerous other assumptions and estimates in preparing the unaudited prospective financial information provided above.
The assumptions made in preparing the above unaudited prospective financial information may not necessarily reflect actual future conditions. The estimates and assumptions underlying the unaudited prospective financial information involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described under the headings “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 36 and “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 49 and the risks described in the periodic reports filed by MAA with the SEC, which reports can be found as described under the heading “Where You Can Find More Information” beginning on page 201, all of which are difficult to predict and many of which are beyond the control of MAA and/or Post Properties and will be beyond the control of the Combined Corporation. The underlying assumptions and projected results may not be realized, and actual results likely will differ, and may differ materially, from those reflected in the unaudited prospective financial information, whether or not the mergers are completed.
In addition, although presented with numerical specificity, the above unaudited prospective financial information reflects numerous assumptions and estimates as to future events made by MAA management that MAA management believes were reasonably prepared. The above unaudited prospective financial information does not give effect to the mergers. MAA shareholders and Post Properties shareholders are urged to review the most recent SEC filings of MAA for a description of the reported and anticipated results of operations and financial condition and capital resources during 2015, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in MAA’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and subsequent Quarterly Reports on Form 10-Q, which are incorporated by reference into this joint proxy statement/prospectus.
Readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on the unaudited prospective financial information set forth above. No representation is made by MAA, Post Properties or any other person to any MAA shareholder or any Post Properties shareholder regarding the ultimate performance of MAA compared to the information included in the above unaudited prospective financial information. The inclusion of unaudited prospective financial information in this joint proxy statement/prospectus should not be regarded as an indication that the prospective financial information will be necessarily predictive of actual future events, and such information should not be relied on as such.
MAA DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.
Certain Post Properties Financial Projections Utilized by the Companies’ Boards and Financial Advisors
Post Properties does not as a matter of course make public long-term projections as to future revenues, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, Post Properties is including certain non-public unaudited prospective financial information that was made available to the Post Properties Board and the MAA Board in connection with the evaluation of the mergers. This information also was provided to Post Properties’ and MAA’s respective financial advisors. The inclusion of this information should not be regarded as an indication that any of Post Properties, MAA, their respective affiliates, advisors or other representatives or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.
These internal financial projections were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with GAAP, published guidelines of the SEC, including with respect to non-GAAP financial measures, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. However, in the view of Post Properties’ management, this information was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Post Properties. This information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on the prospective financial information. In addition, the unaudited prospective financial information requires significant estimates and assumptions that make it inherently less comparable to the similarly titled GAAP measures in Post Properties’ historical GAAP financial statements. Neither Post Properties’ independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
The unaudited prospective financial information was, in general, prepared solely for internal use and is subjective in many respects. As a result, the prospective results may not be realized and the actual results may be significantly higher or lower than estimated. Since the unaudited prospective financial information covers multiple years, that information by its nature becomes less predictive with each successive year. You are encouraged to review the risks and uncertainties described under the headings “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 36 and “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 49 and the risks described in the periodic reports filed by Post Properties with the SEC, which reports can be found as described under the heading “Where You Can Find More Information” beginning on page 201.
The report of Post Properties’ independent registered public accounting firm contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is incorporated by reference into this joint proxy statement/prospectus, relates to Post Properties’ historical financial information. It does not extend to the unaudited prospective financial information and should not be read to do so. Furthermore, the unaudited prospective financial information does not take into account any circumstances or events occurring after the date it was prepared.
The following table presents selected unaudited prospective financial data for the fiscal years ending 2016 through 2021 for Post Properties on a standalone basis.
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||
| (Dollars in millions, except per share values) | ||||||||||||||||||||||||
Total Property Revenues | $ | 402 | $ | 415 | $ | 440 | $ | 473 | $ | 498 | $ | 523 | ||||||||||||
Net Operating Income (NOI)(1) | $ | 245 | $ | 257 | $ | 280 | $ | 294 | $ | 308 | $ | 325 | ||||||||||||
Adjusted Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) | $ | 220 | $ | 228 | $ | 249 | $ | 262 | $ | 276 | $ | 292 | ||||||||||||
Funds from Operations (FFO) per share(2) | $ | 3.26 | $ | 3.37 | $ | 3.65 | $ | 3.96 | $ | 4.06 | $ | 4.26 | ||||||||||||
Adjusted Funds from Operations (AFFO) per share(2) | $ | 2.79 | $ | 2.89 | $ | 3.16 | $ | 3.47 | $ | 3.56 | $ | 3.76 | ||||||||||||
| (1) | Before property management overhead expenses that Post Properties has included in NOI for prior periods. |
| (2) | Amounts for 2016 exclude forecasted debt extinguishment
|
For purposes of the unaudited prospective financial information presented herein, NOI is a non-GAAP financial performance measure that represents total property revenues less total property operating expenses, excluding depreciation, for all properties held during the period, regardless of their status as held for sale. Adjusted EBITDA is a non-GAAP financial performance measure composed of net income before interest expense, income tax expense, depreciation, amortization of debt costs, net gains on asset sales, loss on debt extinguishment, stock based compensation expense and certain other non-cash income or expenses, including adjustments for the impact of non-cash straight-line long term ground lease expense. FFO is a non-GAAP financial performance measure which Post Properties calculates in accordance with the definition published by NAREIT and which represents net income available for common shareholders (computed in accordance with GAAP) excluding extraordinary items, gains or losses on disposition of real estate assets, plus net income attributable to noncontrolling interest, depreciation of real estate, and adjustments for joint ventures to reflect FFO on the same basis. AFFO is a non-GAAP financial measure composed of FFO less recurring capital expenditures. Non-GAAP financial measures, including NOI, EBITDA, FFO and AFFO, should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP.
Post Properties and MAA calculate certain non-GAAP financial metrics including NOI, EBITDA and FFO using different methodologies. Consequently, the financial metrics presented in each company’s prospective financial information disclosures and in the sections of this joint proxy statement/prospectus with respect to the opinions of the financial advisors to Post Properties and MAA may not be directly comparable to one another.
In preparing the foregoing unaudited projected financial information, Post Properties made a number of assumptions regarding, among other things, interest rates, corporate financing activities, annual dividend levels, occupancy and customer retention levels, changes in rent, the amount, timing and cost of existing and planned development properties, lease-up rates of existing and planned developments, the amount and timing of asset sales and asset acquisitions, the amount of income taxes paid, and the amount of general and administrative costs.
Among the particular assumptions made available to the MAA Board, the Post Properties Board and MAA’s and Post Properties’ respective financial advisors, Post Properties also assumed that for the fiscal years ending 2016 through 2021 when forecasting total NOI growth, Post Properties, on a standalone basis, would have forecasted same store NOI growth (SS NOI % Growth) as set forth on the following table:
| 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||
| ($ in million) | ||||||||||||||||||||
Total Capital Expenditures | $ | 60.1 | $ | 62.9 | $ | 66.0 | $ | 69.3 | $ | 72.7 | ||||||||||
Recurring Capital Expenditures | $ | 29.0 | $ | 30.4 | $ | 31.9 | $ | 33.5 | $ | 35.1 | ||||||||||
The assumptions set forth in the preceding table are only representative of a small number of the assumptions and estimates made by MAA in preparing the foregoing unaudited prospective financial information. As described above, MAA made numerous other assumptions and estimates in preparing the unaudited prospective financial information provided above.
The assumptions made in preparing the above unaudited prospective financial information may not necessarily reflect actual future conditions. The estimates and assumptions underlying the unaudited prospective financial information involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described under the headings “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 32 and “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 44 and the risks described in the periodic reports filed by MAA with the SEC, which reports can be found as described under the heading “Where You Can Find More Information” beginning on page 205, all of which are difficult to predict and many of which are beyond the control of MAA and/or Colonial and will be beyond the control of the Combined Corporation. The underlying assumptions and projected results may not be realized, and actual results likely will differ, and may differ materially, from those reflected in the unaudited prospective financial information, whether or not the mergers are completed.
In addition, although presented with numerical specificity, the above unaudited prospective financial information reflects numerous assumptions and estimates as to future events made by MAA management that MAA management believes were reasonably prepared. The above unaudited prospective financial information does not give effect to the mergers. MAA shareholders and Colonial shareholders are urged to review the most recent SEC filings of MAA for a description of the reported and anticipated results of operations and financial condition and capital resources during 2012, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in MAA’s Annual Report on Form 10-K for the year ended December 31, 2012, and subsequent quarterly reports on Form 10-Q, which is incorporated by reference into this joint proxy statement/prospectus.
Readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on the unaudited prospective financial information set forth above. No representation is made by MAA, Colonial or any other person to any MAA shareholder or any Colonial shareholder regarding the ultimate performance of MAA compared to the information included in the above unaudited prospective financial information. The inclusion of unaudited prospective financial information in this joint proxy statement/prospectus should not be regarded as an indication that the prospective financial information will be necessarily predictive of actual future events, and such information should not be relied on as such.
MAA DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.
Certain Colonial Unaudited Prospective Financial Information
Colonial does not as a matter of course make public projections as to future revenues, earnings or other results. However, the management of Colonial has prepared the unaudited prospective financial information set forth below in connection with an evaluation of the mergers. This information was made available to the Colonial Board and the MAA Board in connection with the evaluation of the mergers and also was provided to Colonial’s and MAA’s respective financial advisors.
The accompanying prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of Colonial’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Colonial. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on the prospective financial information. Neither Colonial’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information
The assumptions and estimates underlying the prospective financial information are inherently uncertain and, though considered reasonable by the management of Colonial as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the prospective financial information, including, among others, risks and uncertainties. See “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 32 and “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 44 and the risks described in the periodic reports filed by Colonial with the SEC, which reports can be found as described under the heading “Where You Can Find More Information” beginning on page 205.
Accordingly, there can be no assurance that the prospective results are indicative of the future performance of Colonial or that actual results will not differ materially from those presented in the prospective financial information. Inclusion of the prospective financial information in this joint proxy statement/prospectus should not be regarded as a representation by any person that the results contained in the prospective financial information will be achieved. Colonial does not generally publish its business plans and strategies or make external disclosures of its anticipated financial position or results of operations. Accordingly, Colonial does not intend to update or otherwise revise the prospective financial information to reflect circumstances existing since its preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error. Furthermore, Colonial does not intend to update or revise the prospective financial information to reflect changes in general economic or industry conditions.
The following table presents selected unaudited prospective financial data for the fiscal years ending December 31, 2013 through 2017 for Colonial on a standalone basis.
| 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||||||
| ($ in millions, except per share values) | ||||||||||||||||||||
Net Operating Income (NOI) | $ | 217.0 | $ | 222.5 | $ | 243.2 | $ | 255.8 | $ | 264.7 | ||||||||||
Funds from Operations (FFO) per share | $ | 1.34 | $ | 1.40 | $ | 1.57 | $ | 1.69 | $ | 1.79 | ||||||||||
Adjusted Funds from Operations (AFFO) per share | $ | 1.08 | $ | 1.17 | $ | 1.34 | $ | 1.47 | $ | 1.57 | ||||||||||
EBITDA | $ | 226.8 | $ | 229.4 | $ | 249.9 | $ | 261.9 | $ | 270.9 | ||||||||||
Capital Expenditures(1) | $ | 24.2 | $ | 21.6 | $ | 21.3 | $ | 21.4 | $ | 21.8 | ||||||||||
SS NOI % GrowthThe following table presents additional selected unaudited prospective financial data consisting of the sum of tenant improvements and leasing commissions, straight-line and above or below market rent adjustments, taxes, and development and acquisition funding plus disposition proceeds for Colonial as projected through 2017 (in millions): 2016 2017 2018 2019 2020 2021 3.3 % 2.8 % 2.6 % 2.3 % 2.3 % 2.3 %
In addition, Post Properties assumed that for the fiscal years ending 2016 through 2021, Post Properties, on a standalone basis, would have development capital expenditures and total capital expenditures as set forth on the following table:
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||
| ($in millions) | ||||||||||||||||||||||||
Development Capital Expenditures | $ | 151 | $ | 186 | $ | 103 | $ | 108 | $ | 166 | $ | 155 | ||||||||||||
Total Capital Expenditures | $ | 191 | $ | 225 | $ | 142 | $ | 148 | $ | 207 | $ | 196 | ||||||||||||
The assumptions set forth in the preceding tables are only representative of a small number of the assumptions and estimates made by Post Properties in preparing the foregoing unaudited prospective financial information. As described above, Post Properties made numerous other assumptions and estimates in preparing the unaudited prospective financial information provided above.
The assumptions made in preparing the above unaudited prospective financial information may not necessarily reflect actual future conditions. The estimates and assumptions underlying the unaudited prospective financial information involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described under the headings “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 36 and “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 49 and the risks described in the periodic reports filed by Post Properties with the SEC, which reports can be found as described under the heading “Where You Can Find More Information” beginning on page 201, all of which are difficult to predict and many of which are beyond the control of Post Properties and/or MAA and will be beyond the control of the Combined Corporation. The underlying assumptions and projected results may not be realized, and actual results likely will differ, and may differ materially, from those reflected in the unaudited prospective financial information, whether or not the mergers are completed.
In addition, although presented with numerical specificity, the above unaudited prospective financial information reflects numerous assumptions and estimates as to future events made by Post Properties management that Post Properties management believes were reasonably prepared. The above unaudited prospective financial information does not give effect to the mergers. Post Properties shareholders and MAA shareholders are urged to review the most recent SEC filings of Post Properties for a description of the reported and anticipated results of operations and financial condition and capital resources during 2015, included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Post Properties’ Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and subsequent Quarterly Reports on Form 10-Q, which is incorporated by reference into this joint proxy statement/prospectus.
Readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on the unaudited prospective financial information set forth above. No representation is made by Post Properties, MAA or any other person to any Post Properties shareholder or any MAA shareholder regarding the ultimate performance of Post Properties compared to the information included in the above unaudited prospective financial information. The inclusion of unaudited prospective financial information in this joint proxy statement/prospectus should not be regarded as an indication that the prospective financial information will be necessarily predictive of actual future events, and such information should not be relied on as such.
POST PROPERTIES DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.
Interests of MAA’s Directors and Executive Officers in the Mergers
In considering the recommendation of the MAA Board to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, MAA shareholders should be aware that certain executive officers and directors of MAA have certain interests in the mergers that may be different from, or in addition to, the interests of MAA shareholders generally. These interests may create potential conflicts of interest. The MAA Board was aware of those interests and considered them, among other matters, in reaching its decision to approve the merger agreement and the transactions contemplated thereby.
Following the consummation of the mergers, all ten of the current members of the MAA Board will continue as members of the board of directors of the Combined Corporation. H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman of the Board of Directors, will serve as Chief Executive Officer and Chairman of the Board of Directors of the Combined Corporation. Alan B. Graf, Jr., Lead Independent Director for MAA, will serve as Lead Independent Director for the Combined Corporation. In addition, Albert M. Campbell, III, MAA’s Chief Financial Officer, will serve as Chief Financial Officer of the Combined Corporation, Thomas L. Grimes, Jr., MAA’s Chief Operating Officer, will serve as the Chief Operating Officer of the Combined Corporation, and Robert J. DelPriore, MAA’s General Counsel, will serve as the General Counsel of the Combined Corporation.
H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman of the Board of Directors, and Thomas H. Lowder, Claude B. Nielsen and W. Reid Sanders, each a director of MAA, each own limited partnership units in MAA LP. The ownership of these limited partnership units may result in Messrs. Bolton, Lowder, Nielsen and Sanders having interests in the mergers that are different from, or in addition to, those of MAA shareholders generally.
Executive Incentive Plans with MAA’s Executive Officers
Pursuant to the terms of certain awards of restricted stock granted to MAA’s executive officers under certain of MAA’s equity incentive plans, vesting will accelerate upon a “change in control” (as defined in the applicable award agreement). The mergers will constitute a “change in control” for purposes of those equity incentive plans.
2013FYE | 2014FYE | 2015FYE | 2016FYE | 2017FYE | ||||||||||||
| $167.4 | ($ | 150.4 | ) | $ | 20.5 | ($ | 2.3 | ) | ($ | 2.3 | ) | |||||
For purposes of the unaudited prospective financial information presented herein, NOI is a non-GAAP financial performance measure that represents total property revenues (including minimum rent and other property-related revenue) less total property operating expenses, (including such items as general and administrative expenses, on-site payroll, repairs and maintenance, real estate taxes, insurance and advertising), and includes revenues/expenses from unconsolidated partnerships and joint ventures. EBITDA is a non-GAAP financial performance measure composed of net income before net gain on asset sales and insurance and other settlement proceeds and gain or loss on debt extinguishment, plus depreciation, interest expense and amortization. FFO is a non-GAAP financial performance measure defined by NAREIT, and represents net income (loss) before noncontrolling interest (determined in accordance with GAAP), excluding sales of depreciated property and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. AFFO is a non-GAAP financial performance measure that represents FFO adjusted for capital expenditures, tenant improvements, leasing commissions, straight line rents and above or below market income.
Colonial and MAA calculate certain non-GAAP financial metrics including NOI, EBITDA, FFO and AFFO using different methodologies. Consequently, the financial metrics presented in each company’s prospective financial information disclosures and in the sections of this joint proxy statement/prospectus with respect to the opinions of the financial advisors to Colonial and MAA may not be directly comparable to one another.
In preparing the foregoing unaudited projected financial information, Colonial made a number of assumptions regarding, among other things, interest rates, corporate financing activities, annual dividend levels, occupancy and customer retention levels, changes in rent, the amount, timing and cost of existing and planned development properties, lease-up rates of existing and planned developments, the amount and timing of asset sales and asset acquisitions, including the return on those acquisitions, the amount of income taxes paid, and the amount of general and administrative costs.
The assumptions made in preparing the above unaudited prospective financial information may not accurately reflect future conditions. The estimates and assumptions underlying the unaudited prospective financial information involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described under the headings “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 32 and “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 44 and the risks described in the periodic reports filed by Colonial with the SEC, which reports can be found as described under the heading “Where You Can Find More Information” beginning on page 205, all of which are difficult to predict and many of which are beyond the control of Colonial and/or MAA and will be beyond the control of the Combined Corporation. The underlying assumptions and projected results may not be realized, and actual results likely will differ, and may differ materially, from those reflected in the unaudited prospective financial information, whether or not the mergers are completed.
In addition, although presented with numerical specificity, the above unaudited prospective financial information reflects numerous assumptions and estimates as to future events made by Colonial management that Colonial management believes were reasonably prepared. The above unaudited prospective financial information does not give effect to the mergers. Colonial shareholders and MAA shareholders are urged to review the most recent SEC filings of Colonial for a description of the reported and anticipated results of operations and financial condition and capital resources during 2012, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Exhibit 99.1 to Colonial’s Current Report on Form 8-K filed with the SEC on August 21, 2013, and quarterly reports on Form 10-Q, which are incorporated by reference into this joint proxy statement/prospectus.
Readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on the unaudited prospective financial information set forth above. No representation is made by Colonial, MAA or any other person to any Colonial shareholder or any MAA shareholder regarding the ultimate performance of Colonial compared to the information included in the above unaudited prospective financial information. The inclusion of
unaudited prospective financial information in this joint proxy statement/prospectus should not be regarded as an indication that the prospective financial information will be necessarily predictive of actual future events, and such information should not be relied on as such.
COLONIAL DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.
Interests of MAA’s Directors and Executive Officers in the Mergers
In considering the recommendation of the MAA Board to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement, MAA shareholders should be aware that certain executive officers and directors of MAA have certain interests in the mergers that may be different from, or in addition to, the interests of MAA shareholders generally. These interests may create potential conflicts of interest. The MAA Board was aware of those interests and considered them, among other matters, in reaching its decision to approve the merger agreement and the transactions contemplated thereby.
Following the consummation of the mergers, all seven of the current members of the MAA Board will continue as members of the board of directors of the Combined Corporation. H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman of the Board of Directors, will serve as Chief Executive Officer and Chairman of the Board of Directors of the Combined Corporation. Alan B. Graf, Jr. and Ralph Horn, Co-Lead Independent Directors for MAA, will serve as Co-Lead Independent Directors for the Combined Corporation. In addition, Albert M. Campbell, III, MAA’s Chief Financial Officer, will serve as Chief Financial Officer of the Combined Corporation, and Thomas L. Grimes, Jr., MAA’s Chief Operating Officer, will serve as the Chief Operating Officer of the Combined Corporation.H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman of the Board of Directors, and W. Reid Sanders, a director of MAA, each own limited partnership units in MAA LP. The ownership of these limited partnership units may result in Messrs. Bolton and Sanders having interests in the mergers that are different from, or in addition to, those of MAA shareholders generally. In connection with the mergers, MAA has agreed to amend and restate the limited partnership agreement of MAA LP to contain substantially the same provisions as contained in the existing limited partnership agreement of Colonial LP including, in particular, for the benefit of limited partners in MAA LP after the partnership merger, a provision relating to the consideration of the income tax considerations of limited partners of MAA LP with respect to actions taken by the general partner of MAA LP. Messrs. Bolton and Sanders, as limited partners of MAA LP, will have the benefits of this provision following the partnership merger.
Employment Agreements and Change of Control Agreements with MAA’s Executive Officers
Certain MAA executives, including H. Eric Bolton, Jr., Albert M. Campbell III, and Thomas L. Grimes, Jr., are parties to either employment agreements or change in control and termination agreements with MAA, each of which provides for, among other things, severance payments and benefits upon a qualifying termination of employment without “cause” or for “good reason” upon or after a “change of control” (each, as defined in the applicable agreement), and, pursuant to the terms of the applicable agreements, these MAA executives are entitled to accelerated vesting of restricted stock awards upon such qualifying termination. Additionally, pursuant to the terms of certain awards of restricted stock granted to each MAA executive officer under MAA’s 2004 Stock Plan, vesting will accelerate upon a “change in control” (as defined in the applicable award agreement). The mergers will constitute a “change in control” for purposes of these agreements and MAA’s 2004 Stock Plan.
Waiver Agreements
On June 3, 2013,August 15, 2016, at the request of the MAA Board, MAA entered into waiver agreements with each of its executive officers,Messrs. Bolton, Campbell and Grimes, which provide that (i) the mergers will not constitute a “change in control” for purposes of the
MAA executive’s employment agreement or change in control and termination agreement, as applicable, and related restricted stock agreement(s), (ii) any termination of the executive’s employment that occurs in connection with or following the mergers will not constitute a “change in control termination” for purposes of the employment agreement or change in control and termination agreement, as applicable, and (iii) the vesting or payment of any restricted stock held by the executiveemployee shall not automatically accelerate upon or solely in connection with the mergers. Therefore, as a result of such waivers, none of MAA’s executive officers is a party to an agreement with MAA, or participates in any MAA plan, program or arrangement, that provides for payments or benefits based on or that otherwise relate solely to the consummation of the mergers.
The MAA Board was aware of the interests described in this section and considered them, among other matters, in approving the merger agreement and making its recommendation that MAA shareholders approve the parent merger and the other transactions contemplated by the merger agreement. See “—Recommendation of the MAA Board and Its Reasons for the Parent Merger” above.
Interests of Colonial’s TrusteesPost Properties’ Directors and Executive Officers in the Mergers
In considering the recommendation of the ColonialPost Properties Board to approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement, ColonialPost Properties’ shareholders should be aware that Post Properties’ directors and executive officers and trustees of Colonial have certain interests in the mergers that may beare different from, or in addition to, the interests of ColonialPost Properties’ shareholders generally. These interests may create potential conflictsThe members of interest. The Colonialthe Post Properties Board waswere aware of thosethe different or additional interests and considered them,these interests, among other matters, in reaching its decision to approveevaluating and adoptnegotiating the merger agreement the parent merger pursuant to the plan of merger and the transactions contemplated by the merger agreement. These interests include the following:
Severance Arrangements
Priormergers, and in recommending to the Colonial Board’s approval and adoption ofPost Properties’ shareholders that they approve the merger agreement at the executive compensation committeePost Properties special meeting.
For purposes of the Colonial Board, referred todisclosure in this joint proxy statement/prospectus, the “named executive officers” of Post Properties are David P. Stockert, Sherry W. Cohen, S. Jamie Teabo and David C. Ward. Christopher J. Papa, one of Post Properties’ “named executive officers” as of December 31, 2015, resigned his position effective May 31, 2016. As a result, Mr. Papa is not entitled to receive any compensation in connection with the Colonial Compensation Committee, approved certain severance arrangements described below with respectparent merger that is different from Post Properties’ shareholders generally.
Employment and Change in Control Agreements
Each of Post Properties’ named executive officers is party to Colonial’san employment and change in control agreement. For each executive, officers: Thomas M. Lowder, Paul F. Earle, John P. Rigrish, Bradley P. Sandidge,if a change in control occurs and Jerry Brewer (we refer to each as a Colonial executive officer and collectively as the Colonial executive officers).
In the event that the Colonial executive officerexecutive’s employment is terminated by Colonial uponPost Properties without cause or by the consummation ofexecutive for good reason during the mergers and provided that he is continuously employed by Colonial throughthree-year period following the closing,change in control, or the Colonial executives would be entitled toprotection period, the following severance payments:
In addition to payments under his existing Non-Competition Agreement with Colonial LP and Colonial, described further below, Mr. Lowderexecutive will receive a lump sum severance payment equal to two timesthe sum of: (i) a pro rata portion of the target bonus, if any (as set by the Post Properties Executive Compensation and Management Development Committee, or the Committee), that the executive would have been eligible to receive for the days the executive already worked during the calendar year, plus (ii) a multiple of the executive’s cash compensation (3x for Mr. Stockert and Ms. Cohen and 2x for Ms. Teabo and Mr. Ward); provided that certain payments may be delayed for up to six months in accordance with Section 409A of the Code. Cash compensation, for purposes of the change-in-control severance, is defined in the agreements as the executive’s base salary at the time of termination (or if greater, the average salary over the prior three years), plus the executive’s target bonus as approved by the Committee for the calendar year in which the termination occurs, or if no such target bonus has been approved for the calendar year, then the average annual incentive compensation paid to him forcash bonuses earned over the prior three completed fiscal years immediately preceding the closingyears. The value of the mergers.
Each of Messrs. Earlestock options and Rigrish will receive a severance payment equal to one and one-half times the sum of (1) his annual base salary in effect on the closing date of the mergers, plus (2) the average annual incentive compensation paid to him for the three completed fiscal years immediately preceding the closing of the mergers; and
Each of Messrs. Sandidge and Brewer will receive a severance payment equal to one times the sum of (1) his annual base salary in effect on the closing date of the mergers, plus (2) the average annual incentive compensation paid to him for the three completed fiscal years immediately preceding the closing of the mergers.
In the event of such a termination of employment, these severance payments will be payable in a lump-sum payments of cash on or shortly after the closing of the mergers. With respect to Mr. Lowder, such severance
payment will be payable in addition to any payments that Mr. Lowder would receive under his existing Non-Competition Agreement with Colonial LP and Colonial, entered into as of May 4, 2007, described further below under “—Change in Control Compensation.”
restricted shares are not included. In addition, to the severance payments described above,extent any stock options and restricted stock have not vested pursuant to their terms, then any unvested stock options and restricted stock of each Colonial executive officer who is terminated by Colonial effective uponshall fully vest, and notwithstanding the consummationterms of the stock options, the options shall remain exercisable for the remaining terms of the options as if there had been no termination of employment. The executive will also continue to receive coverage and benefits under Post Properties’ employee benefit plans for a specified period (36 months for Mr. Stockert and Ms. Cohen and 24 months for Ms. Teabo and Mr. Ward) following the change in control and a qualifying termination of employment.
The merger agreement acknowledges that the mergers will constitute a “change in control” for purposes of the employment and change in control agreements and, as a result of the mergers, the named executive officers will receivebe deemed to have experienced a payment with respect to any unused vacation on or shortly after the closing“good reason” event.
For an estimate of the amounts that would be payable to the named executive officers of Post Properties upon a qualifying termination of employment in connection with the mergers, provided that such Colonialsee below under “—Executive Compensation Payable in Connection with the Mergers.”
2016 Annual Bonus and LTI Award Opportunities
In February 2016, the Committee established target cash bonus opportunities for the Post Properties executive officerofficers, to be paid in 2017 following certification of performance results for the year ending December 31, 2016, or the 2016 Annual Bonus Awards. The primary corporate performance measure for the 2016 Annual Bonus Awards is continuously employed by Colonial throughFFO3 per share, which is consistent with the closingprimary corporate performance measure in 2015 and prior years. Post Properties uses FFO per share as the primary measure because it is the financial measure most market analysts and investors use to evaluate Post Properties’ annual operating
| 3 | Post Properties uses the National Association of Real Estate Investment Trusts, or NAREIT, definition of FFO. FFO is defined by NAREIT as net income available to common shareholders determined in accordance with GAAP, excluding gains (or losses) from extraordinary items and sales of depreciable property, plus depreciation of real estate assets, and after adjustment for unconsolidated partnerships and joint ventures all determined on a consistent basis in accordance with GAAP. FFO is a supplemental non-GAAP financial measure. For a further discussion of FFO and a reconciliation of net income available to common shareholders to FFO, refer to pages 51 through 52 of Post Properties’ Annual Report onForm 10-K filed with the SEC on February 26, 2016. |
performance and is a key input into the valuation of Post Properties’ common stock. In addition, the mergers.Committee evaluates each executive’s performance against business unit/leadership goals. Achievement of all goals at target would result in a cash incentive payout of 100% of target, and the maximum potential payout is 150% of target.
Pro-Rata Annual Incentive PaymentsAlso in February 2016, the Committee established target long-term incentive opportunities for the Post Properties executive officers for 2016. Actual awards relative to these targets would be granted in 2017 following the Committee’s assessment of Post Properties’ and each individual’s performance during 2016, or the 2016 LTI Awards.
In connection with the mergers, the Colonial Compensation CommitteePost Properties Board approved the paymentpayments to eligible employees, including the ColonialPost Properties’ executive officers of a pro-rata portion ofand other key corporate office employees relating to the employee’s annual incentive under Colonial’s annual incentive plan for 20132016 Annual Bonus Awards and 2016 LTI Awards as follows: (i) if the employee is terminated by Colonial uponmergers occur prior to December 31, 2016, 2016 Annual Bonus Awards will be paid, and 2016 LTI Awards will be awarded, at the consummation oftarget level, and (ii) if the mergers occur on or after December 31, 2016 and provided that such employee is continuously employed by Colonial throughif the Committee has certified the performance results prior to the closing of the mergers.mergers, 2016 Annual Bonus Awards will be paid, and 2016 LTI Awards will be awarded, based on actual achieved performance. The pro-rata annual incentive2016 Annual Bonus Award payments will be payable in a lump sum payment of cash on or shortly afterbefore the closing of the mergers. The Colonial Compensation Committee will determine Colonial’s achievement as compared to the performance goals specified in the annual incentive plan for 2013 prior toAlso, shortly before the closing of the mergers, andPost Properties will determineaward to the amountexecutive officers a number of the pro-rata annual incentive payments based on such achievement.
The performance criteria previously established for the 2013 annual incentive plan are based on a combinationshares of total return for Colonial for the year (the “absolute measure”) and total return for Colonial as compared to an index of comparable REITs over one-, two-, and three- year periods (each, a “relative measure”). For purposes of the 2013 annual incentive plan, “total return” isPost Properties common stock equal to the share pricefair market value of Colonial (or the companies in the index of comparable REITs, as the case may be) plus any dividends reinvested in Colonial (or the companies in the index of comparable REITs, as the case may be) calculated based on reinvestment on the ex-dividend pay date.such executive officers’ 2016 LTI Awards.
Colonial’s absolute measure must be positive for the plan year for any payout to occur; however, (1) if the absolute measure is negative but Colonial’s total return is at least at the “median” level of performance when compared tothe one-year “total return” relative measure, the Colonial Compensation Committee has discretion to pay up to 20% of the payout calculated based on the relative measures’ results, and (2) if the absolute measure is positive and Colonial’s total return is at least at the “median” level of performance when compared tothe one-year “total return” relative measure, the Colonial Compensation Committee has the discretion to increase the award amount up to 20% of the payout calculated based on the relative measures’ results. In addition to this specific discretionary authority, the Colonial Compensation Committee retains discretion to adjust any payment that is otherwise under the terms of the 2013 annual incentive plan. The amounts actually payable to the participants are determined based upon whether Colonial performance meets the “threshold,” “median,” “target” or “maximum” level for the relative measures. For each relative measure, the “threshold” level is the 25th percentile, the “median” level is the 50th percentile, the “target” level is the 75th percentile and the “maximum” level is the 90th percentile. The relative measures are weighted equally, i.e., 33.33% of any payout is based on the one-year relative measure; 33.33% of any payout is based on the two-year relative measure, and 33.33% of any payout is based on the three-year relative measure.
Under the terms of the 2013 annual incentive plan, the performance payout thresholds were set as follows: (1) for Mr. Lowder, the “threshold” level pays at a maximum of 1% of base salary, the “median” level pays at a maximum of 100% of base salary, the “target” level pays at a maximum of 200% of base salary, and the “maximum” level pays at a maximum of 300% of base salary; (2) for Mr. Earle, the “threshold” level pays at a maximum of 1% of base salary, the “median” level pays at a maximum of 100% of base salary, the “target” level pays at a maximum of 150% of base salary, and the “maximum” level pays at a maximum of 225% of base salary; and (3) for the other Colonial executive officers, the “threshold” level pays at a maximum of 1% of base
salary, the “median” level pays at a maximum of 50% of base salary, the “target” level pays at a maximum of 100% of base salary, and the “maximum” level pays at a maximum of 150% of base salary.
Treatment of ColonialPost Properties Options and Restricted SharesStock
Under the terms of theThe merger agreement provides that at the effective time of the parent merger, MAA will assume each outstanding option to acquire ColonialPost Properties common shares. Each option sostock will vest in full and will be assumed by MAA by virtue of the parent merger and without any action on the part of the holder thereof. Each Post Properties stock option assumed by MAA under the merger agreement will otherwise continue to have, and be subject to, the same terms and conditions, includingother than vesting, schedule, as were applicable to the corresponding Post Properties stock option immediately prior to the effective time of the parent merger.
In addition, under the merger, agreement, immediately prior toexcept that, from and after the effective time of the parent merger, (A) each then-outstanding restricted Colonial common sharePost Properties stock option will be converted into the right to receiveexercisable for that number of whole shares of MAA common stock equal to the product of the number of shares of Post Properties common stock that arewere subject to the same vesting and forfeiture conditions and other terms and conditions as are applicable to the Colonial restricted share awardssuch Post Properties stock option immediately prior to the consummationeffective time multiplied by 0.71, rounded down to the nearest whole number of shares of MAA common stock and (B) the parent merger.
per share exercise price for the shares of MAA common stock issuable upon exercise of such assumed Post Properties stock option will be equal to the quotient determined by dividing the exercise price of each share of Post Properties common stock subject to such assumed stock option by 0.71, rounded up to the nearest whole cent. As a result of the transactions contemplated under the merger agreement, 386,307 restricted Colonialoptions to acquire 152,414 shares of Post Properties common sharesstock held by Colonial’sthe Post Properties executive officers will be converted into options that are exercisable for 108,198 shares of MAA common stock.
The merger agreement provides that immediately prior to the effective time of the parent merger, any and all outstanding issuance and forfeiture conditions on any shares of Post Properties restricted stock shall be deemed satisfied in full, contingent upon the closing of the parent merger, and such shares of Post Properties common stock will be entitled to receive the merger consideration. As a result of the transactions contemplated under the merger agreement, 51,167 currently awarded shares of Post Properties restricted stock held by the Post Properties executive officers and trustees woulddirectors will vest and be converted into the right to receive 139,070 shares of MAA common stock pursuant to the parent merger which based on the closing price of MAA common shares on August 20, 2013, the latest practicable date prior to the filing of this joint proxy statement/prospectus, would have an aggregate value of $8,658,498, and 1,277,705 options to acquire Colonial common shares held by the Colonialconsideration.
The following table sets forth for Post Properties’ executive officers and trustees that would be exercisable for 459,974directors (1) the number of shares of MAAPost Properties common stock wouldunderlying vested Post Properties stock options that will be assumed by MAA.
If an eligible employee’s (including a Colonial executive officer’s) employment is terminated by Colonial uponMAA under the consummationmerger agreement, (2) the number of the mergers, all restricted shares held by such employee will accelerate in full immediately prior to the closing of the mergers. In addition, all outstandingPost Properties common stock underlying unvested Post Properties stock options held by such eligible employee that are not already fully vested and exercisablefor which vesting will accelerate and become immediately exercisable in full, effective upon the closing of the mergers, and remain exercisable for a 90-day period following the closing of the mergers (or, if earlier, the date the option terminates in accordance with its terms). The above-described acceleration and assumption of unvested options is conditioned upon the consummation of the mergers, the termination of the eligible employee’s employment upon the closing of the mergers, and the continuous employment of the eligible employee with Colonial through the closing of the mergers.
The Colonial Compensation Committee has also provided that in the event that a remaining eligible employee’s (including an executive officer’s) employment is terminated by the Combined Corporation without “cause” (as defined below) or the employee resigns for “good reason,” (as defined below) within one year following the closing of the mergers, the unvested portion of the option and restricted shares held by such eligible employee will become fully vested and each such option may be exercised in full for the one-year period immediately following the effective date of such termination or, if earlier, the date the option terminates in accordance with its terms.
For purposes of the foregoing, “cause” means (1) gross negligence or willful misconduct in connection with the performance of duties; (2) conviction of a criminal offense (other than minor traffic offenses); or (3) material breach of any term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreements.
For purposes of the foregoing, “good reason” means the occurrence of any of the following events with respect to the employee: (1) a material, adverse alteration in the employee’s title or responsibilities from those in effect immediately prior to the consummation of the mergers; (2) a material reduction in the employee’s base salary and annual target bonus opportunity as of immediately prior to the consummation of the mergers; or (3) the relocation of the employee’s principal place of employment to a location more than 35 miles from the employee’s principal place of employment as of the consummation of the mergers or Colonial’s (or the
Combined Corporation’s) requiring the employee to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on Colonial’s (or the Combined Corporation’s) business to an extent substantially consistent with the employee’s business travel obligations as of immediately prior to the consummation of the mergers. To qualify as a resignation for “good reason” the employee must provide notice to Colonial (or the Combined Corporation) of any of the foregoing occurrences within 90 days of the initial occurrence, Colonial (or the Combined Corporation) will have 30 days to remedy such occurrence, and the employee’s employment must terminate within 30 days after the end of such 30-day cure period.
With respect to each Colonial trustee that will not be joiningassumed by MAA under the MAA Board immediately after the closing of the mergers, all restricted shares held by such trustee will accelerate in full immediately prior to the closing of the mergersmerger agreement, and all outstanding options held by such trustee that are not already fully vested and exercisable will accelerate and become immediately exercisable in full, effective upon the closing of the mergers.
The following tables set forth for the Colonial executive officers and trustees(3) the number of (i) Colonialshares of Post Properties common shares underlying vested Colonial options, (ii) Colonial common shares underlying unvested Colonial options,stock subject to Post Properties restricted stock awards for which vesting will accelerate under the terms of the merger agreement and (iii) Colonial restricted shares,that will be
exchanged for the merger consideration, in each case as held by the Post Properties executive officers and trustees on August 20, 2013directors as of December 31, 2016, and assuming continued employment through the date of the closing of the mergers. The value of the common stock underlying equity awards is based on a price per share of $66.436, which represents the average closing price of shares of Post Properties common stock over the first five business days following the first public announcement of the parent merger:
Executive Officersmerger. Accordingly, the actual value received by the executive officers and directors may be greater or less than the values provided below.
Name | Shares Underlying Vested Options(1) | Shares Underlying Unvested Options(2) | Restricted Shares | |||||||||
Thomas H. Lowder | 247,571 | 230,681 | 173,101 | |||||||||
Paul F. Earle | 112,106 | 142,073 | 109,525 | |||||||||
John P. Rigrish | 15,363 | 44,267 | 33,439 | |||||||||
Bradley P. Sandidge | 33,188 | 42,399 | 26,833 | |||||||||
Jerry A. Brewer | 18,067 | 41,400 | 25,859 | |||||||||
Name | Shares Underlying Vested Stock Options(#) | Value of Shares Underlying Vested Stock Options($)(1) | Shares Underlying Unvested Stock Options(#) | Value of Shares Underlying Unvested Stock Options($)(1) | Restricted Stock(#) | Value of Restricted Stock($)(2) | ||||||||||||||||||
Named Executive Officers: | ||||||||||||||||||||||||
David P. Stockert | 27,702 | 500,409 | 30,748 | 290,931 | 12,957 | 860,811 | ||||||||||||||||||
Sherry W. Cohen | 7,668 | 128,426 | 13,442 | 125,071 | 7,653 | 508,435 | ||||||||||||||||||
S. Jamie Teabo | 10,566 | 200,146 | 13,558 | 125,448 | 6,653 | 441,999 | ||||||||||||||||||
David C. Ward | 9,026 | 159,499 | 14,574 | 133,744 | 7,915 | 525,841 | ||||||||||||||||||
Other Executive Officers: | ||||||||||||||||||||||||
Charles A. Konas | 7,068 | 117,180 | 12,252 | 113,381 | 5,938 | 394,497 | ||||||||||||||||||
Arthur J. Quirk | 513 | 3,096 | 5,297 | 50,249 | 2,426 | 161,174 | ||||||||||||||||||
Non-Employee Directors: | ||||||||||||||||||||||||
Robert C. Goddard, III | 1,144 | 76,003 | ||||||||||||||||||||||
Walter M. Deriso, Jr. | 1,144 | 76,003 | ||||||||||||||||||||||
Russell R. French | 1,144 | 76,003 | ||||||||||||||||||||||
Toni Jennings | 1,144 | 76,003 | ||||||||||||||||||||||
John F. Morgan, Sr. | 761 | 50,558 | ||||||||||||||||||||||
Ronald de Waal | 1,144 | 76,003 | ||||||||||||||||||||||
Donald C. Wood | 1,144 | 76,003 | ||||||||||||||||||||||
| (1) |
| (2) | The values shown above for the restricted stock assume a price per share of |
Trustees
Name | Shares Underlying Vested Options(1) | Shares Underlying Unvested Options(2) | Restricted Shares | |||||||||
James K. Lowder | 40,000 | 4,510 | 1,950 | |||||||||
Carl F. Bailey | 45,000 | 4,510 | 1,950 | |||||||||
Edwin M. Crawford | 10,000 | 4,510 | 1,950 | |||||||||
M. Miller Gorrie | 20,000 | 4,510 | 1,950 | |||||||||
William M. Johnson | 35,000 | 4,510 | 1,950 | |||||||||
Herbert A. Meisler | 40,000 | 4,510 | 1,950 | |||||||||
Claude B. Nielsen | 45,000 | 4,510 | 1,950 | |||||||||
Harold W. Ripps | 25,000 | 4,510 | 1,950 | |||||||||
John W. Spiegel | 50,000 | 4,510 | 1,950 | |||||||||
Limited Partner Interests in Colonial LP
Under the merger agreement, in the partnership merger, each limited partner interest in Colonial LP designated as a “Class A Unit” and a “Partnership Unit” under the limited partnership agreement of Colonial LP, which we refer to in this joint proxy statement/prospectus as Colonial LP units, issued and outstanding immediately prior to the effectiveness of the partnership merger (other than limited partner interests owned by Colonial) will be converted into Class A common units in MAA LP, which we refer to in this joint proxy statement/prospectus as new MAA LP units, in an amount equal to (x) 1 multiplied by (y) the 0.36, and each holder of new MAA LP units will be admitted as a limited partner of MAA LP in accordance with the terms of the limited partnership agreement of MAA LP following the effectiveness of the partnership merger.
As of August 20, 2013, the Colonial executive officers and Colonial trustees beneficially owned, in the aggregate, 3,893,154 Colonial LP units. If all of the Colonial LP units beneficially owned by the Colonial executive officers and Colonial trustees as of August 20, 2013 were converted to new MAA LP units in connection with the partnership merger, then the Colonial executive officers and Colonial trustees would receive an aggregate of 1,401,535 new MAA LP units.
As of the effective time of the partnership merger, MAA LP will enter into the Third Amended and Restated Agreement of Limited Partnership of MAA LP, pursuant to which, among other things, the new MAA LP units received by holders of Colonial LP units in the partnership merger will become convertible into an amount of cash equal to the value of a corresponding number of shares of MAA common stock, or, at the option of MAA, the corresponding number of shares of MAA common stock. See “The Merger Agreement—Merger Consideration; Effects of the Parent Merger and the Partnership Merger—Merger Consideration” beginning on page 152.
Directors of MAA after the Parent Merger
Under the merger agreement, within two weeks afterat least 10 days prior to the execution and deliverymailing of the merger agreement, Colonialdefinitive joint proxy statement/prospectus, Post Properties was required to designate fivethree members of the existing ColonialPost Properties Board to be appointed to the Combined Corporation board of directors following the parent merger. The merger agreement provided that Thomas H. Lowder was to be oneEach of the Colonial designees and that each of the other ColonialPost Properties designees must be one of the current ColonialPost Properties Board members listed on a schedule to the merger agreement, which schedule listed the following existing ColonialPost Properties Board members: James K. Lowder, Claude B. Nielsen, Harold W. Ripps,Robert C. Goddard, III, David P. Stockert, Walter M. Deriso, Jr., Russell R. French, Toni Jennings, John W. Spiegel, Edwin M. CrawfordF. Morgan, Sr., Ronald de Waal and William M. Johnson.Donald C. Wood. On June 10, 2012,September 20, 2016, the governance committeeNominating and Corporate Governance Committee of the ColonialPost Properties Board approved Thomas H. Lowder, James K. Lowder, Claude B. Nielsen, Harold W. RippsRussell R. French, Toni Jennings and John W. SpiegelDavid P. Stockert to join the Combined Corporation board of directors following the parent merger. Under the terms of the merger agreement, each of the ColonialPost Properties designees will serve until the 20142017 annual meeting of MAA’s shareholders (and until their successors have been elected and qualified) and will be nominated by the MAA board of directorsBoard for reelection at the 2014 and 20152017 annual meetingsmeeting of MAA’s shareholders, subject to the satisfaction and compliance of such ColonialPost Properties designees with MAA’s then-current corporate governance guidelines and code of business conduct and ethics. The ColonialPost Properties designees will be entitled to fees and other compensation and participation in options, share or other benefit plans for which directors of MAA are eligible.
Indemnification and InsuranceIndex to Financial Statements
For a periodPost Properties is party to indemnity agreements with each of six years afterits directors and executive officers that require Post Properties, among other obligations, to indemnify directors and executive officers against certain liabilities that may arise by reason of their status or service as directors or executive officers. These indemnity agreements will be assumed by the effective time ofsurviving corporation in the partnershipparent merger pursuantand will survive the parent merger and continue in full force and effect in accordance with their terms.
In addition, MAA has agreed to the terms of the merger agreement and subject to certain limitations, the Combined Corporation will indemnify and hold harmless among others,and provide advancement of expenses to, each officerof the Post Properties directors and trusteeofficers in respect of Colonial, for actionsacts or omissions occurring at or prior to the effective timecompletion of the partnership merger, including with respect to the transactions contemplated by the merger agreement,mergers to the fullest extent permitted by law or as provided under applicable law. In addition, pursuantthe certificate of incorporation, by-laws and other governing documents of Post Properties and its subsidiaries. Post Properties is also required to the termsobtain a policy of the merger agreement and subject to certain limitations, prior to the effective time of the partnership merger, Colonial has agreed to purchase and MAA has agreed to cause to be maintained in full force and effect for a period of six years after the effective time of the partnership merger, a “tail” prepaid insurance policy or policies of at least the same coverage and amounts and containing terms and conditions that are no less favorable to, among others, the
officers and trustees of Colonial as Colonial’s existing policies with respect to directors’ and officers’ liability insurance coverage for claims arising from facts or events that occurred on or prior to the effective timebenefit of its officers and directors for six years following completion of the partnership merger. If such “tail”mergers.
Such indemnification and insurance policy cannot be obtained or can be obtained only by paying an annual premium in excess of 300% of the current annual premium paid by Colonial, MAA will maintain in effect, for a period of at least six years after the effective time of the partnership merger, as much similar insurance ascoverage is reasonably practicable for an annual premium equal to 300% of the current annual premium paid by Colonial. These interests arefurther described in detail below atthe section titled “The Merger Agreement—Covenants and Agreements—Indemnification of Directors and Officers; Insurance.”Officers’ Insurance” beginning on page 162 of this joint proxy statement/prospectus.
The Colonial Board was aware of the interests described in this section and considered them, among other matters, in approving and adopting the merger agreement and the parent merger pursuant to the plan of merger and in making its recommendation that Colonial shareholders approve and adopt the merger agreement, the parent merger pursuant to the plan of merger and the other transactions contemplated by the merger agreement. See “The Parent Merger—Recommendation of the Colonial Board and Its Reasons for the Parent Merger.”
Executive Compensation Payable in Connection with the Mergers
Colonial’s “named executive officers” for purposes of the disclosure in this joint proxy statement/prospectus are Thomas H. Lowder, Paul F. Earle, John P. Rigrish and Bradley P. Sandidge.
Change in Control Compensation
The followinginformation set forth in the table sets forth the information required bybelow is intended to comply with Item 402(t) of Regulation S-K, promulgated by the SEC, regardingwhich requires disclosure of information about certain compensation thatfor each of Colonial’s named executive officers may receiveofficer that is based on or that otherwise relates to the mergers. The figures intransactions contemplated under the table are estimated based on compensation levels as ofmerger agreement.
Please note that the date of this document and an assumed effective date of August 20, 2013 (the latest practicable date prior to the filing of this joint proxy statement/prospectus) for both the mergers and the termination of the executive’s employment. The amounts reportedindicated below are estimates based on multiplethe material assumptions thatdescribed in the notes to the table below, which may or may not actually occur or be accurate on the relevant date, including an assumption that the employmentoccur. Some of each of Colonial’s named executive officers will terminate upon consummation of the mergers and otherthese assumptions described in this document. As required by applicable SEC rules, all amounts below determined using the per share value of Colonial common shares have been calculatedare based on a per share price of Colonial common shares of $23.66 (the average closing market price of Colonial common shares over the first five business days following the public announcement of the mergers on June 3, 2013). Asinformation currently available and, as a result, of the foregoing assumptions, the actual amounts, if any, that may become payable to be received by a named executive officer may materially differ in material respects from the amounts set forth below. The merger-related compensation payableFurthermore, for purposes of calculating such amounts, we have assumed, solely for purposes of the table below:
Change in Control Compensation
Name | Cash ($) | Equity(1) ($) | Total ($) | |||||||||
Thomas H. Lowder | 4,410,383 | (2) | 4,902,278 | 9,312,661 | ||||||||
Paul F. Earle | 2,402,202 | (3) | 3,083,793 | 5,485,995 | ||||||||
John P. Rigrish | 874,492 | (4) | 945,279 | 1,819,771 | ||||||||
Bradley P. Sandidge | 704,854 | (5) | 781,529 | 1,486,383 | ||||||||
Name | Cash ($)(1) | Accelerated Vesting of Unvested Equity ($)(2) | Non-Qualified Deferred Compensation ($)(3) | Continued Benefits and Perquisites ($)(4) | Tax Reimbursement ($)(5) | Total ($) | ||||||||||||||||||
David P. Stockert | 3,150,000 | 2,151,742 | — | 58,230 | 48,751 | 5,408,723 | ||||||||||||||||||
Sherry W. Cohen | 1,585,000 | 1,108,506 | 631,989 | 13,617 | 11,400 | 3,350,512 | ||||||||||||||||||
Jamie S. Teabo | 1,070,000 | 1,042,447 | 444,072 | 29,844 | 24,986 | 2,611,349 | ||||||||||||||||||
David C. Ward | 1,130,000 | 1,184,585 | 620,587 | 38,854 | 28,078 | 3,002,104 | ||||||||||||||||||
| (1) |
|
| in a lump sum upon the named executive officer’s separation from service. Under the merger agreement, the mergers constitute a “change in control” for purposes of the employment and change in control agreements and, as a result of the mergers, |
The following table quantifies each separate form of cash payment included in the aggregate total reported in the “Cash” column.
| Severance | ||||||||||||
Name | Base Salary Component ($)(a) | Bonus Component($)(a) | 2016 Annual Bonus Awards($) | |||||||||
David P. Stockert | 1,350,000 | 1,350,000 | 450,000 | |||||||||
Sherry W. Cohen | 885,000 | 525,000 | 175,000 | |||||||||
Jamie W. Teabo | 590,000 | 320,000 | 160,000 | |||||||||
David C. Ward | 590,000 | 360,000 | 180,000 | |||||||||
| (a) | Cash compensation for purposes of change in control severance is |
| (2) | Represents unvested restricted stock and stock options |
Name | Accelerated Stock Options ($) | Accelerated Restricted Stock ($) | 2016 LTI Awards ($) | |||||||||
David P. Stockert | 290,931 | 860,811 | 1,000,000 | |||||||||
Sherry W. Cohen | 125,071 | 508,435 | 475,000 | |||||||||
Jamie S. Teabo | 125,448 | 441,999 | 475,000 | |||||||||
David C. Ward | 133,744 | 525,841 | 525,000 | |||||||||
| (4) |
| (5) |
Regulatory Approvals Required for the Mergers
MAA and ColonialPost Properties are not aware of any material federal or state regulatory requirements that must be complied with, or approvals that must be obtained, in connection with the mergers or the other transactions contemplated by the merger agreement.
Material U.S. Federal Income Tax Consequences of the Parent Merger and Ownership of Combined Corporation Common Stock and MAA Series I Preferred Stock
The discussion below, as it relates to the material U.S. federal income tax consequences of the parent merger, summarizes such consequences to U.S. holders (as defined below) of Colonialshares of Post Properties common sharesstock and Post Properties Series A preferred stock that hold such common sharesstock as a capital asset within the meaning of Section 1221 of the Code.
The discussion below, as it relates to the material U.S. federal income tax consequences of holding common stock in the Combined Corporation and MAA Series I preferred stock, summarizes such consequences to certain holders (as specified below) of Combined Corporation common stock and MAA Series I preferred stock that hold such common stock as a capital asset within the meaning of Section 1221 of the Code.
This discussion is based upon the Code, Treasury regulations promulgated under the Code, referred to herein as the Treasury Regulations, judicial decisions and publishedcurrent administrative interpretations and practices of the IRS including its practices and policies as endorsed in private letter rulings, which are not binding on the IRS except in the case of the taxpayer to whom a private letter ruling is addressed, all as currently in effect and all of which are subject to change, possibly with retroactive effect. This discussion does not address (i) U.S. federal taxes other than income taxes, (ii) state, local or non-U.S. taxes or (iii) tax reporting requirements, in each case, as applicable to the parent merger. In addition, this discussion does not address U.S. federal income tax considerations applicable to holders of ColonialPost Properties common sharesstock or Post Properties Series A preferred stock that are subject to special treatment under U.S. federal income tax law, including, for example:
financial institutions;
pass-through entities (such as entities treated as partnerships for U.S. federal income tax purposes);
insurance companies;
broker-dealers;
tax-exempt organizations;
dealers in securities or currencies;
traders in securities that elect to use a mark to market method of accounting;
persons that hold Colonialshares of Post Properties common sharesstock or Post Properties Series A preferred stock (or, following the effective time of the parent merger, shares of Combined Corporation common stock
or MAA Series I preferred stock) as part of a straddle, hedge, constructive sale, conversion transaction, or other integrated transaction for U.S. federal income tax purposes; |
regulated investment companies;
real estate investment trusts;
certain U.S. expatriates;
non-U.S. holders (as defined below);
U.S. holders whose “functional currency” is not the U.S. dollar; and
persons who acquired their Colonialshares of Post Properties common sharesstock or Post Properties Series A preferred stock (or, following the effective time of the parent merger, shares of Combined Corporation common stock or MAA Series I preferred stock) through the exercise of an employee stock option or otherwise as compensation.
For purposes of this discussion, a “U.S. holder” means a beneficial owner of ColonialPost Properties common sharesstock or Post Properties Series A preferred stock (or, following the effective time of the parent merger, of the shares of Combined Corporation common stock or MAA Series I preferred stock) that is:
an individual who is a citizen or resident of the United States for U.S. federal income tax purposes;
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
a trust that (A) is subject to the supervision of a court within the United States and the control of one or more U.S. persons or (B) has a valid election in place under the Treasury Regulations to be treated as a U.S. person.
For purposes of this discussion, a “non-U.S. holder” means a beneficial owner of Colonialshares of Post Properties common stock or Post Properties Series A preferred stock (or, following the effective time of the parent merger, of the shares other thanof Combined Corporation common stock or MAA Series I preferred stock) that is a nonresident alien individual or foreign corporation for U.S. holder.federal income tax purposes that is not otherwise subject to special treatment under the Code.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Colonialshares of Post Properties common sharesstock or Post Properties Series A preferred stock (or, following the parent merger, shares of Combined Corporation common stock or MAA Series I preferred stock), the tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. Any partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes that holds Colonialshares of Post Properties common sharesstock or Post Properties Series A preferred stock (or, following the parent merger, shares of the Combined Corporation common stock or MAA Series I preferred stock), and the partners in such partnership (as determined for U.S. federal income tax purposes), should consult their tax advisors.
This discussion of material U.S. federal income tax consequences of the parent merger is not binding on the IRS. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any described herein.
THE U.S. FEDERAL INCOME TAX RULES APPLICABLE TO THE PARENT MERGER AND TO REITS GENERALLY ARE HIGHLY TECHNICAL AND COMPLEX. HOLDERS OF COLONIALSHARES OF
POST PROPERTIES COMMON SHARESSTOCK OR POST PROPERTIES SERIES A PREFERRED STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE PARENT MERGER, THE OWNERSHIP OF SHARES OF COMMON STOCK OF THE COMBINED CORPORATION OR MAA SERIES I PREFERRED STOCK, AND THE COMBINED CORPORATION’S QUALIFICATION AS A REIT, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX LAWS, AND POTENTIAL CHANGES IN APPLICABLE TAX LAWS, IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.
Tax Opinions from Counsel Regarding the Parent Merger
It is a condition to the completion of the parent merger that Hogan Lovells USKing & Spalding LLP (or other counsel to ColonialPost Properties reasonably acceptable to MAA) and Goodwin Procter LLP (or other counsel to MAA reasonably acceptable to Colonial)Post) each renders a tax opinion to its client to the effect that the parent merger will constitute a reorganization within the meaning of Section 368(a) of the Code. Hogan Lovells USKing & Spalding LLP and Goodwin Procter LLP counsel are providing opinions to ColonialPost Properties and MAA, respectively, to similar effect in connection with the filing of this Registration Statement.joint proxy statement/prospectus. Such opinions will be subject to customary exceptions, assumptions and qualifications, and will be based on representations made by ColonialPost Properties and MAA regarding factual matters (including those contained in tax representation letters provided by ColonialPost Properties and MAA), and covenants undertaken by ColonialPost Properties and MAA. If any assumption or representation is inaccurate in any way, or any covenant is not complied with, the tax consequences of the parent merger could differ from those described in the tax opinions and in this discussion. These tax opinions represent the legal judgment of counsel rendering the opinion and are not binding on the IRS or the courts. No ruling from the IRS has been or will be requested in connection with the parent merger, and there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to the conclusions set forth in the tax opinions.
As noted and subject to the qualifications above, in the opinion of Hogan Lovells USKing & Spalding LLP and Goodwin Procter LLP, the parent merger of ColonialPost Properties with and into MAA will qualify as a reorganization within the meaning of Section 368(a) of the Code. Accordingly:
ColonialPost Properties will not recognize any gain or loss as a result of the parent merger.
A U.S. holder will not recognize any gain or loss upon receipt of common stock of the Combined Corporation or MAA Series I preferred stock in exchange for its Colonialshares of Post Properties common sharesstock or Post Properties Series A preferred stock in connection with the parent merger, except with respect to cash received in lieu of fractional shares of the Combined Corporation common stock, as discussed below.
A U.S. holder will have an aggregate tax basis in the Combined Corporation common stock or MAA Series I preferred stock received in the parent merger equal to the U.S. holder’s aggregate tax basis in its Colonialshares of Post Properties common stock or Post Properties Series A preferred stock, as applicable, surrendered pursuant to the parent merger, reduced by the portion of the U.S. holder’s tax basis in its shares
|
The holding period of the Combined Corporation common stock or MAA Series I preferred stock received by a U.S. holder in connection with the parent merger will include the holding period of the Colonial common shares surrendered in connection with the parent merger.
shares of Post Properties common stock or Post Properties Series A preferred stock, as applicable, surrendered in connection with the parent merger. |
Cash received by a U.S. holder in lieu of a fractional share of Combined Corporation common stock in the parent merger will be treated as if such fractional share had been issued in connection with the parent merger and then redeemed by the Combined Corporation, and such U.S. holder generally will recognize capital gain or loss with respect to such cash payment, measured by the difference, if any, between the amount of cash received and the U.S. holder’s tax basis in such fractional share. Such capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period in respect of such fractional share is greater than one year. Non-corporate U.S. holders are generally subject to tax on long-term capital gains at reduced rates under current law. The deductibility of capital losses is subject to certain limitations.
U.S. Federal Income Tax Consequences of the Parent Merger to ColonialPost Properties and ColonialPost Properties Shareholders (or MAA or MAA Shareholders) if the Parent Merger Does Not Qualify as a Reorganization
If the parent merger fails to qualify as a reorganization, then a ColonialPost Properties shareholder generally would recognize gain or loss, as applicable, equal to the difference between:
the sum of the fair market value of the Combined Corporation common stock, MAA Series I preferred stock and cash in lieu of fractional shares of Combined Corporation common stock received by the ColonialPost Properties shareholder in the parent merger; and
the ColonialPost Properties shareholder’s adjusted tax basis in its Colonialshares of Post Properties common shares.
If the parent merger fails to qualify as a reorganization, so long as ColonialPost Properties qualified as a REIT at the time of the parent merger, ColonialPost Properties generally would not incur a U.S. federal income tax liability so long as ColonialPost Properties has made distributions (which would be deemed to include for this purpose the fair market value of the shares of Combined Corporation common stock and MAA Series I preferred stock issued pursuant to the parent merger) to ColonialPost Properties shareholders in an amount at least equal to the net income or gain on the deemed sale of its assets to the Combined Corporation. In the event that such distributions were not sufficient to eliminate all of Colonial’sPost Properties’ tax liability as a result of the deemed sale of its assets to Colonial,Post Properties, the Combined Corporation would be liable for any remaining tax owed by ColonialPost Properties as a result of the parent merger.
Under the “investment company” rules under Section 368 of the Code, if both MAA and ColonialPost Properties are “investment companies” under such rules, the failure of either ColonialPost Properties or MAA to qualify as a REIT could cause the parent merger to be taxable to ColonialPost Properties or MAA, respectively, and its shareholders. In addition, it is possible that Post Properties will make additional common dividends close in time to the parent merger in order to satisfy its REIT distribution requirements. The payment of such dividends should not be treated as part of the merger consideration and accordingly should not impact the treatment of the parent merger to Post Properties shareholders described under “—Tax Opinions from Counsel Regarding the Parent Merger”. However, if the payment of such dividends were treated as part of the merger consideration, a U.S. holder generally would recognize gain, but not loss, on the amount equal to the lesser of (i) the amount of such cash received or (ii) the excess, if any, of (a) the sum of the amount of such cash received and the fair market value of the Combined Corporation common stock, and cash in lieu of fractional shares of Combined Corporation common stock received by the Post Properties shareholder in the parent merger over (b) the Post Properties shareholder’s adjusted tax basis in its shares of Post Properties common stock.
If the parent merger fails to qualify as a reorganization and ColonialPost Properties did not qualify as a REIT at the time of the parent merger, ColonialPost Properties would generally recognize gain or loss on the deemed transfer of its assets to the Combined Corporation and the Combined Corporation, as its successor, could incur a very significant current tax liability and may be unable to qualify as a REIT.
If the parent merger fails to qualify as a reorganization as a result of MAA failing to qualify as a REIT at the time of the parent merger as a result of the “investment company” rules under Section 368 of the Code, it is
possible that MAA might be treated, for certain purposes, as transferring its assets to ColonialPost Properties in a taxable transaction in exchange for shares of Combined Corporation common stock and MAA Series I preferred stock, followed by a deemed liquidation of MAA and a liquidating distribution of such shares of Combined Corporation common stock and MAA Series I preferred stock to MAA shareholders. In such a case, the Combined Corporation, as successor to MAA, may incur a very significant current tax liability and may be unable to qualify as a REIT.
Backup Withholding
Certain U.S. holders of Colonialshares of Post Properties common sharesstock or Post Properties Series A preferred stock may be subject to backup withholding of U.S. federal income tax with respect to any cash received in lieu of fractional shares pursuant to the parent merger. Backup withholding generally will not apply, however, to a U.S. holder of Colonialshares of Post Properties common sharesstock or Post Properties Series A preferred stock that furnishes a correct taxpayer identification number and certifies that it is not subject to backup withholding on IRS Form W-9 or is otherwise exempt from backup withholding and provides appropriate proof of the applicable exemption. Backup withholding is not an additional tax and any amounts withheld will be allowed as a refund or credit against the holder’s U.S. federal income tax liability, if any, provided that the holder timely furnishes the required information to the IRS.
Tax Opinions from Counsel Regarding REIT Qualification of ColonialPost Properties and MAA
It is a condition to the obligation of MAA to complete the parent merger that MAA receive an opinion from Hogan Lovells USKing & Spalding LLP (or other counsel to ColonialPost Properties reasonably acceptable to MAA) to the effect that, for all taxable years commencing with Colonial’sPost Properties’ taxable year ended December 31, 20042006 through its taxable year which ends with the parent merger, ColonialPost Properties has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code (including an exception for the consequences of the partnership merger).Code. The opinion of Hogan Lovells USKing & Spalding LLP (or such other counsel) will be subject to customary exceptions, assumptions and qualifications, and be based on representations made by ColonialPost Properties and MAA regarding factual matters (including those contained in tax representation letters provided by ColonialPost Properties and MAA), and covenants undertaken by ColonialPost Properties and MAA, relating to the organization and operation of ColonialPost Properties and its subsidiaries and MAA (and the Combined Corporation) and their subsidiaries.
It is a condition to the obligation of ColonialPost Properties to complete the parent merger that ColonialPost Properties receive an opinion from Baker, Donelson, Bearman, CaldwellBass, Berry & Berkowitz, PCSims PLC (or other counsel to MAA reasonably acceptable to Colonial)Post) to the effect that, for all taxable years commencing with MAA’s taxable year ended December 31, 2004,2006, MAA has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and its past, current, and intended future organization and operations will permit MAA (as the Combined Corporation) to continue to qualify for taxation as a REIT under the Code for its taxable year that includes the parent merger and thereafter. The opinion of Baker, Donelson, Bearman, CaldwellBass, Berry & Berkowitz, PCSims PLC (or such other counsel) will be subject to customary exceptions, assumptions and qualifications, and be based on representations made by ColonialPost Properties and MAA regarding factual matters (including those contained in tax representation letters provided by ColonialPost Properties and MAA), and covenants undertaken by ColonialPost Properties and MAA, relating to the organization and operation of ColonialPost Properties and its subsidiaries and MAA (and the Combined Corporation) and their subsidiaries.
Neither of the opinions described above will be binding on the IRS or the courts. The Combined Corporation intends to continue to operate in a manner to qualify as a REIT following the parent merger, but there is no guarantee that it will qualify or remain qualified as a REIT. Qualification and taxation as a REIT depend upon the ability of the Combined Corporation to meet, through actual annual (or, in some cases,
quarterly) operating results, requirements relating to income, asset ownership, distribution levels and diversity of share ownership, and the various REIT qualification requirements imposed under the Code. Given the complex nature of the REIT qualification requirements, the ongoing importance of factual determinations and the possibility of future changes in the circumstances of the Combined Corporation, there can be no assurance that
the actual operating results of the Combined Corporation will satisfy the requirements for taxation as a REIT under the Code for any particular tax year.
Tax Liabilities and Attributes Inherited from ColonialPost
If ColonialPost Properties failed to qualify as a REIT for any of its taxable years for which the applicable period for assessment had not expired, ColonialPost Properties would be liable for (and the Combined Corporation would be obligated to pay) U.S. federal income tax on its taxable income for such years at regular corporate rates, and, assuming the parent merger qualified as a reorganization within the meaning of Section 368(a) of the Code, the Combined Corporation would be subject to tax on the built-in gain on each ColonialPost Properties asset existing at the time of the parent merger if the Combined Corporation were to dispose of the ColonialPost Properties asset for up to ten years following the parent merger. Such tax would be imposed at the highest regular corporate rate in effect at the date of the sale. Moreover, even if ColonialPost Properties qualified as a REIT at all relevant times, the Combined Corporation similarly would be liable for other unpaid taxes (if any) of ColonialPost Properties for any of its taxable years for which the applicable period for assessment had not expired (such as the 100% tax on gains from any sales treated as “prohibited transactions” as discussed below in the discussion of the Combined Corporation’s status as a REIT). Moreover, and irrespective of whether ColonialPost Properties qualified as a REIT, if ColonialPost Properties were to incur tax liabilities as a result of the failure of the parent merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, those tax liabilities would, as described above, be transferred to the Combined Corporation as a result of the parent merger.
Furthermore, after the parent merger and the partnership mergers the asset and gross income tests applicable to REITs will apply to all of the assets of the Combined Corporation, including the assets the Combined Corporation acquires from Colonial,Post Properties, and to all of the gross income of the Combined Corporation, including the income derived from the assets the Combined Corporation acquires from Colonial.Post Properties. As a result, the nature of the assets that the Combined Corporation acquires from ColonialPost Properties and the gross income the Combined Corporation derives will be taken into account in determining the qualification of the Combined Corporation as a REIT. See “U.S. Federal Income Tax Consequences of the Parent Merger to ColonialPost Properties and ColonialPost Properties Shareholders (or MAA or MAA Shareholders) if the Parent Merger Does Not Qualify as a Reorganization” above.
Qualification as a REIT requires ColonialPost Properties to satisfy numerous requirements, some on an annual and others on a quarterly basis, as described below with respect to Colonial.Post Properties. There are only limited judicial and administrative interpretations of these requirements, and qualification as a REIT involves the determination of various factual matters and circumstances which were not entirely within the control of Colonial.Post Properties.
Tax Liabilities and Attributes of MAA
If MAA failed to qualify as a REIT for any of its taxable years for which the applicable period for assessment had not expired, MAA would be liable for (and the Combined Corporation would be obligated to pay) U.S. federal income tax on its taxable income at regular corporate rates. Furthermore, MAA (and the Combined Corporation) would not be able to re-elect REIT status until the fifth taxable year after the first taxable year in which such failure occurred. See “U.S. Federal Income Tax Consequences of the Parent Merger to ColonialPost Properties and ColonialPost Properties Shareholders (or MAA or MAA Shareholders) if the Parent Merger Does Not Qualify as a Reorganization” above.
Material U.S. Federal Income Tax Considerations Applicable to Holders of the Combined Corporation Common Stock and MAA Series I Preferred StockIndex to Financial Statements
This section summarizes the material U.S. federal income tax consequences generally resulting from the election of MAA to be taxed as a REIT and the ownership of common stock of the Combined Corporation.Corporation and MAA Series I preferred stock. The sections of the Code and the corresponding Treasury Regulations that relate to qualification and operation as a REIT are highly technical and complex. The following sets forth the material aspects of the sections of the Code that govern the U.S. federal income tax treatment of a REIT and thecertain holders of certain of its commoncapital stock under
current law. This summary is qualified in its entirety by the applicable Code provisions, relevant rules and regulations promulgated under the Code, and administrative and judicial interpretations of the Code and these rules and regulations. Except as specifically noted, this discussion does not cover differences between current law and prior law applicable to REITs.
Taxation of REITs in General
MAA elected to be taxed as a REIT under Sections 856 through 860 of the Code commencing with its taxable year ended December 31, 1994. MAA believes that it has been organized and operated in a manner which allows MAA and the Combined Corporation to qualify for taxation as a REIT under the Code commencing with the taxable year ended December 31, 1994. MAA currently intends to continue to be organized and operate in this manner. However, qualification and taxation as a REIT depend upon the ability of the Combined Corporation to meet the various qualification tests imposed under the Code, including through actual annual operating results, asset composition, distribution levels and diversity of stock ownership. Accordingly, no assurance can be given that MAA has been organized and has operated, or that the Combined Corporation will continue to be organized and operate, in a manner so as to qualify or remain qualified as a REIT.
Provided the Combined Corporation qualifies for taxation as a REIT, the Combined Corporation generally will be allowed to deduct dividends paid to its shareholders, and, as a result, the Combined Corporation generally will not be subject to U.S. federal income tax on that portion of its ordinary income and net capital gain that it currently distributes to its shareholders. The Combined Corporation expects to make distributions to its shareholders on a regular basis as necessary to avoid material U.S. federal income tax and to comply with the REIT requirements. See “—Annual Distribution Requirements” below.
Notwithstanding the foregoing, even if the Combined Corporation qualifies for taxation as a REIT, it nonetheless may be subject to U.S. federal income tax in certain circumstances, including the following:
The Combined Corporation will be required to pay U.S. federal income tax on its undistributed REIT taxable income, including net capital gain;
The Combined Corporation may be subject to the “alternative minimum tax”;
The Combined Corporation may be subject to tax at the highest corporate rate on certain income from “foreclosure property” (generally, property acquired by reason of default on a lease or indebtedness held by it);
The Combined Corporation will be subject to a 100% U.S. federal income tax on net income from “prohibited transactions” (generally, certain sales or other dispositions of property, sometimes referred to as “dealer property,” held primarily for sale to customers in the ordinary course of business) unless the gain is realized in a “taxable REIT subsidiary,” or TRS, or such property has been held by the Combined Corporation for at least two years and certain other requirements are satisfied;
If the Combined Corporation fails to satisfy the 75% gross income test or the 95% gross income test (discussed below), but nonetheless maintains its qualification as a REIT pursuant to certain relief provisions, the Combined Corporation will be subject to a 100% U.S. federal income tax on the greater of (i) the amount by which it fails the 75% gross income test or (ii) the amount by which it fails the 95% gross income test, in either case, multiplied by a fraction intended to reflect its profitability;
If the Combined Corporation fails to satisfy any of the asset tests, other than a failure of the 5% or the 10% asset tests that qualifies under the De Minimis Exception, and the failure qualifies under the General Exception, as described below under “—Qualification as a REIT—Asset Tests,” then the Combined Corporation will have
General Exception, as described below under “—Qualification as a REIT—Asset Tests,” then the Combined Corporation will have to pay an excise tax equal to the greater of (i) $50,000 and (ii) an amount determined by multiplying the net income generated during a specified period by the assets that caused the failure by the highest U.S. federal income tax applicable to corporations; |
If the Combined Corporation fails to satisfy any REIT requirements other than the income test or asset test requirements, described below under “—Qualification as a REIT—Income Tests” and
“—Qualification as a REIT—Asset Tests,” respectively, and the Combined Corporation qualifies for a reasonable cause exception, then the Combined Corporation will have to pay a penalty equal to $50,000 for each such failure;
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The Combined Corporation will be subject to a 4% nondeductible excise tax if certain distribution requirements are not satisfied;
The Combined Corporation may be required to pay monetary penalties to the IRS in certain circumstances, including if the Combined Corporation fails to meet record-keeping requirements intended to monitor its compliance with rules relating to the composition of a REIT’s shareholders, as described below in “—Recordkeeping Requirements”;
If the Combined Corporation acquires any asset from a corporation which is or has been a C corporation in a carry-over basis transaction in which the basis of the asset in the Combined Corporation’s hands is less than the fair market value of the asset, in each case determined at the time it acquired the asset, and it subsequently recognizes gain on the disposition of the asset during the ten-year period beginning on the date on which it acquired the asset (or five year period for assets disposed of in calendar years 2012 and 2013)acquired before August 8, 2016), then it will be required to pay tax at the highest regular corporate tax rate on this gain to the extent of the excess of (a) the fair market value of the asset over (b) its adjusted basis in the asset, in each case determined as of the date on which it acquired the asset. The results described in this paragraph with respect to the recognition of gain assume that the C corporation will refrain from making an election to receive different treatment under applicable Treasury Regulations on its tax return for the year in which the Combined Corporation acquires the asset from the C corporation. The forgoing rules would apply to the assets acquired from ColonialPost Properties in the parent merger if ColonialPost Properties failed to qualify as a REIT for a period prior to the parent merger, the parent merger nonetheless qualified as a reorganization under Section 368(a) of the Code, and the Combined Corporation sold such assets within the applicable recognition periods. The IRS has issued proposed Treasury Regulations which would exclude from the application of this built-in gains tax any gain from the sale of property acquired by a REIT in an exchange under Section 1031 (a like kind exchange) or Section 1033 (an involuntary conversion) of the Code. The proposed Treasury Regulations described above will not be effective unless they are issued in their final form, and as of the date of this joint proxy statement/prospectus it is not possible to determine whether the proposed regulations will be finalized in their current form or at all;
The Combined Corporation will be required to pay a 100% tax on any redetermined rents, redetermined deductions, redetermined TRS service income and excess interest. In general, redetermined rents are rents from real property that are overstated as a result of services furnished to any of its non-TRS tenants by one of its TRSs. Redetermined deductions and excess interest generally represent amounts that are deducted by a TRS for amounts paid to the Combined Corporation that are in excess of the amounts that would have been deducted based on arm’s-length negotiations. Redetermined TRS service income generally represents amounts included in the gross income of a TRS attributable to services provided to, or on behalf of, the Combined Corporation that are less than the amounts that would have been paid based on arm’s-length negotiations; and
Income earned by the Combined Corporation’s TRSs or any other subsidiaries that are C corporations will be subject to tax at regular corporate rates.
No assurance can be given that the amount of any such U.S. federal income taxes will not be substantial. In addition, the Combined Corporation and its subsidiaries may be subject to a variety of taxes, including payroll taxes and state, local and foreign income, property and other taxes on assets and operations. The Combined Corporation could also be subject to tax in situations and on transactions not presently contemplated.
Qualification as a REITIndex to Financial Statements
In General.The REIT provisions of the Code apply to a domestic corporation, trust, or association (i) that is managed by one or more trustees or directors, (ii) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest, (iii) that properly elects to be taxed as a REIT and such
election has not been terminated or revoked, (iv) that is neither a financial institution nor an insurance company, (v) that uses a calendar year for U.S. federal income tax purposes, (vi) that would be taxable as a domestic corporation but for the special Code provisions applicable to REITs and (vii) that meets the additional requirements discussed below.
Ownership Tests.Commencing with the Combined Corporation’s second REIT taxable year, (i) the beneficial ownership of the Combined Corporation commoncapital stock must be held by 100 or more persons during at least 335 days of a 12-month taxable year (or during a proportionate part of a taxable year of less than 12 months) for each of its taxable years and (ii) during the last half of each taxable year, no more than 50% in value of the Combined Corporation’s shares may be owned, directly or indirectly, by or for five or fewer individuals, which we refer to as the 5/50 Test. Share ownership for purposes of the 5/50 Test is determined by applying the constructive ownership provisions of Section 544(a) of the Code, subject to certain modifications. The term “individual” for purposes of the 5/50 Test includes a private foundation, a trust providing for the payment of supplemental unemployment compensation benefits, and a portion of a trust permanently set aside or to be used exclusively for charitable purposes. A “qualified trust” described in Section 401(a) of the Code and exempt from tax under Section 501(a) of the Code generally is not treated as an individual for purposes of the 5/50 Test; rather, shares held by it are treated as owned proportionately by its beneficiaries.
The Combined Corporation’s charter restricts ownership and transfers of its shares that would violate these requirements, although these restrictions may not be effective in all circumstances to prevent a violation. In addition, the Combined Corporation will be deemed to have satisfied the 5/50 Test for a particular taxable year if it has complied with all the requirements for ascertaining the ownership of its outstanding shares in that taxable year and has no reason to know that it has violated the 5/50 Test.
Ownership of Interests in Entities Treated as Partnerships for U.S. Federal Income Tax Purposes.A REIT that is a partner in an entity treated as a partnership for U.S. federal income tax purposes (generally including any domestic unincorporated entity with two or more owners that has not elected to be taxed as a corporation and is not a “publicly traded partnership” or a “taxable mortgage pool”) will be deemed to own its proportionate share of the assets of the partnership and will be deemed to earn its proportionate share of the partnership’s income, based on its interest in partnership capital. In addition, the assets and gross income of the partnership retain the same character in the hands of the REIT for purposes of the gross income and asset tests applicable to REITs as described below. Thus, so long as MAA LP qualifies as a partnership for U.S. federal income tax purposes, the Combined Corporation’s proportionate share of the assets and items of income of MAA LP, including MAA LP’s share of assets and items of income of any subsidiaries that are partnerships for U.S. federal income tax purposes, are treated as assets and items of income of the Combined Corporation for purposes of applying the REIT income and asset tests described below. Unless otherwise noted, references to “partnership” in this discussion include any entity that is treated as a partnership for U.S. federal income tax purposes.
Ownership of Interests in Disregarded Subsidiaries. If a REIT owns a corporate subsidiary (including an entity which is treated as an association taxable as a corporation for U.S. federal income tax purposes) that is a “qualified REIT subsidiary,” the separate existence of that subsidiary is disregarded for U.S. federal income tax purposes. Generally, a qualified REIT subsidiary is a corporation, other than a TRS (discussed below), all of the capital stock of which is owned by the REIT (either directly or through other disregarded subsidiaries). For U.S. federal income tax purposes, all assets, liabilities and items of income, deduction and credit of the qualified REIT subsidiary will be treated as assets, liabilities and items of income, deduction and credit of the REIT itself. A qualified REIT subsidiary of the Company will not be subject to U.S. federal corporate income taxation, although it may be subject to state and local taxation in some states. Certain other entities also may be treated as disregarded entities for U.S. federal income tax purposes, generally including any domestic unincorporated entity that would be
treated as a partnership if it had more than one owner. For U.S. federal income tax purposes, all assets, liabilities and items of income, deduction and credit of any such disregarded entity will be treated as assets, liabilities and items of income, deduction and credit of the owner of the disregarded entity.
Income Tests.In order to maintain qualification as a REIT, the Combined Corporation must annually satisfy two gross income requirements. First, at least 75% of its gross income (excluding gross income from prohibited transactions and certain other income and gains as described below) for each taxable year must be derived, directly or indirectly, from investments relating to real property or mortgages on real property or from certain types of temporary investments (or any combination thereof). Qualifying income for the purposes of this 75% gross income test generally includes: (a) rents from real property, (b) interest on debt secured by mortgages on real property or on interests in real property, (c) dividends or other distributions on, and gain from the sale of, shares in other REITs, (d) gain from the sale of real estate assets (other than gain from prohibited transactions), (e) income and gain derived from foreclosure property, and (f) income from certain types of temporary investments.
Second, in general, at least 95% of the Combined Corporation’s gross income (excluding gross income from prohibited transactions and certain other income and gains as described below) for each taxable year must be derived from the real property investments described above and from other types of dividends and interest, gain from the sale or disposition of shares or securities that are not dealer property, or any combination of the above.
Rents the Combined Corporation receives will qualify as rents from real property in satisfying the gross income requirements for a REIT described above only if several conditions are met. First, the amount of rent must not be based in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “rents from real property” solely by reason of being based on a fixed percentage or percentages of receipts or sales. Second, rents received from a “related party tenant” will not qualify as rents from real property in satisfying the gross income tests unless the tenant is a TRS and either (i) at least 90% of the property is leased to unrelated tenants and the rent paid by the TRS is substantially comparable to the rent paid by the unrelated tenants for comparable space, or (ii) the property leased is a “qualified lodging facility,” as defined in Section 856(d)(9)(D) of the Code, or a “qualified health care property,” as defined in Section 856(e)(6)(D)(i), and certain other conditions are satisfied. A tenant is a related party tenant if the REIT, or an actual or constructive owner of 10% or more of the REIT’s stock, actually or constructively owns 10% or more of the interests in the assets or net profits of the tenant if the tenant is not a corporation, or, if the tenant is a corporation, 10% or more of the total combined voting power of all classes of stock entitled to vote or 10% or more of the total value of all classes of stock of the tenant. Third, if rent attributable to personal property, leased in connection with a lease of real property, is greater than 15% of the total rent received under the lease, then the portion of rent attributable to the personal property will not qualify as rents from real property.
Generally, for rents to qualify as rents from real property for the purpose of satisfying the gross income tests, the REIT may provide directly only an insignificant amount of services, unless those services are “usually or customarily rendered” in connection with the rental of real property and not otherwise considered “rendered to the occupant” under the applicable tax rules. Accordingly, the Combined Corporation may not provide “impermissible services” to tenants (except through an independent contractor from whom it derives no revenue and that meets other requirements or through a TRS) without giving rise to “impermissible tenant service income.” Impermissible tenant service income is deemed to be at least 150% of the direct cost to the REIT of providing the service. If the impermissible tenant service income exceeds 1% of the REIT’s total income from a property, then all of the income from that property will fail to qualify as rents from real property. If the total amount of impermissible tenant service income from a property does not exceed 1% of the Combined Corporation’s total income from the property, the services will not disqualify any other income from the property that qualifies as rents from real property, but the impermissible tenant service income will not qualify as rents from real property.
The Combined Corporation does not intend to charge rent that is based in whole or in part on the income or profits of any person or to derive rent from related party tenants, or rent attributable to personal property leased
in connection with real property that exceeds 15% of the total rents from the real property if the treatment of any such amounts as non-qualified rent would jeopardize its status as a REIT. The Combined Corporation also does
not intend to derive impermissible tenant service income that exceeds 1% of its total income from any property if the treatment of the rents from such property as nonqualified rents could cause it to fail to qualify as a REIT.
If the Combined Corporation fails to satisfy one or both of the 75% or the 95% gross income tests, it may nevertheless qualify as a REIT for a particular year if it is entitled to relief under certain provisions of the Code. Those relief provisions generally will be available if the failure to meet such tests is due to reasonable cause and not due to willful neglect and a schedule is filed describing each item of gross income for such year(s) in accordance with the applicable Treasury Regulations. It is not possible, however, to state whether in all circumstances these relief provisions could apply. As discussed above in “—Taxation of REITs in General,” even if these relief provisions were to apply, the Combined Corporation would be subject to U.S. federal income tax to the extent it fails to meet the 75% or 95% gross income tests or otherwise fails to distribute 100% of its net capital gain and taxable income.
Asset Tests.At the close of each quarter of its taxable year, the Combined Corporation must also satisfy fourfive tests relating to the nature of its assets. First, real estate assets, cash and cash items, and government securities must represent at least 75% of the value of its total assets. For purposes of the 75% asset test and for taxable years beginning on or after January 1, 2016, real estate assets include personal property leased with real property if the rents attributable to the personal property would be rents from real property (under the income tests discussed above) and debt instruments issued by publicly offered REITs.
Second, not more than 25% of its total assets may be represented by securities other than those in the 75% asset class. Third, of the investments that are not included in the 75% asset class and that are not securities of its TRSs, (i) the value of any one issuer’s securities owned by the Combined Corporation may not exceed 5% of the value of its total assets and (ii) the Combined Corporation may not own more than 10% by vote or by value of any one issuer’s outstanding securities. For purposes of the 10% value test, debt instruments issued by a partnership are not classified as “securities” to the extent of the Combined Corporation’s interest as a partner in such partnership (based on its proportionate share of the partnership’s equity interests and certain debt securities) or if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test. For purposes of the 10% value test, the term “securities” also does not include debt securities issued by another REIT, certain “straight debt” securities (for example, qualifying debt securities of a corporation of which the Combined Corporation owns no more than a de minimis amount of equity interest), loans to individuals or estates, and accrued obligations to pay rent. Fourth, securities of TRSs cannot represent more than 25% of a REIT’s total assets (20% in the case of(for taxable years beginning prior tobefore January 1, 2009)2018) or 20% (for taxable years beginning on or after January 1, 2018). Real estate assets for purposes of the REIT rules include stock in other REITs, but do not include stock in non-REIT companies. Fifth, not more than 25% of the value of its total assets may be represented by publicly offered REIT debt instruments that are not secured by mortgages on real property.
The Combined Corporation will monitor the status of its assets for purposes of the various asset tests and will endeavor to manage its portfolio in order to comply at all times with such tests. If the Combined Corporation fails to satisfy the asset tests at the end of a calendar quarter, other than the first calendar quarter, the Combined Corporation will not lose its REIT status if one of the following exceptions applies:
the Combined Corporation satisfied the asset tests at the end of the preceding calendar quarter, and the discrepancy between the value of its assets and the asset test requirements arose from changes in the market values of its assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets; or
the Combined Corporation eliminates any discrepancy within 30 days after the close of the calendar quarter in which it arose.
Moreover, if the Combined Corporation fails to satisfy the asset tests at the end of a calendar quarter during a taxable year, it will not lose its REIT status if one of the following additional exceptions applies:
De Minimis Exception: The failure is due to a violation of the 5% or 10% asset tests referenced above and is “de minimis” (meaning that the failure is one that arises from ownership of assets the total value of which does not exceed the lesser of 1% of the total value of the Combined Corporation’s assets at the end of the quarter in which the failure occurred and $10 million), and the Combined Corporation either disposes of the assets that caused the failure or otherwise satisfies the asset tests within six months after the last day of the quarter in which the Combined Corporation’s identification of the failure occurred; or
General Exception: All of the following requirements are satisfied: (i) the failure is not due to a “de minimis” violation of the 5% or 10% asset tests (as defined above), (ii) the failure is due to reasonable cause and not willful neglect, (iii) the Combined Corporation files a schedule in accordance with Treasury Regulations providing a description of each asset that caused the failure, and (iv) the Combined Corporation either disposes of the assets that caused the failure or otherwise satisfies the asset tests within six months after the last day of the quarter in which its identification of the failure occurred, and (v) the Combined Corporation pays an excise tax as described above in “—Taxation of REITs in General.”
Foreclosure Property.Foreclosure property is real property (including interests in real property) and any personal property incident to such real property (1) that is acquired by a REIT as a result of the REIT having bid in the property at foreclosure, or having otherwise reduced the property to ownership or possession by agreement or process of law, after there was a default (or default was imminent) on a lease of the property or a mortgage loan held by the REIT and secured by the property, (2) for which the related loan or lease was made, entered into or acquired by the REIT at a time when default was not imminent or anticipated and (3) for which such REIT makes an election to treat the property as foreclosure property. Income and gain derived from foreclosure property is treated as qualifying income for both the 95% and 75% gross income tests. REITs generally are subject to tax at the maximum corporate rate (currently 35%) on any net income from foreclosure property, including any gain from the disposition of the foreclosure property, other than income that would otherwise be qualifying income for purposes of the 75% gross income test. Any gain from the sale of property for which a foreclosure property election has been made will not be subject to the 100% tax on gains from prohibited transactions described above, even if the property is held primarily for sale to customers in the ordinary course of a trade or business.
Debt Instruments.The Combined Corporation may hold or acquire mortgage, mezzanine, bridge loans and other debt investments. Interest income constitutes qualifying mortgage interest for purposes of the 75% gross income test (as described above) to the extent that the obligation upon which such interest is paid is secured by a mortgage on real property. If a REIT receives interest income with respect toFor taxable years beginning after December 31, 2015, a mortgage loan that is secured by both real property and otherpersonal property shall be treated as a wholly qualifying real estate asset and the highest principal amountall interest shall be qualifying income for purposes of the loan outstanding during a taxable year exceeds75% income test if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property, even if the real property oncollateral value is less than the date that it acquired or originated the mortgage loan, the interest income will be apportioned between the real property and the other collateral, and income from the arrangement will qualify for purposesoutstanding principal balance of the 75% gross income test only to the extent that the interest is allocable to the real property.loan. Loans that are modified generally will have to be retested using the fair market value of the collateral real property securing the loan as of the date the modification, unless the modification does not result in a deemed exchange of the unmodified note for the modified note for tax purposes, or the mortgage loan was in default or is reasonably likely to default and the modified loan substantially reduces the risk of default, in which case no re-testing in connection with the loan modification is necessary. UnderIn the case of a loan not subject to the 15% rule discussed above in this paragraph, under IRS guidance, asuch loan may be treated as a qualifying real estate asset in an amount equal to the lesser of the fair market value of the loan or the fair market value of the real property securing the loan on the date the REIT acquired the loan. Although the guidance is not entirely clear, it appears that the non-qualifying portion of the mortgage loan will be equal to the portion of the loan’s fair market value that exceeds the value on the date of acquisition of the associated real property that is security for that loan.
The application of the REIT provisions of the Code to certain mezzanine loans, which are loans secured by equity interests in an entity that directly or indirectly owns real property rather than by a direct mortgage of the real property, is not entirely clear. A safe harbor in Revenue Procedure 2003-65 provides that if a mezzanine loan meets certain requirements then (i) the mezzanine loan will be treated as a qualifying real estate asset for purposes of the REIT asset tests and (ii) interest in respect of such mezzanine loan will be treated as qualifying mortgage interest for purposes of the 75% income test. To the extent the Combined Corporation acquires mezzanine loans that do not comply with this safe harbor, all or a portion of such mezzanine loans may not qualify as real estate assets or generate qualifying income and REIT status may be adversely affected. As such, the REIT provisions of the Code may limit the Combined Corporation’s ability to acquire mezzanine loans that it might otherwise desire to acquire.
Interests in a real estate mortgage investment conduit, or REMIC, generally will be treated as real estate assets for purposes of the asset tests, and income derived from REMIC interests generally will be treated as qualifying income for purposes of the 75% and 95% gross income tests, except that if less than 95% of the assets of the REMIC are real estate assets, then the Combined Corporation will be treated as owning and receiving its proportionate share of the assets and income of the REMIC, with the result that only a proportionate part of the Combined Corporation’s interest in the REMIC and income derived from the interest will qualify for purposes of the assets and the 75% gross income test. Even if a loan is not secured by real property, or is undersecured, the income that it generates may nonetheless qualify for purposes of the 95% gross income test.
To the extent that a REIT derives interest income from a mortgage loan where all or a portion of the amount of interest payable is contingent, such income generally will qualify for purposes of the gross income tests only if it is based upon the gross receipts or sales, and not the net income or profits, of the borrower. This limitation does not apply, however, (i) where the borrower leases substantially all of its interest in the property to tenants or subtenants, to the extent that the rental income derived by the borrower would qualify as rents from real property had the REIT earned the income directly, or (ii) if contingent interest is payable pursuant to a “shared appreciation mortgage” provision. A shared appreciation mortgage provision is any provision which is in connection with an obligation held by a REIT that is secured by an interest in real property, which entitles the REIT to a portion of the gain or appreciation in value of the collateral real property at a specified time. Any contingent interest earned pursuant to a shared appreciation mortgage provision shall be treated as gain from the sale of the underlying real property collateral for purposes of the REIT income tests.
Hedging Transactions.The Combined Corporation may enter into hedging transactions with respect to one or more of its assets or liabilities. Hedging transactions could take a variety of forms, including interest rate swaps or cap agreements, options, futures contracts, forward rate agreements or similar financial instruments. Except to the extent as may be provided by future Treasury Regulations, any income from a hedging transaction entered into after July 30, 2008 which is clearly and properly identified as such before the close of the day on which it was acquired, originated or entered into, including gain from the disposition or termination of such a transaction, will not constitute gross income for purposes of the 95% and 75% gross income tests, provided that the hedging transaction is entered into (i)(1) made in the normal course of business primarily to manage risk of interest rate or price changes or currency fluctuations with respect to indebtednessborrowings made or to be made, or ordinary obligations incurred or to be incurred by the Combined Corporation to acquire or carryown real estate assets, or (ii)(2) entered into primarily to manage the risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% income tests (or any property whichthat generates such income or gain). In the case of a hedging transaction entered into, or, (3) for taxable years beginning on or prior to July 30, 2008 which is clearlyafter December 31, 2015, that hedges against transactions described in clause (1) or (2) and properly identified as such before the close of the day on which it was acquired, originated or entered into, the income from such transaction shall be excluded from the 95% income test, but shall be nonqualifying income for the 75% test, provided the hedging transaction is entered into to hedgein connection with the extinguishment of debt incurred or to be incurred to acquire real estate assets.sale of property that is being hedged against by the transaction described in clause (1) or (2), and which complies with certain identification requirements, including gain from the disposition or termination of such a transaction, will not constitute gross income for purposes of the 95% gross income test and the 75% gross income test. To the extent the Combined Corporation enters into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both the 75% and 95% gross income tests. The Combined Corporation intends to structure any hedging transactions in a manner that does not jeopardize the Combined Corporation’s ability to qualify as a REIT.
Foreign Investments.To the extent that the Combined Corporation holds or acquires any investments and, accordingly, pay taxes in other countries, taxes paid in non-U.S. jurisdictions may not be passed through to, or
used by, the Combined Corporation’s shareholders as a foreign tax credit or otherwise. In addition, certain passive income earned by a non-U.S. taxable REIT subsidiary must be taken in account currently (whether or not distributed by the taxable REIT subsidiary) and may not be qualifying income under the 95% and 75% gross income tests.
Qualified Temporary Investment Income.Income derived by the Combined Corporation from certain types of temporary share and debt investments made with the proceeds of sales of the Combined Corporation’s stock or certain public debt offerings, not otherwise treated as qualifying income for the 75% gross income test, generally will nonetheless constitute qualifying income for purposes of the 75% gross income test for the year following the sale of such stock. More specifically, qualifying income for purposes of the 75% gross income test includes
“qualified “qualified temporary investment income,” which generally means any income that is attributable to shares of stock or a debt instrument, is attributable to the temporary investment of new equity capital and certain debt capital, and is received or accrued during the one-year period beginning on the date on which the REIT receives such new capital. After such one year period, income from such investments will be qualifying income for purposes of the 75% income test only if derived from one of the other qualifying sources enumerated above. Also, for purposes of the REIT asset tests, the term “real estate assets” includes any property that is not otherwise a real estate asset and that is attributable to such temporary investment of new capital, but only if such property is comprised of shares or debt instruments, and only for the one-year period beginning on the date the REIT receives such new capital.
Annual Distribution Requirements
In order to qualify as a REIT, the Combined Corporation must distribute dividends (other than capital gain dividends) to its shareholders in an amount at least equal to (A) the sum of (i) 90% of its REIT taxable income, determined without regard to the dividends paid deduction and by excluding any net capital gain, and (ii) 90% of the net income (after tax), if any, from foreclosure property, minus (B) the sum of certain items of non-cash income. The Combined Corporation generally must pay such distributions in the taxable year to which they relate, or in the following taxable year if declared before the Combined Corporation timely files its tax return for such year and if paid on or before the first regular dividend payment after such declaration.
To the extent that the Combined Corporation does not distribute all of its net capital gain and taxable income, it will be subject to U.S. federal, state and local tax on the undistributed amount at regular corporate income tax rates. Furthermore, if the Combined Corporation should fail to distribute during each calendar year (not to include any throwback dividends under the provisions of IRC Section 858), at least the sum of (i) 85% of its ordinary income for such year, (ii) 95% of its capital gain net income for such year, and (iii) 100% of any corresponding undistributed amounts from prior periods, it will be subject to a 4% nondeductible excise tax on the excess of such required distribution over the amounts actually distributed.
Under certain circumstances, the Combined Corporation may be able to rectify a failure to meet the distribution requirement for a year by paying “deficiency dividends” to its shareholders in a later year that may be included in its deduction for dividends paid for the earlier year. Thus, the Combined Corporation may be able to avoid being taxed on amounts distributed as deficiency dividends; however, the Combined Corporation will be required to pay interest based upon the amount of any deduction taken for deficiency dividends.
In addition, dividends the Combined Corporation payspaid prior to January 1, 2015 must not be preferential. If a dividend iswas preferential, it willwould not qualify for the dividends paid deduction. To avoid paying preferential dividends, the Combined Corporation must treat every shareholder of the class of shares with respect to which it makes a distribution the same as every other shareholder of that class, and the Combined Corporation must not treat any class of shares other than according to its dividend rights as a class. Under certain technical rules governing deficiency dividends, the Combined Corporation could lose its ability to cure an under-distribution in a year with a subsequent year deficiency dividend if it pays preferential dividends. Accordingly, the Combined Corporation intends to pay dividends pro rata within each class, and to abide by the rights and preferences of each class.
The Combined Corporation may retain and pay income tax on net long-term capital gains received during the tax year. To the extent the Combined Corporation so elects, (i) each shareholder must include in its income (as
(as long-term capital gain) its proportionate share of the Combined Corporation’s undistributed long-term capital gains, (ii) each shareholder is deemed to have paid, and receives a credit for, its proportionate share of the tax paid by the Combined Corporation on the undistributed long-term capital gains, and (iii) each shareholder’s basis in its shares of the Combined Corporation’s capital stock is increased by the included amount of the undistributed long-term capital gains less their share of the tax paid.
To qualify as a REIT, the Combined Corporation may not have, at the end of any taxable year, any undistributed earnings and profits accumulated in any non-REIT taxable year. In the event theThe Combined
Corporation accumulatesintends to distribute any non-REIT earnings and profits the Combined Corporation intends to distribute its non-REIT earnings and profits before the end of its first REIT taxable yearas needed in order to comply with this requirement.
Failure to Qualify
If the Combined Corporation fails to qualify as a REIT and such failure is not an asset test or income test failure subject to the cure provisions described above, or the result of preferential dividends paid prior to January 1, 2016, the Combined Corporation generally will be eligible for a relief provision if the failure is due to reasonable cause and not willful neglect and the Combined Corporation pays a penalty of $50,000 with respect to such failure.
If the Combined Corporation fails to qualify for taxation as a REIT in any taxable year and no relief provisions apply, the Combined Corporation generally will be subject to tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Distributions to the Combined Corporation’s shareholders in any year in which the Combined Corporation fails to qualify as a REIT will not be deductible by the Combined Corporation nor will they be required to be made. In such event, to the extent of the Combined Corporation’s current or accumulated earnings and profits, all distributions to its shareholders will be taxable as dividend income. Subject to certain limitations in the Code, corporate shareholders may be eligible for the dividends received deduction, and individual, trust and estate shareholders may be eligible to treat the dividends received from the Combined Corporation as qualified dividend income taxable as net capital gains, under the provisions of Section 1(h)(11) of the Code. Unless entitled to relief under specific statutory provisions, the Combined Corporation also will be ineligible to elect to be taxed as a REIT again prior to the fifth taxable year following the first year in which it failed to qualify as a REIT under the Code.
The Combined Corporation’s qualification as a REIT for U.S. federal income tax purposes will depend on it continuing to meet the various requirements summarized above governing the ownership of its outstanding shares, the nature of its assets, the sources of its income, and the amount of its distributions to its shareholders. Although the Combined Corporation intends to operate in a manner that will enable it to comply with such requirements, there can be no certainty that such intention will be realized. In addition, because the relevant laws may change, compliance with one or more of the REIT requirements may become impossible or impracticable.
Prohibited Transactions Tax
Any gain realized by the Combined Corporation on the sale of any property held as inventory or other property held primarily for sale to customers in the ordinary course of business, including its share of any such gain realized by its operating partnership and taking into account any related foreign currency gains or losses, will be treated as income from a “prohibited transaction” that is subject to a 100% penalty tax. Whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business depends upon all the facts and circumstances with respect to the particular transaction. However, the Code provides a safe harbor pursuant to which sales of properties held for at least two years and meeting certain other requirements will not give rise to prohibited transaction income.
The Combined Corporation may make sales that do not satisfy the “safe harbor” requirements described above and there can be no assurance that the IRS will not contend that one or more of these sales are subject to the 100% penalty tax. The 100% tax will not apply to gains from the sale of property realized through a TRS or other taxable corporation, although such income will be subject to tax at regular corporate income tax rates.
Recordkeeping RequirementsIndex to Financial Statements
To avoid a monetary penalty, the Combined Corporation must request on an annual basis information from its shareholders designed to disclose the actual ownership of its outstanding shares.
Investments in TRSs
The Combined Corporation may own one or more subsidiaries intended to be treated as TRSs for federal income tax purposes. A TRS is a corporation in which a REIT directly or indirectly own shares and that jointly elects with the REIT to be treated as a TRS under Section 856(l) of the Code. In addition, if a TRS owns, directly or indirectly, securities representing 35% or more of the vote or value of a subsidiary corporation, that subsidiary will also be treated as a TRS of the REIT. A domestic TRS pays U.S. federal, state, and local income taxes at the full applicable corporate rates on its taxable income prior to payment of any dividends. A non-U.S. TRS with income from a U.S. trade or business or certain U.S. sourced income also may be subject to U.S. income taxes. A TRS owning property outside of the U.S. may pay foreign taxes. The taxes owed by a TRS could be substantial. To the extent that the Combined Corporation’s TRSs are required to pay U.S. federal, state, local, or foreign taxes, the cash available for distribution by the Combined Corporation will be reduced accordingly.
A TRS is permitted to engage in certain kinds of activities that cannot be performed directly by the Combined Corporation without jeopardizing the Combined Corporation’s qualification as a REIT. Certain payments made by any of the Combined Corporation’s TRSs to the Combined Corporation may not be deductible by the TRS (which could materially increase the TRS’s taxable income), and certain direct or indirect payments made by any of the Combined Corporation’s TRS to the Combined Corporation may be subject to 100% tax. In addition, subject to certain safe harbors, the Combined Corporation generally will be subject to a 100% tax on the amounts of any rents from real property, deductions, or excess interest received from a TRS that would be reduced through reapportionment under Section 482 of the Code in order to more clearly reflect the income of the TRS (and amounts protected from the 100% tax by reason of such safe harbor may nonetheless be reapportioned under Section 482). Furthermore, the Combined Corporation generally will be subject to a 100% tax on the amounts of any redetermined TRS service income, which is generally amounts included in the gross income of a TRS attributable to services provided to, or on behalf of, the Combined Corporation that are less than the amounts that would have been paid based on arm’s-length negotiations.
Distributions that the Combined Corporation receives from a domestic TRS will be classified as dividend income to the extent of the current or accumulated earnings and profits of the TRS. Such distributions will generally constitute qualifying income for purposes of the 95% gross income test, but not under the 75% gross income test unless attributable to investments of certain new capital during the one-year period beginning on the date of receipt of the new capital.
REIT Subsidiaries
MAA LP may hold interests in one or more subsidiaries intended to qualify as REITs. Any such subsidiary REITs would need to satisfy the various REIT requirements discussed above on a stand-alone basis. Stock of any subsidiary qualifying as REIT will be a qualifying real estate asset for purposes of the assets tests, , and any dividends received by the Combined Corporation from a subsidiary qualifying as a REIT and gains from sales of such subsidiary’s stock will be qualifying income for purposes of both the 95% and 75% gross income tests. If a subsidiary intended to qualify as a REIT failed to so qualify, the Combined Corporation would be treated as holding stock of a non-REIT, non-TRS corporate subsidiary, which could jeopardize the Combined Corporation’s status as a REIT. Following the parent merger, MAA LP will hold interests in 1499 Massachusetts Avenue, Inc., which is intended to qualify as a REIT.
Tax Aspects of MAA LP
In General.The Combined Corporation will own all or substantially all of its assets through MAA LP, and MAA LP in turn will own a substantial portion of its assets through interests in various partnerships and limited liability companies.
Except in the case of subsidiaries that have elected REIT or TRS status, the Combined Corporation expects that MAA LP and the partnership and limited liability company subsidiaries MAA LP will be treated as partnerships or disregarded entities for U.S. federal income tax purposes. In general, entities that are classified as partnerships for U.S. federal income tax purposes are treated as “pass-through” entities which are not required to pay U.S. federal income tax. Rather, partners or members of such entities are allocated their share of the items of
income, gain, loss, deduction and credit of the entity, and are potentially required to pay tax on that income without regard to whether the partners or members receive a distribution of cash from the entity. The Combined Corporation includes in its income its allocable share of the foregoing items for purposes of computing its REIT taxable income, based on the applicable partnership agreement. For purposes of applying the REIT income and asset tests, the Combined Corporation includes its pro rata share of the income generated by and the assets held by the partnerships and limited liability companies treated as partnerships for U.S. federal income tax purposes in which it owns an interest, including their shares of the income and assets of any subsidiary partnerships and limited liability companies treated as partnerships for U.S. federal income tax purposes, based on its capital interests. See “—Taxation of REITs in General.”
The Combined Corporation’s ownership interests in such partnerships and limited liability companies involve special tax considerations, including the possibility that the IRS might challenge the status of these entities as partnerships or disregarded entities, as opposed to associations taxable as corporations, for U.S. federal income tax purposes. If a partnership or limited liability company in which it owns an interest, or one or more of its subsidiary partnerships or limited liability companies, were treated as an association, it would be taxable as a corporation and would be required to pay an entity-level tax on its income. In this situation, the character of its assets and items of gross income would change, and could prevent the Combined Corporation from satisfying the REIT asset tests and/or the REIT income tests. See “—Qualification as a REIT—Asset Tests” and “—Qualification as a REIT—Income Tests.” This, in turn, could prevent the Combined Corporation from qualifying as a REIT. See “—”—Failure to Qualify” for a discussion of the effect of the Combined Corporation’s failure to meet these tests for a taxable year.
MAA believes that these partnerships and limited liability companies will be classified as partnerships or disregarded entities for U.S. federal income tax purposes, and the remainder of the discussion under this section “—Tax Aspects of MAA LP” is based on such classification.
Although a domestic unincorporated entity is generally treated as a partnership (if it has more than one owner) or a disregarded entity (if it has a single owner) for U.S. federal income tax purposes, in certain situations such an entity may be treated as a corporation for U.S. federal income tax purposes, including if the entity is a “publicly traded partnership” that does not qualify for an exemption based on the character of its income. A partnership is a “publicly traded partnership” under Section 7704 of the Code if:
| (1) | interests in the partnership are traded on an established securities market; or |
| (2) | interests in the partnership are readily tradable on a “secondary market” or the “substantial equivalent” of a secondary market. |
MAA LP currently takes the reporting position for U.S. federal income tax purposes that it is not a publicly traded partnership, and the Combined Corporation and MAA LP expect to continue to take that position after the partnership merger. There is a risk, however, that the right of a holder of operating partnership units to redeem the units for common stock could cause operating partnership units to be considered readily tradable on the substantial equivalent of a secondary market. Under the relevant Treasury regulations,Regulations, interests in a partnership will not be considered readily tradable on a secondary market or on the substantial equivalent of a secondary market if the partnership qualifies for specified “safe harbors,” which are based on the specific facts and circumstances relating to the partnership. MAA and MAA LP believe that MAA LP will qualify for at least one of these safe harbors at all times in the foreseeable future, but cannot provide any assurance that MAA LP will continue to qualify for one of the safe harbors mentioned above.
If MAA LP is a publicly traded partnership, it will be taxed as a corporation unless at least 90% of its gross income has consisted and will consistsconsist of “qualifying income” under Section 7704 of the Code. Qualifying income is generally real property rents and other types of passive income. MAA and MAA LP believe that MAA LP will have sufficient qualifying income so that it would be taxed as a partnership, even if it were a publicly traded partnership. The income requirements applicable to REITs under the Code and the definition of qualifying
income under the publicly traded partnership rules are very similar. Although differences exist between these two income tests, MAA and MAA LP do not believe that these differences have caused or will cause MAA LP not to satisfy the 90% gross income test applicable to publicly traded partnerships.
Allocations of Income, Gain, Loss and Deduction. A partnership or limited liability company agreement will generally determine the allocation of income and losses among partners or members for U.S. federal income tax purposes. These allocations, however, will be disregarded for tax purposes if they do not comply with the provisions of Section 704(b) of the Code and the related Treasury Regulations. Generally, Section 704(b) of the Code and the related Treasury Regulations require that partnership and limited liability company allocations respect the economic arrangement of their partners or members. If an allocation is not recognized by the IRS for U.S. federal income tax purposes, the item subject to the allocation will be reallocated according to the partners’ or members’ interests in the partnership or limited liability company, as the case may be. This reallocation will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners or members with respect to such item. The allocations of taxable income and loss in each of the partnerships and limited liability companies in which the Combined Corporation owns an interest are intended to comply with the requirements of Section 704(b) of the Code and the Treasury Regulations promulgated thereunder.
Tax Allocations With Respect to Contributed Properties. In general, when property is contributed to a partnership in exchange for a partnership interest, the partnership inherits the “carryover” tax basis of the contributing partner in the contributed property. Any difference between the fair market value and the adjusted tax basis of contributed property at the time of contribution is referred to as a “Book-Tax Difference.” Under Section 704(c) of the Code, income, gain, loss and deduction attributable to property with a Book-Tax Difference that is contributed to a partnership in exchange for an interest in the partnership must be allocated in a manner so that the contributing partner is charged with the unrealized gain or benefits from the unrealized loss associated with the property at the time of the contribution, as adjusted from time-to-time, so that, to the extent possible under the applicable method elected under Section 704(c) of the Code, the non-contributing partners receive allocations of depreciation and gain or loss for tax purposes comparable to the allocations they would have received in the absence of Book-Tax Differences. These allocations are solely for U.S. federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners or members. Similar tax allocations are required with respect to the Book-Tax Differences in the assets owned by a partnership when additional assets are contributed in exchange for a new partnership interest.
Contributions of appreciated property have been made to each of MAA LP and ColonialPost LP, and MAA LP may accept additional contributions from limited partners following the partnership merger. In addition, it is intended that, in connection with the partnership merger, ColonialPost LP be treated as contributing its properties to MAA LP in exchange for units in MAA LP and then distributing such units to the partners of ColonialPost LP in liquidation of ColonialPost LP. Moreover, the book value of the assets owned by MAA LP immediately prior to the partnership merger will be restated to current fair market value in connection with the partnership merger, thereby creating additional Book-Tax Differences. Consequently, the agreement of limited partnership of MAA LP will require such allocations to be made in a manner consistent with Section 704(c) of the Code. As a result of such tax allocations, the carryover basis of contributed assets in the hands of MAA LP and the absence of a basis step up in the partnership merger, certain partners of MAA LP (including the Combined Corporation) willmay be allocated lower amounts of depreciation and other deductions for tax purpose, and possibly greater amounts of taxable income in the event of sales, as compared to the partner’s share of such items for economic or book purposes. Thus, these rules may cause the Combined Corporation to recognize taxable income in excess of cash proceeds, which might adversely affect our ability to comply with the REIT distribution requirements. See “—Qualification as a REIT—Annual Distribution Requirements.”
U.S. Federal Income Tax Considerations for U.S. Holders of the Combined Corporation Common Stock and MAA Series I Preferred StockIndex to Financial Statements
U.SPartnership Audit Rules.The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships. Under the new rules (which generally are effective for taxable years beginning after December 31, 2017), among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner’s distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto are assessed and collected, at the partnership level. Although it is uncertain how these new rules will be implemented, it is possible that they could result in partnerships in which the Combined Corporation directly or indirectly invests being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and the Combined Corporation, as a direct or indirect partner of these partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though the Combined Corporation, as a REIT, may not otherwise have been required to pay additional corporate-level taxes as a result of the related audit adjustment. The changes created by these new rules are sweeping and in many respects dependent on the promulgation of future regulations or other guidance by the U.S. Treasury. Holders are urged to consult their tax advisors with respect to these changes and their potential impact on their investment in Combined Corporation common stock.
Distributions.Distributions by the Combined Corporation, other than capital gain dividends, will constitute ordinary dividends to the extent of its current and accumulated earnings and profits as determined for U.S. federal
income tax purposes. For purposes of determining whether distributions are out of MAA’s current or accumulated earnings and profits, MAA’s earnings and profits will be allocated first to MAA’s outstanding preferred stock (including the MAA Series I preferred stock) to the extent of its distribution preference and then to MAA’s outstanding common stock. In general, these dividends will be taxable as ordinary income and will not be eligible for the dividends-received deduction for corporate U.S. holders. The Combined Corporation’s ordinary dividends generally will not qualify as “qualified dividend income” taxed as net capital gain for U.S. holders that are individuals, trusts, or estates. However, distributions to U.S. holders that are individuals, trusts, or estates generally will constitute qualified dividend income taxed as net capital gains to the extent the U.S. holder satisfies certain holding period requirements and to the extent the dividends are attributable to (i) qualified dividend income the Combined Corporation receives from C corporations, including its TRSs, (ii) the Combined Corporation’s undistributed earnings or built-in gains taxed at the corporate level during the immediately preceding year or (iii) any earnings and profits inherited from a C corporation in a tax-deferred reorganization or similar transaction, and provided the Combined Corporation properly designates the distributions as qualified dividend income. The Combined Corporation does not anticipate distributing a significant amount of qualified dividend income.
To the extent that the Combined Corporation makes a distribution in excess of its current and accumulated earnings and profits, the distribution will be treated first as a tax-free return of capital, reducing the tax basis in a U.S. holder’s shares, and thereafter as capital gain realized from the sale of such shares to the extent the distribution exceeds the U.S. holder’s tax basis in the shares.
Dividends declared by the Combined Corporation in October, November or December and payable to a U.S. holder of record on a specified date in any such month shall be treated both as paid by the Combined Corporation and as received by the U.S. holder on December 31 of the year, provided that the dividend is actually paid during January of the following calendar year.
Distributions that are properly designated as capital gain dividends will be taxed as long-term capital gains (to the extent they do not exceed the Combined Corporation’s actual net capital gain for the taxable year) without regard to the period for which the U.S. holder has held its shares. However, corporate U.S. holders may be required to treat up to 20% of certain capital gain dividends as ordinary income. In addition, U.S. holders may be required to treat a portion of any capital gain dividend as “unrecaptured Section 1250 gain,” taxable at a maximum rate of 25%, if the Combined Corporation incurs such gain. Capital gain dividends are not eligible for the dividends-received deduction for corporate U.S. holders.
The REIT provisions of the Code do not require the Combined Corporation to distribute its long-term capital gain, and the Combined Corporation may elect to retain and pay income tax on its net long-term capital gains received during the taxable year. If the Combined Corporation so elects for a taxable year, its U.S. holders would include in income as long-term capital gains their proportionate share of retained net long-term capital gains for the taxable year as the Combined Corporation may designate. A U.S. holder would be deemed to have paid its share of the tax paid by the Combined Corporation on such undistributed capital gains, which would be credited or refunded to the U.S. holder. The U.S. holder’s basis in its shares would be increased by the amount of undistributed long-term capital gains (less the capital gains tax paid by the Combined Corporation) included in the U.S. holder’s long-term capital gains.
Passive Activity Loss and Investment Interest Limitations.The Combined Corporation’s distributions and gain from the disposition of its shares will not be treated as passive activity income and, therefore, U.S. holders will not be able to apply any “passive losses” against such income. With respect to non-corporate U.S. holders, the Combined Corporation’s dividends (to the extent they do not constitute a return of capital) that are taxed at ordinary income rates will generally be treated as investment income for purposes of the investment interest limitation; however, net capital gain from the disposition of shares of the Combined Corporation common stock or MAA Series I preferred stock (or distributions treated as such), capital gain dividends, and dividends taxed at net capital gains rates generally will be excluded from investment income except to the extent the U.S. holder elects to treat such amounts as ordinary income for U.S. federal income tax purposes. U.S. holders may not include in their own U.S. federal income tax returns any of the Combined Corporation’s net operating or net capital losses.
Sale or Disposition of Shares of Common Stock or MAA Series I Preferred Stock.In general, any gain or loss realized upon a taxable disposition of shares of the Combined Corporation common stock or MAA Series I preferred stock by a U.S. holder will be a long-term capital gain or loss if the
shares have been held for more than one year and otherwise as a short-term capital gain or loss. However, any loss upon a sale or exchange of the shares by a U.S. holder who has held such shares for six months or less (after applying certain holding period rules) will be treated as a long-term capital loss to the extent of undistributed capital gains or distributions received by the U.S. holder from the Combined Corporation, each as required to be treated by such U.S. holder as long-term capital gain. All or a portion of any loss realized upon a taxable disposition of shares of the Combined Corporation common stock or MAA Series I preferred stock may be disallowed if other shares of its commoncapital stock are purchased within 30 days before or after the disposition.
Redemption of Shares of MAA Series I Preferred Stock. The treatment to be accorded to any redemption by the Combined Company of shares of MAA Series I preferred stock can only be determined on the basis of particular facts as to each U.S. holder of MAA Series I preferred stock at the time of redemption. In general, a U.S. holder of MAA Series I preferred stock will recognize capital gain or loss (provided the MAA Series I preferred stock are held as a capital asset) measured by the difference between the amount realized by the U.S. holder upon the redemption and such U.S. holder’s adjusted tax basis in the MAA Series I preferred stock redeemed if such redemption (i) results in a “complete termination” of the U.S. holder’s interest in all classes of shares of the Combined Company under Section 302(b)(3) of the Code, (ii) is “substantially disproportionate” with respect to the U.S. holder’s interest in the Combined Company under Section 302(b)(2) of the Code (which will not be the case if only MAA Series I preferred stock are redeemed, since they generally do not have voting rights) or (iii) is “not essentially equivalent to a dividend” with respect to the U.S. holder of MAA Series I 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 U.S. holder by reason of certain constructive ownership rules set forth in the Code, as well as shares actually owned, generally must be taken into account.
Medicare Tax on Unearned Income.A U.S. holder that is an individual is subject to a 3.8% tax on the lesser of (1) the U.S. holder’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’s filing status). A U.S. holder
that is an estate or trust that does not fall into a special class of trusts that is exempt from such tax is subject to the same 3.8% tax on the lesser of its undistributed net investment income and the excess of its adjusted gross income over a certain threshold. A U.S. holder’s net investment income will include, among other things, dividends on and capital gains from the sale or other disposition of shares of the Combined Corporation. Prospective U.S. holders that are individuals, estates or trusts should consult their tax advisors regarding the effect, if any, of this Medicare tax on their ownership and disposition of the Combined Corporation common stock.
Taxation of U.S. Tax-Exempt Holders
In general, a tax-exempt organization is exempt from U.S. federal income tax on its income, except to the extent of its “unrelated business taxable income”income,” or UBTI, which is defined by the Code as the gross income derived from any trade or business which is regularly carried on by a tax-exempt entity and unrelated to its exempt purposes, less any directly connected deductions and subject to certain modifications. For this purpose, the Code generally excludes from UBTI any gain or loss from the sale or other disposition of property (other than stock in trade or property held primarily for sale in the ordinary course of a trade or business), dividends, interest, rents from real property, and certain other items. However, a portion of any such gains, dividends, interest, rents, and other items generally is UBTI to the extent derived from debt-financed property, based on the amount of “acquisition indebtedness” with respect to such debt-financed property. Distributions that the Combined Corporation makes to a tax-exempt employee pension trust or other domestic tax-exempt holder or gains from the disposition of the Combined Corporation’s shares held as capital assets generally will not constitute UBTI unless the exempt organization’s shares are debt-financed property (e.g., the holder has borrowed to acquire or carry its shares). However, if the Combined Corporation is a “pension-held REIT,” this general rule will not apply to distributions to certain pension trusts that hold more than 10% (by value) of the Combined Corporation’s shares. The Combined Corporation will be treated as a “pension-held REIT” if (i) treating qualified trusts as individuals would cause the Combined Corporation to fail the 5/50 Test (as defined above) and (ii) the Combined Corporation is “predominantly held” by certain pension trusts. The Combined Corporation will be “predominantly held” if either (i) a single such pension trust holds more than 25% by value of the Combined Corporation’s shares or (ii) one or more such pension trusts, each owning more than 10% by value of the Combined Corporation’s shares, hold in the aggregate more than 50% by value of the Combined Corporation’s shares. In the event the Combined Corporation is a pension-held REIT, the percentage of any dividend received from it treated as UBTI would be equal to the ratio of (a) the gross UBTI (less certain associated expenses) earned by it (treating it as if it were a qualified trust and, therefore, subject to tax on UBTI) to (b) its total gross income (less certain associated expenses). A de minimis exception applies where the ratio set forth in the preceding sentence is less than 5% for any year; in that case, no dividends are treated as UBTI. There can be no assurance that the Combined Corporation will not be treated as a pension-held REIT. Before making an investment in shares of the Combined Corporation common stock, a tax-exempt holder should consult its tax advisors with regard to UBTI and the suitability of the investment in shares of the Combined Corporation’s common stock.
Social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans that are exempt from taxation under paragraphs (7), (9), (17), and (20), respectively, of Section 501(c) of the Code are subject to different UBTI rules, which generally will require them to characterize distributions from the Combined Corporation as UBTI. Before making an investment in shares of the Combined Corporation common stock, a tax-exempt holder should consult its tax advisors with regard to UBTI and the suitability of the investment in the Combined Corporation’s shares.
Taxation of Non-U.S. Holders.
The following is a summary of certain U.S. federal income tax consequences of the ownership and disposition of common stockshares of the Combined Corporation common stock and MAA Series I preferred stock applicable to non-U.S. holders. The discussion addresses only selective and not all aspects of U.S. federal income taxation that may be material for non-U.S. holders and is for general information only.
Ordinary Dividends.The portion of dividends received by non-U.S. holders payable out of the Combined Corporation’s earnings and profits that are not attributable to gains from sales or exchanges of U.S. real property interests and which are not effectively connected with a U.S. trade or business of the non-U.S. holder generally will be treated as ordinary income and will be subject to withholding tax at the rate of 30%, unless reduced or eliminated by an applicable income tax treaty. Under some treaties, lower withholding rates do not apply to dividends from REITs.
In cases where the dividend income from a non-U.S. holder’s investment in the Combined Corporation common stock or MAA Series I preferred stock is, or is treated as, effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business, the non-U.S. holder generally will be subject to U.S. federal income tax at graduated rates, in the same manner as U.S. holders are taxed with respect to such dividends, and may also be subject to the 30% branch profits tax (or a lower rate of tax under the applicable income tax treaty) on the income after the application of the income tax in the case of a non-U.S. holder that is a corporation. The Combined Corporation plans to withhold U.S. income tax at the rate of 30% on the gross amount of any distribution paid to a non-U.S. holder (including any portion of any dividend that is payable in stock) that is neither a capital gain dividend nor a distribution that is attributable to gain from the sale or exchange of “United States real property interests” under the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, rules described below under “—Dispositions of Common Stock or MAA Series I Preferred Stock” unless either (i) a lower treaty rate applies and the non-U.S. holder files with the Combined Corporation any required IRS FormW-8 (for example, an IRS Form W-8BEN) evidencing eligibility for that reduced rate or (ii) the non-U.S. holder files with the Combined Corporation an IRS Form W-8ECI claiming that the distribution is effectively connected income. The balance of this discussion assumes that dividends that the Combined Corporation distributes to non-U.S. holders and gains non-U.S. holders recognize with respect to Combined Corporation shares are not effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business unless deemed to be effectively connected under FIRPTA as described below under “—Dispositions of Common Stock or MAA Series I Preferred Stock.”
Non-Dividend Distributions.Distributions by the Combined Corporation to non-U.S. holders that are not attributable to gains from sales or exchanges of U.S. real property interests and that exceed the Combined Corporation’s earnings and profits will be a non-taxable return of the non-U.S. holder’s basis in its shares and, to the extent in excess of the non-U.S. holder’s basis, gain from the disposition of such shares, the tax treatment of which is described below. If it cannot be determined at the time at which a distribution is made whether or not the distribution will exceed the Combined Corporation’s earnings and profits, the distribution may be subject to withholding at the rate applicable to dividends.dividends (but not less than 15%). A non-U.S. holder, however, may seek a refund from the IRS of any amounts withheld that exceed the non-U.S. holder’s actual U.S. federal income tax liability. If the Combined Corporation’s stock constitutes a U.S. real property interest, distributions in excess of the sum of the Combined Corporation’s earnings and profits plus the non-U.S. holder’s adjusted tax basis in the stock will be taxed under FIRPTA at the rate of tax, including any applicable capital gain rates, that would apply to a U.S. holder of the same type (e.g., an individual or a corporation, as the case may be), and the collection of the tax will be enforced by a withholding at a rate of 10%15% of the amount by which the distribution exceeds the non-U.S. holder’s share of
the Combined Corporation’s earnings and profits. The amount withheld generally would be creditable against the non-U.S. holder’s U.S. federal income tax liability.
Capital Gain Dividends.Under FIRPTA, subjectExcept as discussed below with respect to the discussion below for 5%10% or smallerless holders of regularly traded classes of stock, “qualified shareholders” and “qualified foreign pension funds”, for any year in which the Combined Corporation qualifies as a distribution madeREIT, a non-U.S. holder will incur tax on distributions by the Combined Corporation to a non-U.S. holderthat are attributable to gains from dispositions of U.S. real property interests held by the Combined Corporation (directly or through pass-through subsidiaries) and must be reported in U.S. federal income tax returns filed by, and are treated as effectively connected with a U.S. trade or business of, the non-U.S. holder. The term “U.S. real property interests” includes interests in U.S. real property and shares in U.S. corporations at least 50% of whose real estate and business assets consist of U.S. real property interests. Such gains are subject to federal income tax at the rates applicable to U.S. holders and, in the case of a non-U.S. holder that is a corporation, a 30% branch profits tax (or a lower rate of tax under the applicable income tax treaty). The Combined Corporation is required to withhold tax at a 35% rate from distributions that are attributable to gains from the sale or exchange of U.S. real property interests. The amount withheld generally would be creditable against the non-U.S. holder’s U.S. federal income tax liability.
Notwithstanding However, FIRPTA and the foregoing discussion, capital gain dividends distributed35% withholding tax will not apply to any distribution to a non-U.S. holder who did“qualified shareholder” or a “qualified foreign pension fund,” and will also not atapply to any time during the one year period ending on the date of the distribution own more than 5% of awith respect to any class of sharesCombined Corporation stock that is regularly traded on an established securities market located in the U.S. willUnited States if the recipient non-U.S. holder did not be subjectown more
than 10% of such class of stock at any time during the one-year period ending on the date of distribution. However, any capital gain dividend exempt from FIRPTA butunder the succeeding publicly traded stock exception or qualified shareholder exception will be treated as ordinary dividends subject to the rules discussed above under “—Ordinary Dividends.”
Capital gain dividends that are not attributable to gains from sales or exchanges of U.S. real property interests, generally are not subject to U.S. federal income tax unless (i) such distribution is effectively connected with a U.S. trade or business of the non-U.S. holder and, if certain treaties apply, is attributable to a U.S. permanent establishment of the non-U.S. holder, in which case the non-U.S. holder will be subject to net-basis U.S. federal income tax on the dividend as if the non-U.S. holder were a U.S. holder and, in the case of a non-U.S. holder that is a corporation, a 30% branch profits tax (or a lower rate of tax under the applicable income tax treaty), or (ii) such non-U.S. holder was present in the U.S. for 183 days or more during the taxable year and has a “tax home” in the U.S., in which case a 30% withholding tax would apply to the dividend.
However, notwithstanding that such dividends should only be subject to U.S. federal income taxation in those two instances, existing Treasury Regulations might be construed to require the Combined Corporation to withhold on such dividends in the same manner as capital gain dividends that are attributable to gain from the disposition of U.S. real property interests, generally at the rate of 35% of the dividend (although any amounts withheld generally would be creditable against the non-U.S. holder’s U.S. federal income tax liability).
Dispositions of Common Stock or MAA Series I Preferred Stock.Unless FIRPTA applies, or as otherwise set forth below, a sale or exchange of Combined Corporation shares by a non-U.S. holder generally will not be subject to U.S. federal income taxation. FIRPTA applies only if shares of the Combined Corporation common stock or MAA Series I preferred stock constitute a U.S. real property interest.
The Combined Corporation common stockA non-U.S. holder generally will not constituteincur tax under FIRPTA with respect to gain on a U.S. real property interest if the Combined Corporation is a “domestically controlled qualified investment entity.” A domestically controlled qualified investment entity includes a REIT in which, at all times during a specified testing period, less than 50% in value of its outstanding shares are held directly or indirectly by non-U.S. holders. Because the Combined Corporation common stock will be publicly traded, no assurance can be given that the Combined Corporation will be, or that if it is it will remain, a domestically controlled qualified investment entity.
In the event that the Combined Corporation does not constitute a domestically controlled qualified investment entity, a non-U.S. holder’s saledisposition of the Combined Corporation common stock nonetheless will generally not be subject to tax under FIRPTAor MAA Series I preferred stock as a sale of a U.S. real property interest, provided that (1) shares of the Combined Corporation common stock are “regularly traded,”long as defined by applicable Treasury Regulations, on an established securities market and (2) the selling non-U.S. holder owned, actually or constructively, 5% or
less of the Combined Corporation’s outstanding common stockat all times during the five-year period ending on the date of disposition non-U.S. persons hold, directly or indirectly, less than 50% in value of the saleoutstanding capital stock. For these purposes, beginning on December 18, 2015, a person holding less than 5% of the Combined Corporation’s regularly traded capital stock for five years will be treated as a U.S. person unless the Combined Corporation has actual knowledge that such person is not a U.S. person. Because the Combined Corporation’s common stock is publicly traded, the Combined Corporation cannot assure that its non-U.S. ownership will be less than 50% at any time. Even if the Combined Corporation’s non-U.S. ownership remains under 50% for five years and it otherwise meets the requirements of this rule, pursuant to “certain wash sale” rules under FIRPTA, a non-U.S. holder may incur tax under FIRPTA to the extent such stockholder disposes of the Combined Corporation’s stock within a certain period prior to a distribution attributable to USRPI gain and directly or exchange (or,indirectly (including through certain affiliates) reacquires stock within certain prescribed periods, provided that this rule will not apply to a disposition and reacquisition of the Combined Corporation’s common stock or MAA Series I preferred stock by a non-U.S. holder that is a qualified shareholder, a qualified foreign pension fund, or a non-U.S. stockholder owning, actually or constructively, 5% or less of Combined Corporation capital stock at any time during the one-year period ending on the date of such distribution attributable to USRPI gain.
Regardless of the extent of the Combined Corporation’s non-U.S. ownership, a non-U.S. holder will not incur tax under FIRPTA on a disposition of the shares of the Combined Corporation’s publicly traded stock if such non-U.S. holder owned, actually or constructively, at all times during a specified testing period, 10% or less of the total fair market value of such stock. The testing period is the shorter of (1) the period during which the non-U.S. holder held the stock).shares and (2) the five-year period ending on the disposition date. For as long as Combined Corporation common stock and MAA Series I preferred stock is regularly traded on an established securities market, a non-U.S. holder should not incur tax under FIRPTA with respect to gain on a sale of Combined Corporation common stock or MAA Series I preferred stock unless it owns, actually or constructively, more than 10% of such Combined Corporation stock during such testing period.
In addition, even if
To the extent the Combined Corporation’s stock is held directly (or indirectly through one or more partnerships) by a “qualified shareholder,” it will not be treated as a USRPI. Further, to the extent such treatment applies, any distribution to such shareholder will not be treated as gain recognized from the sale or exchange of a USRPI. For these purposes, a qualified shareholder is generally a non-U.S. stockholder that (i)(A) is eligible for treaty benefits under an income tax treaty with the United States that includes an exchange of information program, and the principal class of interests of which is listed and regularly traded on one or more stock exchanges as defined by the treaty, or (B) is a foreign limited partnership organized in a jurisdiction with an exchange of information agreement with the United States and that has a class of regularly traded limited partnership units (having a value greater than 50% of the value of all partnership units) on the New York Stock Exchange or Nasdaq, (ii) is a “qualified collective investment vehicle” (within the meaning of Section 897(k)(3)(B) of the Code) and (iii) maintains records of persons holding 5% or more of the class of interests described in clauses (i)(A) or (i)(B) above. However, in the case of a qualified shareholder having one or more “applicable investors,” the exception described in the first sentence of this paragraph will not apply with respect to a portion of the qualified shareholder’s stock (determined by applying the ratio of the value of the interests held by applicable investors in the qualified shareholder to the value of all interests in the qualified shareholder and applying certain constructive ownership rules). Such ratio applied to the amount realized by a qualified shareholder on the disposition of Combined Corporation common stock or MAA Series I preferred stock or with respect to a distribution from the Combined Corporation is a domestically controlled qualified investment entity, upon disposition of shares of the Combined Corporation, a non-U.S. holder may be treated as havingattributable to gain from the sale or exchange of a U.S. real property interest ifUSRPI will be treated as amounts realized from the non-U.S. holder (1) disposesdisposition of USRPIs. Such treatment shall also apply to applicable investors in respect of distributions treated as a sale or exchange of stock with respect to a qualified shareholder. For these purposes, an “applicable investor” is person who holds an interest in the Combined Corporation’s shares during the 30-day period preceding the ex-dividend datequalified shareholder and holds more than 10% of a distribution, any portion of which, but for the disposition, would have been treated as gain from sale or exchange of a U.S. real property interest and (2) acquires, enters into a contract or option to acquire, or is deemed to acquire, other shares of the Combined Corporation commoncapital stock within 30 days after such ex-dividend date. applying certain constructive ownership rules.
The foregoingFIRPTA rules dowill not apply to any USRPI held directly (or indirectly through one or more partnerships) by, or to any distribution received from a transaction ifREIT by, a “qualified foreign pension fund” or any entity all of the interests of which are held by a qualified foreign pension fund. For these purposes, a “qualified foreign pension fund” is an organization or arrangement (i) created or organized in a foreign country, (ii) established to provide retirement or pension benefits to current or former employees (or their designees) of one or more employers for services rendered, (iii) which does not have a single participant or beneficiary that has a right to more than 5% regularly traded test described aboveof its assets or income, (iv) which is satisfiedsubject to government regulation and provides annual information reporting about its beneficiaries to relevant local tax authorities and (v) with respect to the non-U.S. holder.which, under its local laws, contributions that would otherwise be subject to tax are deductible or excluded from its gross income or taxed at a reduced rate, or taxation of its income is deferred or taxed at a reduced rate.
If gain on the sale of shares of the Combined Corporation common stock or MAA Series I preferred stock were subject to taxation under FIRPTA, the non-U.S. holder would be subject to the same treatment as a U.S. holder with respect to such gain, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals, and the purchaser of the shares could be required to withhold 10%15% of the purchase price and remit such amount to the IRS.
Gain from the sale of shares of the Combined Corporation common stock or MAA Series I preferred stock that would not otherwise be subject to FIRPTA will nonetheless be taxable in the U.S. to a non-U.S. holder if (i) such gain is effectively connected to a U.S. trade or business of the non-U.S. holder and, if certain treaties apply, is attributable to a U.S. permanent establishment of the non-U.S. holder, in which case the gain will be subject to net-basis U.S. federal income tax as if the non-U.S. holder were a U.S. holder and, in the case of a non-U.S. holder that is a corporation, a 30% branch profits tax (or a lower rate of tax under the applicable income tax treaty), or (ii) the non-U.S. holder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year and has a “tax home” in the U.S., in which case the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain.
Information Reporting Requirements and Backup Withholding TaxIndex to Financial Statements
The Combined Corporation will report to its U.S. holders and to the IRS the amount of distributions paid during each calendar year, and the amount of tax withheld, if any. Under the backup withholding rules, a U.S. holder may be subject to backup withholding at a rate of 28% with respect to distributions paid, unless such U.S. holder (i) is a corporation or other exempt entity and, when required, proves its status or (ii) certifies under penalties of perjury that the taxpayer identification number the U.S. holder has furnished is correct and the U.S. holder is not subject to backup withholding and otherwise complies with the applicable requirements of the backup withholding rules. A U.S. holder that does not provide its correct taxpayer identification number also may be subject to penalties imposed by the IRS.
The Combined Corporation will also report annually to the IRS and to each non-U.S. holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty. A non-U.S. holder may be subject to back-up withholding unless applicable certification requirements are met.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.
Other Withholding and Reporting Requirements under FATCA
The Foreign Account Tax Compliance Act provisions of the Code enacted in 2010,together with administrative guidance and certain intergovernmental agreements entered into thereunder, which we refer to as FATCA, impose withholding taxes on certain types of payments to (i) foreign financial institutions that do not agree to comply with certain diligence, reporting and withholding obligations with respect to their U.S. accounts and (ii) non-financial foreign entities that do not identify (or confirm the absence of) substantial U.S. owners. The withholding tax of 30% would apply to dividends and the gross proceeds of a disposition of Combined Corporation common stock or MAA Series I preferred stock paid to certain foreign entities unless various information reporting requirements are satisfied. Because the Combined Corporation may not know the extent to which a distribution is a dividend for U.S. federal income tax purposes at the time it is made, for purposes of these withholding rules the Combined Corporation may treat the entire distribution as a dividend. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these withholding provisions may be subject to different rules.
For these purposes, a foreign financial institution generally is defined as any non-U.S. entity that (i) accepts deposits in the ordinary course of a banking or similar business, (ii) is engaged in the business of holding financial assets for the account of others, or (iii) is engaged or holds itself out as being engaged primarily in the business of investing, reinvesting, or trading in securities, partnership interests, commodities, or any interest in such assets. Withholding under this legislation (as modified pursuant to subsequent guidance) on withholdable payments to foreign financial institutions and non-financial foreign entities wouldwill apply after December 31, 20162018 with respect to gross proceeds of a disposition of property that can produce U.S. source interest or dividends and would apply after June 30, 2014currently applies with respect to other withholdable payments.
Legislative or Other Actions Affecting REITs
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. No assurance can be given as to whether, when, or in what form, the U.S. federal income tax laws applicable to the Combined Corporation and its shareholders may be enacted. Changes to the U.S. federal tax laws and interpretations of federal tax laws could adversely affect an investment in the Combined Corporation common stock or MAA Series I preferred stock.
State, Local and Foreign TaxIndex to Financial Statements
The Combined Corporation may be subject to state, local and foreign tax in states, localities and foreign countries in which it does business or owns property. The tax treatment applicable to the Combined Corporation and its shareholders in such jurisdictions may differ from the U.S. federal income tax treatment described above.
MAA prepares its financial statements in accordance with GAAP. The parent merger will be accounted for by applying the acquisition method, which requires the identification of the acquirer, the determination of the acquisition date, the recognition and measurement, at fair value, of the identifiable assets acquired, liabilities assumed and any noncontrolling interest in the consolidated subsidiaries of the acquiree and recognition and measurement of goodwill or a gain from a bargain purchase. The accounting guidance for business combinations, referred to as ASC 805, provides that in a business combination involving the exchange of equity interests, the entity issuing the equity interests is usually the acquirer; however, all pertinent facts and circumstances must be considered, including the relative voting rights of the shareholders of the constituent companies in the combined entity, the composition of the board of directors and senior management of the combined entity, the relative size of the company and the terms of the exchange of equity interests in the business combination, including payment of a premium.
Based on the fact that MAA is the entity issuing the equity securities, that continuing MAA equity holderscommon shareholders will own approximately 56%67.7% of the issued and outstanding common shares of the Combined Corporation,
assuming the conversion of all limited partnership units of MAA LP held by existing limited partners of MAA LP to shares of Combined Corporation common stock, and former Colonial equity holdersPost Properties common shareholders will own approximately 44%32.3% of the issued and outstanding shares of common stock of the Combined Corporation, assuming the conversion of all limited partnership units issued by MAA LP to former limited partners of ColonialPost LP to shares of Combined Corporation common stock, and that MAA board members and senior management will represent the majority of the board and senior management of the Combined Corporation, and based on the terms of the parent merger, with ColonialPost Properties shareholders receiving a premium (as of the trading day immediately preceding the merger announcement) over the fair market value of their shares on such date, MAA is considered the acquirer for accounting purposes. Therefore, MAA will recognize and measure, at fair value, the identifiable assets acquired, liabilities assumed and any noncontrolling interests in the consolidated subsidiaries of Colonial,Post Properties, and MAA will recognize and measure goodwill and any gain from a bargain purchase, in each case, upon completion of the parent merger.
Exchange of Shares in the Parent Merger
MAA has appointed American Stock Transfer & Trust Company, or the exchange agent, to act as the exchange agent for the exchange of Colonialshares of Post Properties common sharesstock for shares of MAA common stock and for the exchange of shares of Post Properties Series A preferred stock for shares of MAA Series I preferred stock. As promptly as practicable after the effective time of the parent merger, the exchange agent will send to each holder of record of ColonialPost Properties common sharesstock and Post Properties Series A preferred stock at the effective time of the parent merger who holds Colonialshares of Post Properties common sharesstock or Post Properties Series A preferred stock in certificated or book-entry form a letter of transmittal and instructions for effecting the exchange of Colonialshares of Post Properties common sharestock or Post Properties Series A preferred stock certificates or book-entry shares for the merger consideration or preferred merger consideration the applicable holder is entitled to receive under the merger agreement. Upon surrender of sharestock certificates or book-entry shares for cancellation along with the executed letter of transmittal and other documents described in the instructions, a Colonial shareholderholder of shares of Post Properties common stock will receive any whole shares of MAA common stock such holder is entitled to receive and cash in lieu of any fractional share of MAA common stock such holder is entitled to receive, and a holder of shares of Post Properties Series A preferred stock will receive any whole shares of MAA commonSeries I preferred stock such holder is entitled to receive. After the effective time of the parent merger, ColonialPost Properties will not register any transfers of Colonialshares of Post Properties common shares.stock or Post Properties Series A preferred stock.
MAA shareholders need not take any action with respect to their stock certificates or book-entry shares.
Each company plans to continue its current dividend policy until the closing of the mergers, except that MAA and ColonialPost Properties will coordinate so that their respective quarterly dividends declared following the execution of the merger agreement will have the same payment dates and record dates. MAA currently pays a quarterly dividend equating to $0.695of $0.82 per share of MAA common stock and ColonialPost Properties currently pays a quarterly dividend equating to $0.21of $0.47 per share.share of Post Properties common stock. Following the closing of the mergers, MAA expects to continue its current dividend policy for shareholders of the Combined Corporation, subject to the discretion of the Combined Corporation’s board of directors, which reserves the right to change the Combined Corporation’s dividend policy at any time and for any reason. In addition, the merger agreement permits each of MAA and Post Properties to pay any distribution that is reasonably necessary to maintain its REIT qualification and/or to avoid the imposition of U.S. federal income or excise tax. In addition, the merger agreement permits Post Properties to continue to pay a regular quarterly distribution, in accordance with past practice, at a rate not to exceed $1.0625 per quarter per share of Post Properties Series A preferred stock. See “Risk Factors—Risks Related to an Investment in the Combined Corporation’s Common Stock—The Combined Corporation cannot assure you that it will be able to continue paying dividends at or above the rate currently paid by MAA and Colonial”Post Properties” on page 38.45.
Listing of MAA Common Stock and MAA Series I Preferred Stock
It is a condition to the completion of the mergers that the shares of MAA common stock and the shares of MAA Series I preferred stock issuable in connection with the parent merger be approved for listing on the NYSE, subject to official notice of issuance.
Delisting and Deregistration of ColonialPost Properties Common SharesStock and Post Properties Series A Preferred Stock
After the parent merger is completed, the ColonialPost Properties common sharesstock and the Post Properties Series A preferred stock currently listed on the NYSE will cease to be listed on the NYSE and will be deregistered under the Exchange Act.
Litigation RelatingIndex to the Mergers
On June 19, 2013, a putative class action lawsuit was filed in the Circuit Court for Jefferson County, Alabama against Colonial and purportedly on behalf of a proposed class of all Colonial shareholders captionedWilliams v. Colonial Properties Trust, et al. (the “State Litigation”). A derivative claim purportedly on behalf of Colonial was also asserted in the State Litigation. The complaint names as defendants Colonial, the members of the Colonial board of trustees, Colonial, LP, MAA, MAA LP and OP Merger Sub and alleges that the Colonial trustees breached their fiduciary duties by engaging in an unfair process leading to the merger agreement, failing to secure and obtain the best price reasonable for Colonial shareholders, allowing preclusive deal protection devices in the merger agreement, and by engaging in conflicted actions. The complaint alleges that Colonial LP, MAA, MAA LP and OP Merger Sub aided and abetted those breaches of fiduciary duties. The complaint seeks a declaration that the defendants have breached their fiduciary duties or aided and abetted such breaches and that the merger agreement is unlawful and unenforceable, an order enjoining the consummation of the mergers, direction of the Colonial trustees to exercise their fiduciary duties to obtain a transaction that is in the best interests of Colonial, rescission of the mergers in the event they are consummated, an award of costs and disbursements, including reasonable attorneys’ and experts’ fees, and other relief.
On July 2, 2013, plaintiff moved for expedited fact discovery and for an expedited schedule for filing and hearing a preliminary motion to enjoin the mergers; on July 11, 2013, defendants opposed those motions and moved to stay fact discovery. On July 11, 2013, defendants also moved to dismiss the complaint for failure to state a claim upon which relief can be granted on the grounds that: (1) the claims against the Colonial trustees are derivative and not direct, and plaintiff did not comply with Alabama law on serving notice of the claims on Colonial prior to filing; and (2) Alabama law does not recognize a cause of action in aiding and abetting a breach of fiduciary duty and, even if it did, such claims would also be derivative and not direct. The Court scheduled a motions hearing for August 8, 2013, which was continued on the request of the parties to the State Litigation to August 14, 2013 to facilitate settlement discussions. In the meantime, on August 2, 2013, plaintiff filed an amended complaint that re-asserted plaintiff’s earlier claims and added a new claim that the Colonial trustees breached their alleged duty of candor by not providing Colonial shareholders full and complete disclosures regarding the merger.
On August 14, 2013, prior to the Court’s scheduled hearing, the parties to the State Litigation reached an agreement in principle to settle the State Litigation, in which (a) defendants agreed to make certain additional disclosures in this joint proxy statement/prospectus, and (b) the parties agreed that they would use their best efforts to agree upon, execute and present to the Court a stipulation of settlement which would, among other things, (i) provide for the conditional certification of a non-opt out settlement class pursuant to Alabama Rules of Civil Procedure 23(b)(1) and (b)(2) consisting generally of all record and beneficial holders of the common stock of Colonial from June 3, 2013 through and including the date of the closing of the parent merger (the “Settlement Class”); (ii) release all claims that members of the Settlement Class may have that were alleged in the State Litigation or otherwise arising out of or relating in any manner to the parent merger (except Colonial shareholders’ statutory dissenters’ rights, see “Dissenters’ Rights” beginning on page 177), and (iii) dismiss the State Litigation with prejudice. The proposed settlement also provides that the defendants will not oppose a request to the Court by plaintiff’s counsel for attorney’s fees up to an immaterial amount agreed to by the parties and is subject to, among other things, confirmatory discovery, agreement to a stipulation of settlement, and final court approval following notice to the Settlement Class. The parties reported the proposed settlement to the Court on August 14, 2013, and the Court ordered a stay of all proceedings (except those related to settlement). Colonial and MAA management believe that the allegations in the amended complaint are without merit and that the disclosures made prior to the settlement are adequate under the law but wish to settle the State Litigation in order to avoid the cost and distraction of further litigation. In the event that the stipulation of settlement is not approved by the Court, the defendants intend to vigorously defend the State Litigation.
On August 20, 2013, a purported Colonial shareholder filed an individual lawsuit in the United States District Court for the Northern District of Alabama against Colonial captionedKempen v. Colonial Properties Trust, et al. (the “Federal Litigation”). The complaint names as defendants Colonial, the members of the Colonial
board of trustees, Colonial LP, MAA, MAA LP and OP Merger Sub, and alleges that all defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder because the joint proxy statement/prospectus included in the registration statement on Form S-4 filed with the SEC on July 19, 2013 is allegedly materially misleading, depriving plaintiff of making a fully informed decision regarding his vote on the parent merger. The complaint alleges that defendants misrepresented or omitted material facts concerning Colonial’s projections, the financial analyses of Colonial’s financial advisor, conflicts of interest affecting defendants and Colonial’s financial advisor, and the process employed by the Colonial trustees leading up to the decision to approve and recommend the parent merger. Plaintiff seeks an order enjoining the consummation of the mergers, rescission of the mergers in the event they are consummated or awarding Plaintiff rescissory damages, and an award of costs and disbursements, including reasonable attorneys’ and experts’ fees. Colonial and MAA management believe that the allegations in the complaint are without merit and intend to vigorously defend the Federal Litigation.
This section of this joint proxy statement/prospectus summarizes the material provisions of the merger agreement, which is attached as Annex A to this joint proxy statement/prospectus and is incorporated herein by reference. As a shareholder, you are not a third party beneficiary of the merger agreement and therefore you may not directly enforce any of its terms and conditions.
This summary may not contain all of the information about the merger agreement that is important to you. MAA and ColonialPost Properties urge you to carefully read the full text of the merger agreement because it is the legal document that governs the mergers. The merger agreement is not intended to provide you with any factual information about MAA or Colonial.Post Properties. In particular, the assertions embodied in the representations and warranties contained in the merger agreement (and summarized below) are qualified by information each of MAA and ColonialPost Properties filed with the SEC prior to the effective date of the merger agreement, as well as by certain disclosure letters each of the parties delivered to the other in connection with the signing of the merger agreement, that modify, qualify and create exceptions to the representations and warranties set forth in the merger agreement. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may apply contractual standards of materiality in a way that is different from what may be viewed as material by investors or that is different from standards of materiality generally applicable under the U.S. federal securities laws or may not be intended as statements of fact, but rather as a way of allocating risk among the parties to the merger agreement. The representations and warranties and other provisions of the merger agreement and the description of such provisions in this document should not be read alone but instead should be read in conjunction with the other information contained in the reports, statements and filings that each of MAA and ColonialPost Properties file with the SEC and the other information in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205.201.
MAA and ColonialPost Properties acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, each of them is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this joint proxy statement/prospectus not misleading.
Form, Effective Time and Closing of the MergersMerger
The merger agreement provides for the combination of ColonialPost Properties and MAA through the merger of ColonialPost Properties with and into MAA, which is referred to herein as the parent merger, with MAA surviving the parent merger upon the terms and subject to the conditions set forth in the merger agreement. The parent merger will become effective upon the later of such time as the articles of merger have been accepted for record by the Office offiled with the Secretary of State forof the State of AlabamaGeorgia or the articles of merger have been accepted for record byfiled with the Secretary of State of the State of Tennessee, or at a later date and time agreed to by MAA and ColonialPost Properties (not to exceed 30 days fromafter the date the applicable articles of merger are accepted for record). The merger agreement also provides for the merger prior to the parent merger, of OP Merger Sub, a subsidiary of MAAPost LP with and into ColonialMAA LP with ColonialMAA LP continuing as the surviving entity, which is referred to herein as the partnership merger, and, an indirect wholly-owned subsidiary of MAA LP.together with the parent merger, are referred to herein as the mergers. The partnership merger will become effective upon the later of such time as the certificate of merger has been filed with the Secretary of State forof the State of DelawareGeorgia or the certificate of merger has been filed with the Secretary of State of the State of Tennessee, or at a later date and time agreed to by MAA and ColonialPost Properties (not to exceed 30 days fromafter the date the applicable certificate of merger is accepted for record). MAA and ColonialPost Properties have agreed to cause the effective time of the partnershipparent merger to occur prior toas soon as practicable following the effective time of the parentpartnership merger. MAA and MAA LP are collectively referred to herein as the MAA parties, and Post Properties, Post GP Holdings, Inc. and Post LP are collectively referred to herein as the Post Properties parties.
The merger agreement provides that the closing of the parent merger will take place at the date and time mutually agreed upon by MAA and ColonialPost Properties but in no event later than the thirdsecond business day following
the date on which the last of the conditions to closing of the parent merger (described below under “—Conditions to Completion of the Mergers”Merger”) havehas been satisfied or waived (other than the conditions that by their terms are to be satisfied at the closing of the parent merger, but subject to the satisfaction or waiver of those conditions), although MAA may elect inat its reasonable discretion to accelerate or delayschedule the closing date of closing toon the last business
day of the calendar month in which the last of the conditions to closing of the parent merger havehas been satisfied or waived, (providedor on the datefirst business day of closing does not occur less than two business days and no more than 15the immediately succeeding calendar days after the date on which all conditions to closing have been satisfied or waived).month.
The MAA parties and the ColonialPost Properties parties have agreed to reasonably cooperate reasonably with each otherand agree to consider any reasonable changes requested by the other parties regarding the structure of the mergers and the other transactions contemplated by the merger agreement so long as the changes do not have certain effects.
Organizational Documents of the Combined Corporation
The MAA charter and MAA bylaws as in effect immediately prior to the effective time of the parent merger will continue to be in effect following the parent merger as the charter and bylaws of the Combined Corporation.
MAA has agreed to cause theThe limited partnership agreement of MAA LP to be amended and restatedas in all material respects in the form attachedeffect immediately prior to this joint proxy statement/prospectus as Annex I no later than the effective time of the partnership merger and the limited partnership agreement of MAA LP, as so amended and restated, will continue to be the limited partnership agreement of MAA LP following the partnership merger.
Board of Directors of the Combined Corporation
Immediately following the effective time of the parent merger, the MAA Board will be increased to 1213 members, with the seventen current MAA directors, H. Eric Bolton, Jr., Alan B. Graf, Jr., Ralph Horn,James K. Lowder, Thomas H. Lowder, Monica McGurk, Claude B. Nielsen, Philip W. Norwood, W. Reid Sanders, William B. Sansom and Gary Shorb, continuing as directors of the Combined Corporation. H. Eric Bolton, Jr., MAA’s Chief Executive Officer and Chairman of the Board of Directors, will serve as Chief Executive Officer and Chairman of the Board of Directors of the Combined Corporation. Alan B. Graf, Jr. and Ralph Horn, Co-Lead, Lead Independent DirectorsDirector for MAA, will serve as Co-LeadLead Independent DirectorsDirector for the Combined Corporation. The MAA Board will fill the fivethree newly created vacancies by immediately appointing to the MAA Board the fivethree members designated by the ColonialPost Properties Board, Thomas H. Lowder, James K. Lowder, Claude B. Nielsen, Harold W. RippsRussell R. French, Toni Jennings and John W. Spiegel,David P. Stockert, which members are referred to herein as the ColonialPost Properties designees, to serve until the 20142017 annual meeting of MAA’s shareholders (and until their successors have been duly elected and qualified). The ColonialPost Properties designees will be nominated by the MAA Board for reelection at the 2014 and 20152017 annual meetingsmeeting of MAA’s shareholders, in all cases subject to the satisfaction and compliance of such ColonialPost Properties designees with MAA’s then-current corporate governance guidelines and code of business conduct and ethics.
Merger Consideration; Effects of the Parent Merger and the Partnership Merger
Merger Consideration
At the effective time of the parent merger and by virtue of the parent merger, each outstanding Colonialshare of Post Properties common sharestock (other than shares held by any wholly owned subsidiary of ColonialPost Properties or by MAA or any of its subsidiaries and other than shares with respect to which dissenters’ rights have been properly exercised and not withdrawn under applicable law)subsidiaries) will be converted into the right to receive 0.360,0.71, which is referred to herein as the exchange ratio, shares of MAA common stock, which is referred to herein as the merger consideration.consideration, subject to any applicable withholding tax. No fractional shares of MAA common stock will be issued. Instead of fractional shares, ColonialPost Properties shareholders will receive cash, without interest, in an amount determined by multiplying the fractional interest of MAA common stock to which the holder would otherwise be entitled by the volume weighted average price of MAA common stock for the 10 trading days immediately prior to the closing date, starting with the opening of trading on the first trading day to the closing of the second to last trading day prior to the closing date, as reported by Bloomberg.
At the effective time of the partnership merger and by virtue of the partnership merger, each outstanding limited partnership unit in ColonialPost LP will automatically be converted into 0.3600.71 newly issued Class A limited partnership units in MAA LP and Colonialeach holder of such Class A limited partnership units in MAA LP will become an indirect wholly owned subsidiarybe admitted as a limited partner of MAA LP in accordance with the terms of the limited partnership agreement of MAA LP.
Procedures for Surrendering Colonial Share CertificatesTreatment of Shares of Post Properties Series A Preferred Stock
The conversionAt the effective time of Colonial common sharesthe parent merger and by virtue of the parent merger, each outstanding share of the Post Properties Series A preferred stock will be automatically converted into the right to receive one newly issued share of MAA Series I preferred stock, which is referred to herein as the preferred merger consideration, with the same rights, preferences, privileges and voting powers as those of the Post Properties Series A preferred stock, subject to any applicable withholding tax.
Procedures for Surrendering Post Properties Stock Certificates or Book-Entry Shares
The conversion of shares of Post Properties common stock into the right to receive the merger consideration, and the conversion of shares of Post Properties Series A preferred stock into the right to receive the preferred merger consideration, will occur automatically at the effective time of the parent merger. In accordance with the merger agreement, MAA has appointed an exchange agent to handle the payment and delivery of the merger consideration, the preferred merger consideration and the cash payments to be delivered in lieu of fractional shares. At the effective time of the parent merger, the Combined Corporation will deliver to the exchange agent evidence of the shares of MAA common stock and MAA Series I preferred stock in book-entry form sufficient to pay the merger consideration and the preferred merger consideration and cash in an amount sufficient to pay for any fractional shares. As soon as reasonably practicable after the effective time, but in no event later than two business days thereafter, the Combined Corporation will cause the exchange agent to mail (and make available for collection by hand) to each record holder of Colonialshares of Post Properties common shares,stock and Post Properties Series A preferred stock, a letter of transmittal and instructions explaining how to surrender ColonialPost Properties common sharestock certificates or book-entry shares, or Post Properties Series A preferred stock certificates or book-entry shares, to the exchange agent.
Each ColonialPost Properties common shareholder that surrenders its stock certificate to the exchange agent together with a duly completed letter of transmittal, and each ColonialPost Properties shareholder that holds book-entry Colonialshares of Post Properties common shares,stock, will receive the merger consideration due to such common shareholder (including cash in lieu of any fractional shares).share), and each Post Properties Series A preferred shareholder that surrenders its stock certificate to the exchange agent together with a duly completed letter of transmittal, and each Post Properties preferred shareholder that holds book-entry shares of Post Properties Series A preferred stock, will receive the preferred merger consideration due to such preferred shareholder. After the effective time of the parent merger, each certificate that previously represented ColonialPost Properties common sharesstock will only represent the right to receive the merger consideration into which those Colonialshares of Post Properties common stock have been converted, and each certificate that previously represented Post Properties Series A preferred stock will only represent the right to receive the preferred merger consideration into which those shares of Post Properties Series A preferred stock have been converted.
Assumption of ColonialPost Properties Equity Incentive Plans by MAA
At the effective time of the parent merger, the Combined Corporationeach outstanding option to purchase shares of Post Properties common stock, which are referred to herein as Post Properties options, will assume all outstanding options, whether or not exercisable,vest in full and restricted share awards subject to their current terms under the Colonial equity incentive plans, as adjusted for the exchange ratio. Each option sobe assumed by the Combined CorporationMAA. Each Post Properties option assumed by MAA will continue to have, and be subject to, the same terms and conditions (including vesting schedule)(other than vesting) as were applicable under the Colonial equity incentive plans prior to the effective time of the parent merger.
As of the effective time of the parent merger, all Colonial common shares subject to vesting and other restrictions under the Colonial equity incentive plans will convert into the right to receive shares of Combined Corporation common stock that are subject to the same vesting conditions and other terms and conditions as are applicable to such shares of Colonial restricted sharescorresponding Post Properties option immediately prior to the effective time of the parent merger, as adjustedbut will be exercisable for a number of shares of MAA common stock and at an exercise price calculated based on the exchange ratio.
In addition, immediately prior to the effective time of the parent merger, all outstanding issuance and forfeiture conditions on any shares of Post Properties common stock subject to restricted stock awards will be deemed satisfied in full and entitled to receive the merger consideration.
Withholding
All payments under the merger agreement are subject to applicable withholding requirements.
Dissenters’ RightsIndex to Financial Statements
Holders of Colonial common shares are entitled to dissent and demand payment for their shares at “fair value” plus accrued interest. See “Dissenters’ Rights” beginning on page 177. MAA’s obligation to close the mergersNo dissenters’ or appraisal rights will be conditioned onavailable to holders of no more than 15% of ColonialPost Properties common shares properly perfecting their rightstock with respect to dissent and demand cash payment for their shares.the merger or the other transactions contemplated by the merger agreement.
Representations and Warranties
The merger agreement contains a number of representations and warranties made by the MAA parties, on the one hand, and the ColonialPost Properties parties, on the other hand. The representations and warranties were made by the parties as of the date of the merger agreement and do not survive the effective time of the mergers. Certain of these representations and warranties are subject to specified exceptions and qualifications contained in the merger agreement and qualified by information each of MAA and ColonialPost Properties filed with the SEC prior to the date of the merger agreement and in the disclosure letters delivered in connection with the merger agreement.
Representations and Warranties of the MAA Parties
The merger agreement includes representations and warranties by the MAA parties relating to, among other things:
organization, valid existence, good standing and qualification to conduct business;
organizational documents;
capital structure;
due authorization, execution, delivery and validity of the merger agreement;
absence of any conflict with or violation of organizational documents or applicable laws, and the absence of any violation or breach of, or default or consent requirements under, certain agreements;
permits and compliance with law;
SEC filings and financial statements;
absence of certain changes since March 31, 2013;
absence of undisclosed material liabilities;
absence of existing default or violation under organizational documents or certain other agreements;
litigation;
tax matters, including qualification as a REIT;
employee benefit plans and employees;
labor and employment matters;
accuracy of information supplied for inclusion in the joint proxy statement/prospectus and registration statement;
intellectual property;
environmental matters;
real property;
material contracts;
insurance;
opinion of MAA’s financial advisor;
shareholder vote required in order to approve the parent merger approvaland to approve an amendment to the MAA charter that increases the number of limited partnersauthorized shares of MAA LP required in ordercommon stock;
broker’s, finder’s and investment banker’s fees;
inapplicability of the Investment AdvisersCompany Act of 1940, as amended;
exemption of the mergers from anti-takeover statutes; and
related party transactions.
Representations and Warranties of the ColonialPost Properties Parties
The merger agreement includes representations and warranties by the ColonialPost Properties parties relating to, among other things:
organization, valid existence, good standing and qualification to conduct business;
organizational documents;
capital structure;
due authorization, execution, delivery and validity of the merger agreement;
absence of any conflict with or violation of organizational documents or applicable laws, and the absence of any violation or breach of, or default or consent requirements under, certain agreements;
permits and compliance with law;
SEC filings and financial statements;
absence of certain changes since March 31, 2013;
absence of undisclosed material liabilities;
absence of existing default or violation under organizational documents or certain other agreements;
litigation;
tax matters, including qualification as a REIT;
employee benefit plans and employees;
labor and employment matters;
accuracy of information supplied for inclusion in the joint proxy statement/prospectus and registration statement;
intellectual property;
environmental matters;
real property;
material contracts;
insurance;
opinion of Post Properties’ financial advisor;
shareholder vote required in order to approve the parent merger and approval of limited partners of Post LP required in order to approve the partnership merger;
broker’s, finder’s and investment banker’s fees;
inapplicability of the Investment AdvisersCompany Act of 1940, as amended;
exemption of the mergers from anti-takeover statutes; and
related party transactions.
Definition of “Material Adverse Effect”
Many of the representations of the MAA parties and the ColonialPost Properties parties are qualified by a “material adverse effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct, individually or in the aggregate, would reasonably be expected to have a material adverse effect). For the purposes of the merger agreement, “material adverse effect” means any event, circumstance, change or effect (i) that is material and adverse to the business, assets, properties, financial condition or results of operations of MAA and its subsidiaries, taken as a whole, or ColonialPost Properties and its subsidiaries, taken as a whole, as the case may be, or (ii) that will, or would reasonably be expected to, prevent or materially impair the ability of the MAA parties or the ColonialPost Properties parties, as the case may be, to consummate the mergers in the manner contemplated by the merger agreement before December 31, 2013.agreement. However, for purposes of clause (i) above, any event, circumstance, change or effect will not be considered a material adverse effect to the extent arising out of or resulting from the following:
any failure of MAA or Colonial,Post Properties, as applicable, to meet any internal or external projections or forecasts or any estimates of earnings, revenues, or other metrics for any period (except any event, circumstance, change or effect giving rise to such failure may be taken into account in determining whether there has been a material adverse effect)effect, if not otherwise falling into one of the other exceptions contained in this definition);
any events, circumstances, changes or effects that affect the multifamily residential real estate REIT industry generally;
any changes in the United States or global economy or capital, financial, banking, credit or securities markets generally, including changes in interest or exchange rates;
any changes in the legal, tax, political or regulatory conditions;
the commencement, escalation or worsening of a war (whether or not declared) or armed hostilities or the occurrence of acts of terrorism or sabotage;
the negotiation, execution or announcement of the merger agreement, or the consummation or anticipation of consummation of the mergers or the other transactions contemplated by the merger agreement;
the taking of any action expressly required by, or the failure to take any action expressly prohibited by, the merger agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of the other party;
earthquakes, hurricanes, floods or other natural disasters;
any damage or destruction of any assets or property of MAA or Colonial propertyany MAA subsidiary, or Post Properties or any Post Properties subsidiary, as applicable, caused by casualty that is substantially covered by insurance; or
changes in law or GAAP;GAAP or any interpretations thereof or any accounting principles, practices or policies that MAA or any MAA subsidiary, or Post Properties or any Post Properties subsidiary, as applicable, is required to adopt;
which, (i) in the case of the second, third, fourth, fifth and tenth bullet points immediately above, such changes do not materially disproportionately affect MAA and its subsidiaries, taken as a whole, or ColonialPost Properties and its
subsidiaries, taken as a whole, as applicable, relative to other similarly situated participants in the multifamily residential real estate REIT industry in the United States and (ii) in the case of the eighth bullet point immediately above, such changes do not materially disproportionately affect MAA and its subsidiaries, taken as a whole, or ColonialPost Properties and its subsidiaries, taken as a whole, as applicable, relative to other participants in the multifamily residential real estate REIT industry in the geographic regions in which MAA and its subsidiaries, or ColonialPost Properties and its subsidiaries, as applicable, operate or own or lease properties. Further, the mere fact of a decrease in the market price or a change in the trading volume of MAA common stock or Post Properties common stock, as applicable, will not, in and of itself, constitute a material adverse effect, but any event, circumstance, change or effect underlying such decrease or change will be considered in determining whether there has been a material adverse effect if not otherwise falling into one of the other exceptions contained in this definition.
Conduct of Business of the ColonialPost Properties Parties Pending the Partnership Merger
The ColonialPost Properties parties have agreed to certain restrictions on them until the earlier of the effective time of the partnershipparent merger and the valid termination of the merger agreement. In general, except with MAA’s prior written approval (not to be unreasonably withheld, delayed or conditioned) or as otherwise expressly required or permitted by the merger agreement or required by law, the ColonialPost Properties parties have agreed that they will, and will cause each of their subsidiaries to, conduct their business in all material respects in the ordinary course and in a manner consistent with past practice, and use their commercially reasonable efforts to (i) maintain their material assets and properties in their current condition (normal wear and tear excepted), (ii) preserve intact in all material respects their current business organization, goodwill, ongoing businesses and significant business relationships, with third parties, (iii) keep available the services of their present officers provided it does not require additional compensation, (iv) maintain all material ColonialPost Properties insurance policies and (v) maintain the status of ColonialPost Properties as a REIT. Without limiting the foregoing, the ColonialPost Properties parties have also agreed that, subject to certain specified exceptions and except with MAA’s prior written approval (not to be unreasonably withheld, delayed or conditioned), to the extent required by law, or as otherwise expressly contemplated, required or permitted by the merger agreement, they will not, and they will not cause or permit any of their subsidiaries to:
amend or propose to amend their organizational documents;
split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of ColonialPost Properties or any of its subsidiaries (other than any wholly owned subsidiary);
declare, set aside or pay any dividends on or make any other distributions with respect to shares of capital stock or other equity securities or ownership interests in ColonialPost Properties or any of its subsidiaries;
redeem, repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock or other equity interests of ColonialPost Properties or any of its subsidiaries;
issue, sell, pledge, dispose, encumber or grant any shares of Colonial’sPost Properties’ or any of its subsidiaries’ capital stock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of Colonial’sPost Properties’ or any of its subsidiaries’ capital stock or other equity interests;
grant, confer, award or modify the terms of any option to purchase sharesstock or restricted sharestock award of ColonialPost Properties common shares;
acquire or agree to acquire (including by merger, consolidation or acquisition of stock or assets) any real property, personal property, corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof;
sell, mortgage, pledge, lease, assign, transfer, dispose of or encumber, or effect a deed in lieu of foreclosure with respect to, any property or assets;
incur, create, assume, refinance, replace or prepay any indebtedness for borrowed money or issue or amend the terms of any debt securities of ColonialPost Properties or any of its subsidiaries, or assume, guarantee or endorse, or otherwise become responsible (whether directly, contingently or otherwise) for the indebtedness of any other person;
make any loans, advances or capital contributions to, or investments in, any other person or entity (including to any of its officers, trustees,directors, affiliates, agents or consultants), make any change in its existing borrowing or lending arrangements for or on behalf of such persons or entities, or enter into any “keep well” or similar agreement to maintain the financial condition of another entity;
enter into, renew, modify, amend or terminate, or waive, release, compromise or assign any rights or claims under, any material contract;
waive, release, assign any material rights or claims or make any payment, direct or indirect, of any material liability of ColonialPost Properties or any ColonialPost Properties subsidiary before the same comes due in accordance with its terms;
waive, release, assign, settle or compromise any claim, action or proceeding;
hire any officer of ColonialPost Properties or promote or appoint any person to a position of officer of Colonial;
increase in any manner the amount, rate or terms of compensation or benefits of any of Colonial’s trusteesPost Properties’ directors or officers;
enter into, adopt, amend or terminate any employment, bonus, severance or retirement contract or other compensation or employee benefits arrangement;
accelerate the vesting or payment of any compensation or benefits;
grant any awards under the ColonialPost Properties equity incentive plans or any bonus, incentive, performance or other compensation plan or arrangement;
fail to maintain all financial books and records in all material respects in accordance with GAAP (or any interpretation thereof) or make any material change to its methods of accounting in effect at December 31, 2012,2015, or make any change with respect to accounting policies;
enter into any new line of business;
fail to duly and timely file all material reports and other material documents required to be filed with any governmental authority;
enter into, or modify in a manner adverse to ColonialPost Properties or MAA any tax protection agreement, make, change or rescind any material election relating to taxes, change a material method of tax accounting, amend any material income tax return, settle or compromise any material federal, state, local or foreign tax liability, audit, claim or assessment, enter into any material closing agreement related to taxes, or knowingly surrender any right to claim any material tax refund;
adopt a plan of merger, complete or partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization;
form any new funds or joint ventures;
make or commit to make any capital expenditures in excess of a specified threshold;
amend or modify the compensation terms or any other obligations of Colonial contained in its engagement letter with its financial advisor in a manner materially adverse to Colonial,Post Properties, any of its subsidiaries or MAA, or engage other financial advisors in connection with the transactions contemplated by the merger agreement;agreement unless the
directors of Post Properties have concluded in good faith (after consultation with outside legal counsel) that failure to engage another financial advisor would be inconsistent with their fiduciary duties under applicable law; |
take any action that would reasonably be expected to prevent or delay the consummation of transactions contemplated by the merger agreement; or
authorize, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
However, nothing in the merger agreement prohibits ColonialPost Properties from taking any action that, in the reasonable judgment of the ColonialPost Properties Board, upon advice of counsel, is necessary for ColonialPost Properties to avoid or continue to avoid incurring entity-level income or excise taxes under the Code or to maintain its qualification as a REIT under the Code for any period or portion thereof ending on or prior to the partnershipparent merger or to qualify or preserve certain tax status of ColonialPost Properties subsidiaries, including making dividend or other distribution payments to shareholders of Colonial.Post Properties. In addition, the merger agreement permits ColonialPost LP to take any action as ColonialPost LP determines to be necessary to be in compliance with all of its obligations under any tax protection agreement and avoid liability for any indemnification or other payment under any tax protection agreement.
Conduct of Business of the MAA Parties Pending the Partnership Merger
The MAA parties have agreed to certain restrictions on them until the earlier of the effective time of the partnership merger and the valid termination of the merger agreement. In general, except with Colonial’sPost Properties’ prior written approval (not to be unreasonably withheld, delayed or conditioned) or as otherwise expressly required or permitted by the merger agreement or required by law, the MAA parties have agreed that they will, and will cause each of their subsidiaries to, conduct their business in all material respects in the ordinary course and in a manner consistent with past practice, and use their commercially reasonable efforts to (i) maintain their material assets and properties in their current condition (normal wear and tear excepted), (ii) preserve intact in all material respects their current business organization, goodwill, ongoing businesses and significant business relationships, with third parties, (iii) keep available the services of their present officers provided it does not require additional compensation, (iv) maintain all material MAA insurance policies and (v) maintain the status of MAA as a REIT. Without limiting the foregoing, the MAA parties have also agreed that, subject to certain specified exceptions and except with Colonial’sPost Properties’ prior written approval (not to be unreasonably withheld, delayed or conditioned), to the extent required by law, or as otherwise expressly contemplated, required or permitted by the merger agreement, they will not, and they will not cause or permit any of their subsidiaries to:
amend or propose to amend their organizational documents;
split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of MAA or any of its subsidiaries (other than any wholly owned subsidiary);
declare, set aside or pay any dividends on or make any other distributions with respect to shares of capital stock or other equity securities or ownership interests in MAA or any of its subsidiaries;
redeem, repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock or other equity interests of MAA or any of its subsidiaries;
issue, sell, pledge, dispose, encumber or grant any shares of MAA’s or any of its subsidiaries’ capital stock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of MAA’s or any of its subsidiaries’ capital stock or other equity interests;
grant, confer, award or modify the terms of any option to purchase shares of MAA common stock;
acquire or agree to acquire or make any loans to, advances or capital contributions to, or investments in (including by merger, consolidation or acquisition of stock or assets) any joint venture, real property, personal property, corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof;thereof that would, or would reasonably be expected to, prevent or materially impair the ability of the MAA parties to consummate the mergers before February 28, 2017 or having, in the aggregate, a fair market value in excess of a specified threshold;
sell, mortgage, pledge, lease, assign, transfer, dispose of or encumber, or effect a deed in lieu of foreclosure with respect to, any property or assets;
incur, create, assume, refinance, replace or prepay any indebtedness for borrowed money or issue or amend the terms of any debt securities of MAA or any of its subsidiaries, or assume, guarantee or endorse, or otherwise become responsible (whether directly, contingently or otherwise) for the indebtedness of any other person;
make any loans, advances or capital contributions to, or investments in, any other person or entity (including to any of its officers, directors, affiliates, agents or consultants), make any change in its existing borrowing or lending arrangements for or on behalf of such persons or entities, or enter into any “keep well” or similar agreement to maintain the financial condition of another entity;
enter into, renew, modify, amend or terminate or waive, release, compromise or assign any rights or claims under, any material contract;
waive, release, assign any material rightscontract that would, or claimswould reasonably be expected to, prevent or make any payment, direct or indirect, of any liability of MAA or any MAA subsidiary beforematerially impair the same comes due in accordance with its terms;
waive, release, assign, settle or compromise any claim, action or proceeding;
hire any officer of MAA or promote or appoint any person to a position of officer of MAA;
increase in any manner the amount, rate or terms of compensation or benefits of any of MAA’s directors or officers;
enter into, adopt, amend or terminate any employment, bonus, severance or retirement contract or other compensation or employee benefits arrangement;
accelerate the vesting or payment of any compensation or benefits;
grant any awards under the MAA equity incentive plans or any bonus, incentive, performance or other compensation plan or arrangement;
increase the sizeability of the MAA Board beyond seven directors;
fail to maintain all financial books and records in all material respects in accordance with GAAP (or any interpretation thereof) or make any material change to its methods of accounting in effect at December 31, 2012,2015, or make any change with respect to accounting policies;
enter into any new line of business;
fail to duly and timely file all material reports and other material documents required to be filed with any governmental authority;
enter into, or modify in a manner adverse to MAA or Colonial,Post Properties any tax protection agreement, make, change or rescind any material election relating to taxes, change a material method of tax accounting, amend any material income tax return, settle or compromise any material federal, state, local or foreign tax liability, audit, claim or assessment, enter into any material closing agreement related to taxes, or knowingly surrender any right to claim any material tax refund;
adopt a plan of merger, complete or partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization;
form any new funds or joint ventures;
maketake any action, or commitfail to maketake any capital expenditures in excess ofaction, which action or failure would reasonably be expected to cause MAA or any MAA REIT subsidiary to fail to qualify as a specified threshold;
amend or modify the compensation terms or any other obligations of MAA contained in its engagement letter with its financial advisor in a manner materially adverse to MAA, any of its subsidiaries or Colonial or engage other financial advisors in connection with the transactions contemplated by the merger agreement;
take any action that would reasonably be expected to prevent or delay the consummation of transactions contemplated by the merger agreement; or
authorize, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
However, nothing in the merger agreement prohibits MAA from taking any action that, in the reasonable judgment of the MAA Board, upon advice of counsel, is necessary for MAA to avoid or continue to avoid incurring entity-level income or excise taxes under the Code or to maintain its qualification as a REIT under the Code for any period or portion thereof ending on or prior to the partnershipparent merger or to qualify or preserve certain
tax status of ColonialMAA subsidiaries, including making dividend or other distribution payments to shareholders of MAA. In addition, the merger agreement permits MAA LP to take any action as MAA LP determines to be necessary to be in compliance with all of its obligations under any tax protection agreement and avoid liability for any indemnification or other payment under any tax protection agreement.
No Solicitation of Transactions
Each of MAAPost Properties and ColonialMAA will not, nor will it permit any of its subsidiaries to, authorize or permit any of its officers, trustees, directors or employees to, and will use its reasonable best efforts to cause its and its subsidiaries’ other representatives not to, directly or indirectly, (i) initiate, solicit or knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer by or with a third party with respect to an Acquisition Proposal (as defined below), (ii) engage in any negotiations concerning, or provide any confidential information or data to any person relating to an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal, (iii) approve or execute or enter into any letter of intent, agreement in principle, merger agreement, asset purchase or share exchange agreement, option agreement or other similar agreement related toproviding for any Acquisition Proposal, or (iv) publicly propose publicly or agree to do any of the foregoing.
For the purposes of the merger agreement, “Acquisition Proposal” means any proposal, offer or transaction (other than a proposal or offer made by MAA or ColonialPost Properties or their affiliates) for (i) any merger, consolidation, share exchange, business combination or similar transaction involving it which would result in any person beneficially owning more than twenty percent (20%) of the outstanding voting securities of Post Properties, Post LP, MAA or MAA LP, as the case may be, or any of its subsidiaries,successor thereto or parent company thereof, (ii) any sale, lease, exchange, mortgage, pledge, license, transfer or other disposition, directly or indirectly, by merger, consolidation, sale of equity interests, share exchange, joint venture, business combination or otherwise, of any of its assets or that of its subsidiaries (including stock or other ownership interests of its subsidiaries) representing more than twenty percent (20%) or more of the consolidated assets, of Post Properties and its subsidiaries, or MAA and its subsidiaries, as determinedthe case may be, on a book-valueconsolidated basis, (iii) any issue,issuance, sale or other disposition of (including by way of merger, consolidation, share exchange, joint venture, business combination share exchange or any similar transaction)otherwise) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing more than twenty percent (20%) of the outstanding voting securities of Post Properties, Post LP, MAA or more of its voting power,MAA LP, as the case may be, or any successor thereto or parent company thereof, (iv) any tender offer or exchange offer that, if consummated, would results in which any person or “group” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) shall seek to acquireacquiring beneficial ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire beneficial ownership, of more than twenty percent (20%) or more of the outstanding shares of any class of itsthe outstanding voting securities of Post Properties, Post LP, MAA or MAA LP, as the case may be, or any successor thereto or parent company thereof, (v) any recapitalization, restructuring, liquidation, dissolution or other similar type of transaction in which a third party shall acquire beneficial ownership of more than twenty percent (20%) or more of the outstanding sharesvoting securities of Post Properties, Post LP, MAA or MAA LP, as the case may be, or any classsuccessor thereto or parent company thereof, or (vi) a merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, reclassification, share exchange, business combination or similar transaction involving Post Properties or MAA, as the case may be, pursuant to which the shareholders of itsPost Properties or MAA, as the case may be, immediately preceding such transaction hold less than eighty percent (80%) of the voting securities.equity interests in the surviving or resulting entity of such transaction.
Notwithstanding the restrictions set forth above, the merger agreement provides that at any time prior to the approval of the parent merger at their respective shareholder meetings, each of the ColonialPost Properties Board and the MAA Board iswill each be permitted subject to first entering into a confidentialitytake the following actions, prior to receipt of the approval of the merger agreement, having provisions that are no less favorable to those containedthe parent merger and the other transactions contemplated by the merger agreement by Post Properties’ shareholders or the approval of the merger agreement, the parent merger and the other transactions contemplated by the merger agreement by MAA’s shareholders, as applicable, in the confidentiality agreement between MAA and Colonial, to engage in discussions and negotiations with, or provide any nonpublic information or data to, any personeach case in response to an unsolicited bona fide written Acquisition Proposal by such person made after June 3, 2013August 15, 2016 (provided that the Acquisition Proposal by such person did not result from a breach of the no solicitation no-solicitation
provisions of the merger agreement (other than an unintentional and inadvertent breach thereof that was not intended to result in an Acquisition Proposal but that nevertheless resulted in an Acquisition Proposal)) and which the MAAPost Properties Board or the ColonialMAA Board, as applicable, concludes in good faith (after consultation with outside legal counsel and financial advisors) either constitutes or is reasonablywould likely to lead to a Superior Proposal (as defined below), if and only to the extent that the MAAPost Properties Board or the ColonialMAA Board, as applicable, concludeconcludes in good faith (after consultation with outside legal counsel) that failure to do so would be inconsistent with their fiduciary duties under applicable law. Coloniallaw: (i) engage in discussions and negotiations regarding such Acquisition Proposal, (ii) provide any nonpublic information or data to the person who made such Acquisition Proposal after entering into a confidentiality agreement with such person (provided that the provisions of such confidentiality agreement may not be more favorable to such person than those contained in the existing confidentiality agreement between MAA and Post Properties with respect to MAA unless Post Properties offers to amend the existing confidentiality agreement with MAA to be as favorable or as unrestrictive to MAA in the aggregate as the confidentiality agreement signed by the person who made the Acquisition Proposal), and (iii) effect any nonappealable, final action that any court of competent jurisdiction orders Post Properties or MAA, as applicable, to take; provided, however, that MAA or Post Properties, as applicable, shall have an opportunity to appear before any such court of competent jurisdiction with respect to such matter if such court will entertain MAA’s or Post Properties’, as applicable, motion to be heard with respect to such action. Post Properties and MAA, as applicable, will provide the other party with a copy of any nonpublic information or data provided to a third party pursuant to the prior sentence prior to or simultaneously with furnishing such information to such third party.party to the extent such nonpublic information or data has not been previously provided to MAA or Post Properties, as the case may be.
Each party must notify the other party promptly (but in no event later than one business day) after receipt of any Acquisition Proposal, or any request for nonpublic information relating to such party or any of its subsidiaries by any person that informs such party or any of its subsidiaries that itsuch person is considering making, or has made, an Acquisition Proposal, or any inquiry from any person seeking to have discussions or negotiations with such party relating to a possible Acquisition Proposal. The notice will be made orally and promptly thereafter confirmed in writing, and will indicate the identity of the person making the Acquisition Proposal, inquiry or request and the material terms and conditions of any inquiries, proposals or offers (including a copy thereof if in writing and any relatedmaterial documentation or correspondence)correspondence that sets forth any terms of such Acquisition Proposal). Each party will also promptly, and in any event within one business day, notify the other party, orally and promptly thereafter in writing, if it enters into discussions or negotiations concerning any Acquisition Proposal or provides nonpublic information or data to any person and keep the other party promptly informed in all material respects of the status and terms of any such proposals, offers, discussions or negotiations on a currenttimely basis, including by promptly providing a copy of all material documentation or correspondence relating thereto.
Except as described below, neither the MAA Board, the ColonialPost Properties Board, nor any committee thereof will withhold, withdraw or modify in any manner adverse to the other party, or propose publicly to withhold, withdraw or modify in any manner adverse to the other party, the approval, recommendation or declaration of advisability by the MAA Board or the ColonialPost Properties Board, as applicable, or any such committee thereof with respect to the merger agreement or the transactions contemplated thereby, which is referred to herein as a Change in Recommendation.
Notwithstanding the foregoing, with respect to an Acquisition Proposal, the MAA Board or the ColonialPost Properties Board, as applicable, may make in writing a Change in Recommendation (and in the event that the MAA Board or the ColonialPost Properties Board, as applicable, determines the Acquisition Proposal to be a Superior Proposal, terminate the merger agreement)agreement in writing), if and only if (i) an unsolicited bona fide written Acquisition Proposal (that(provided that the Acquisition Proposal did not result from a breach of the no solicitationno-solicitation provisions of the merger agreement)agreement (other than an unintentional and inadvertent breach thereof that was not intended to result in an Acquisition Proposal but that nevertheless resulted in an Acquisition Proposal)) is made to MAA or Colonial,Post Properties, as applicable, and is not withdrawn, (ii) the MAA Board or the Colonial Post Properties
Board, as applicable, has concluded in good faith (after consultation with outside legal counsel and financial advisors) that such Acquisition Proposal constitutes a Superior Proposal, (iii) the directors of MAA and the trustees of Colonial,or Post Properties, as applicable, have concluded in good faith (after consultation with outside legal counsel) that failure to do so would be inconsistent with their fiduciary duties under applicable law, (iv) four business days, which is referred to herein as the notice period, has elapsed since the party proposing to take such action has given written notice to the other party advising the other party that it intends to take such action and specifying in reasonable detail the reasons therefor, including the terms and conditions of any such Superior Proposal that is the basis of the proposed action, which is referred to as the notice of recommendation change, which notice of recommendation change or intention will not be deemed a Change in Recommendation for any purpose of the merger agreement, (v) during such notice period, the notifying party has considered and, at the reasonable request of the other party, engaged in good faith discussions with the other party regarding, any adjustment or modification of the terms of the merger agreement proposed by the other party, and (vi) the directors or trustees of the party proposing to take such action, following such notice period, again reasonably determineconclude in good faith (after consultation with outside legal counsel, and taking into account any adjustment or
modification of the terms of the merger agreement proposed by the other party) that failure to do so would be inconsistent with their fiduciary duties under applicable law.law and that such Acquisition Proposal continues to constitute a Superior Proposal. Upon any material amendment to the Superior Proposal giving rise to the notice, the notifying party is required to deliver a new notice and commence a new negotiationnotice period of three business days instead of four business days.
For the purposes of the merger agreement, in circumstances not involving or relating to an Acquisition Proposal, the MAA Board or the ColonialPost Properties Board, as applicable, may make a Change in Recommendation if and only if (i) a material fact, effect, event, development or change in circumstances has occurred or arisen after June 3, 2013August 15, 2016 that was neithernot known to such party nor(or, if known, the consequences of which were not reasonably foreseeable to the Post Properties Board or the MAA Board, as applicable, as of June 3, 2013August 15, 2016 ) (and which change or development does not relate to an Acquisition Proposal), (ii) the directors or trustees of the party proposing to take such action have first reasonably determined in good faith (after consultation with outside legal counsel) that failure to do so would be inconsistent with their fiduciary duties under applicable law, (iii) four business days, which is referred to herein as the intervening event notice period, will have elapsed since the party proposing to take such action has given a notice of recommendation change (which notice of recommendation change or intention will not be deemed a Change in Recommendation for any purpose of the merger agreement) to the other party advising that the notifying party intends to take such action and specifying in reasonable detail the reasons therefor, (iv) during the four business day period, the notifying party has considered and, at the reasonable request of the other party, engaged in good faith discussions with the other party regarding, any adjustment or modification of the terms of the merger agreement proposed by the other party, and (v) the directors or trustees, as applicable, of the party proposing to take such action, following such intervening event notice period, again reasonably determine in good faith (after consultation with outside legal counsel, and taking into account any adjustment or modification of the terms of the merger agreement proposed by the other party) that failure to do so would be inconsistent with their fiduciary duties under applicable law. In the event the MAA Board or the ColonialPost Properties Board, as applicable, does not make a Change in Recommendation following such four business day period, but thereafter determines to make a Change in Recommendation in circumstances not involving an Acquisition Proposal, the foregoing procedures shall apply anew and shall also apply to any subsequent withdrawal, amendment or change.change (provided, however, that in this instance the intervening event notice period shall be three business days instead of four business days).
For purposes of the merger agreement and with respect to an Acquisition Proposal, “Superior Proposal” means a written bona fide Acquisition Proposal (except that, for purposes of this definition, the references in the definition of “Acquisition Proposal” to “twenty percent (20%)” and to “eighty percent (80%)” shall be replaced by “fifty“seventy-five percent (50%(75%)”) made by a third party that does not contain any financing conditions and is otherwise on terms that the MAA Board or the ColonialPost Properties Board, as applicable, determines in its good faith judgment, after consultation with outside legal counsel and financial advisors, taking into account all factors and matters deemed relevant in good faith by the MAA Board or the Post Properties Board, as applicable, including financial, legal, regulatory and any other aspects of the transaction described in such proposal and such other relevant factors (including without limitation, the identity of the person making
such proposal, any break-up fees, expense reimbursement provisions, conditions to consummation and feasibility and certainty of consummation (including whether consummation is reasonably capable of being completed on a timely basis on the terms proposed), as well as any changes to the financial terms of the merger agreement proposed by the other party in response to such proposal or otherwise), described in such proposal, would, if consummated, be more favorable to MAA and its shareholders or ColonialPost Properties and its shareholders, as applicable, from a financial point of view than the transactions contemplated by the merger agreement.
The merger agreement requires each of MAA and ColonialPost Properties to, and to cause their respective subsidiaries to, immediately terminate any and all existing activities, discussions or negotiations with any third parties conducted prior to June 3, 2013August 15, 2016 with respect to any Acquisition Proposal, and to agree that it will not release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which it or any of its subsidiaries is a party with respect to any Acquisition Proposal. Each of MAA and ColonialPost Properties further agrees that it will use its reasonable best efforts to promptly inform its and its subsidiaries’ respective representatives of these obligations.
Unless the merger agreement is terminated with respect to a Superior Proposal, notwithstanding a Change in Recommendation, each of ColonialPost Properties and MAA has agreed to submit the adoptionapproval of the merger agreement to a vote of its respective shareholders. In addition, MAA and ColonialPost Properties have agreed not to submit any Acquisition Proposal other than the mergers to a vote of its respective shareholders prior to the termination of the merger agreement.
Form S-4, Joint Proxy Statement/Prospectus; ShareholdersShareholders’ Meetings
The merger agreement provides that MAA and ColonialPost Properties will prepare and cause to be filed with the SEC the joint proxy statement included in this joint proxy statement/prospectus and MAA agreed to prepare and file a registration statement on Form S-4 with respect to the MAA common stock and the MAA Series I preferred stock issuable in the parent merger, which includes this joint proxy statement/prospectus, in each case as promptly as reasonably practicable following the date of the merger agreement. MAA and ColonialPost Properties also will use their reasonable best efforts to (i) have the Form S-4 declared effective under the Securities Act as promptly as practicable after filing, (ii) ensure that the Form S-4 complies in all material respects with the applicable provisions of the Exchange Act or Securities Act and (iii) to keep the Form S-4 effective for so long as necessary to complete the mergers.
Each of MAA and ColonialPost Properties will use its reasonable best efforts to cause this joint proxy statement/prospectus to be mailed or delivered to their shareholders entitled to vote at their respective shareholder meetings and to hold their respective shareholder meetings as soon as practicable after the Form S-4 is declared effective. Each of MAA and ColonialPost Properties also will include in the joint proxy statement/prospectus its recommendation to its shareholders that they approve the parent merger and the other transactions contemplated by the merger agreement and to use its reasonable best efforts to obtain its shareholder approval.
Efforts to Complete Transactions; Consents
Both MAA and ColonialPost Properties will use their reasonable best efforts to take all actions and do all things necessary, proper or advisable under applicable laws or pursuant to any contract or agreement to consummate and make effective, as promptly as practicable, the mergers, including obtaining all necessary actions or nonactions, waivers, consents and approvals from governmental authorities or other persons or entities in connection with the mergers and the other transactions contemplated by the merger agreement and defending any lawsuits or other legal proceedings challenging the merger agreement or the mergers or other transactions contemplated by the merger agreement.
MAA and ColonialPost Properties will provide any necessary notices to third parties and to use their reasonable best efforts to obtain any third-party consents that are necessary, proper or advisable to consummate the mergers.
Access to Information; ConfidentialityIndex to Financial Statements
The merger agreement requires both MAA and ColonialPost Properties to provide to the other, upon reasonable advance notice and during normal business hours, reasonable access to its properties, offices, books, contracts, commitments, personnel and records, and each of MAA and ColonialPost Properties are required to furnish reasonably promptly to the other a copy of each report, schedule, registration statement and other document filed prior to closing pursuant to U.S. federal or state securities laws and all other information concerning its business, properties and personnel as the other party may reasonably request.
Each of MAA and ColonialPost Properties will hold, and towill cause its representatives and affiliates to hold, any non-public information in confidence to the extent required byin accordance with the terms of itsthe existing confidentiality agreements.agreement by and between the parties.
Each of MAA and ColonialPost Properties will give prompt written notice to the other upon becoming aware of the occurrence or impending occurrence of any event or circumstance relating to it or to any of its subsidiaries which could reasonably be expected to have, individually or in the aggregate, a material adverse effect.
Notification of Certain Matters; Transaction Litigation
MAA and ColonialPost Properties will provide prompt notice to the other of any notice received from any governmental authority in connection with the merger agreement or the transactions contemplated by the merger agreement, including the mergers, or from any person or entity alleging that its consent is or may be required in connection with any such transaction.
Each of MAA and ColonialPost Properties will provide prompt notice to the other if any representation or warranty made by it in the merger agreement becomes untrue or inaccurate such that, the applicable closing conditionsif uncured, would reasonably be expected to be incapableresult in any of the applicable closing conditions not being capable of being satisfied by December 31, 2013,prior to February 28, 2017, or if it fails to comply with or satisfy in any material respect any covenant, condition or agreement contained in the merger agreement.agreement such that, if uncured, would result in any of the applicable closing conditions not to be satisfied.
Each of MAA and ColonialPost Properties will provide prompt written notice to the other upon becoming aware of the occurrence or impending occurrence of any event or circumstance relating to it which could reasonably be expected to have, individually or in the aggregate, a material adverse effect.
Each of MAA and Post Properties will provide prompt notice to the other of any actions, suits, claims, investigations or proceedings commenced or threatened against, relating to or involving such party or any of its subsidiaries in connection with the merger agreement, the mergers or the other transactions contemplated by the merger agreement. Each willhas agreed to allow the other the opportunity to reasonably participate in the defense and settlement of any shareholder litigation and Post Properties will not to agree to a settlement of any shareholder litigation without the other’sMAA’s consent (not to be unreasonably withheld, conditioned or delayed).
In addition, Post Properties will give MAA the opportunity to reasonably participate in the defense and settlement of a certain lawsuit against Post Properties, which is referred to as the Specified Action, set forth on the Post Properties disclosure letter. Post Properties will provide MAA with all pleadings, motions, memoranda and material correspondence, as well as decisions or other actions by the court in the Specified Action, reasonable opportunity to review and comment in advance on all pleadings, motions and memoranda to be filed by Post Properties, and advance notice of any hearings or status conferences with the court in the Specified Action. No settlement of the Specified Action shall be agreed to without MAA’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).
Indemnification of DirectorsIndemnification; Directors’ and Officers;Officers’ Insurance
From and after the effective time of the parent merger, pursuant to the terms of the merger agreement and subject to certain limitations, the Combined Corporation and MAA LP will jointly and severally will, for a period of
six years from the effective time of the parent merger, indemnify and hold harmless, among others, any manager, director, officer, trustee or fiduciary of ColonialPost Properties and its subsidiaries, against all losses, claims, damages, liabilities and costs pertaining to matters existing or occurring, or acts or omissions occurring at or prior to the effective time of the parent merger, including with respect to the transactions contemplated by the merger agreement, to the fullest extent permittedauthorized or not prohibited under applicable law.
Prior to the effective time of the partnershipparent merger, ColonialPost Properties will purchase,obtain and pay for, and MAA will maintain, a “tail” prepaid insurance policy or policies from Post Properties’ current insurance carrier or an insurance carrier with the same or better credit rating as Post Properties’ current insurance carrier with a claim period for six years from the effective time of the partnershipparent merger for Colonial’sPost Properties’ and its subsidiaries’ current and former trustees, directors, officers, agents and fiduciaries for facts or events that occurred at or prior to the effective time of the partnershipparent merger with terms and conditions, coverageretentions and amountslimits of liability that are no less favorable than those of Colonial’sPost Properties’ existing directors’ and officers’ liability insurance and fiduciary insurance.
If ColonialPost Properties is unable toor does not obtain and pay for a “tail” policy as of the effective time of the partnershipparent merger, MAA must, at Colonial’sPost Properties’ request, purchaseobtain, pay for and maintain in full force and effect, during the six year period following the effective time of the partnershipparent merger, a “tail” insurance policy or policies from onePost Properties’ current insurance carrier or morean insurance carriers believed to be sound and reputablecarrier with respect to directors’ and officers’ liabilitythe same or better credit rating as Post Properties’ current insurance and fiduciary liability insurance,carrier, with terms and conditions, coverageretentions and amountslimits of liability that are no less favorable than those of Colonial’sPost Properties’ existing directors’ and officers’ liability insurance and fiduciary insurance.
Notwithstanding the foregoing, (i) neither Colonial,Post Properties, MAA nor the Combined Corporation will be required to pay annual premiums in excess of 300% of the current annual premium paid by ColonialPost Properties for such insurance, and (ii) if the annual premiums exceed 300%, Colonial,Post Properties, MAA or the Combined Corporation will be permitted to obtain as much similar insurance as is possible for an annual premium equal to 300% of the current annual premium.
Public Announcements
Each of MAA and ColonialPost Properties will, subject to certain exceptions, to consult with each other before issuing any press release or otherwise making any public statements or filings with respect to the merger agreement or any of the transactions contemplated by the merger agreement. In addition, each of MAA and ColonialPost Properties will not, subject to certain exceptions, not to issue any press release or otherwise make a public statement without obtaining the other’s consent (not to be unreasonably withheld).
Other Covenants and Agreements
The merger agreement contains certain other covenants and agreements, including covenants related to:
each of ColonialPost Properties and MAA using its respective commercially reasonable efforts (before and, as relevant, after the effective time of the parent merger) to cause the parent merger to qualify as a reorganization under the Code;
each of ColonialPost Properties and MAA taking all steps to ensure that any disposition of ColonialPost Properties common sharesstock and any acquisition of shares of MAA common stock in connection with the parent merger and the other transactions contemplated by the merger agreement by certain individuals are exempted pursuant to Rule 16b-3 promulgated under the Exchange Act from giving rise to any liability under Section 16 of the Exchange Act;
ColonialPost Properties and its subsidiaries voting all shares of MAA common stock they beneficially own as of the record date of the MAA special meeting, if any, in favor of approval of the parent merger and issuance of shares of MAA common stock
issuance of shares of MAA common stock to be issued in the parent merger, and MAA and its subsidiaries voting all Post Properties common stock they beneficially own as of the record date of the Post Properties special meeting, if any, in favor of the approval of the parent merger; |
MAAPost Properties voting all limited partnership units in MAAPost LP beneficially owned by MAAPost Properties and its subsidiaries, if any, in favor of the matters submitted to the limited partners of MAAPost LP for approval;
the MAA Board adopting resolutions and taking all other action necessary so that, immediately following the effective time of the partnershipparent merger, the board of directors of the Combined Corporation is comprised of twelvethirteen directors, with the current chairman of the MAA Board remaining chairman of the Combined Corporation’s board of directors after the effective time of the partnershipparent merger;
the ColonialPost Properties Board adopting such resolutions or taking such other actions as may be required to terminate Colonial’sPost Properties’ equity incentive plans, terminate Colonial’sPost Properties’ Dividend Reinvestment Plan and suspend Colonial’sPost Properties’ Employee Share Purchase Plan;
if requested by MAA, ColonialPost Properties terminating each employee benefit plan of ColonialPost Properties intended to be qualified within the meaning of Section 401(a) of the Code as of the day prior to the closing date;
MAA and its subsidiaries, during the period commencing on the closing and ending twelve months thereafter, providing each employee of ColonialPost Properties and ColonialPost LP who remains employed by Colonial,Post Properties, any ColonialPost Properties subsidiary, MAA or any MAA subsidiary immediately following the closing with (i) an aggregate annual base salary(each, a “continuing employee” and target bonus opportunity (excluding equity-based compensation) at least equal to that provided by Colonial and its subsidiaries immediately prior to closing, (ii) severance payments and benefits no less favorable than those provided by Colonial and its subsidiaries immediately prior to closing, and (iii) all othercollectively, the “continuing employees”) with compensation and benefits that are, in the aggregate, no less favorable than those provided to similarly situated employees of MAA and its subsidiaries, as applicable, immediately following the closing;
MAA transferring,each of the parties taking, or causing to be taken, all actions necessary to delist the transferPost Properties common stock and the Post Properties Series A preferred stock from the NYSE and terminate their registration under the Exchange Act effective after the effective time of certain real property assetsthe parent merger; and
Colonial and Colonial LP assigning, and MAA and MAA LP assuming, certain registration rights agreements.
Conditions to Completion of the MergersMerger
Mutual Closing Conditions
The obligation of each of the MAA parties and the ColonialPost Properties parties to complete the mergers is subject to the satisfaction or, to the extent permitted by law, written waiver, at or prior to the effective time of the partnershipparent merger, of the following conditions:
approval by MAA shareholders of the merger agreement, the parent merger and the other transactions contemplated by the merger agreement and approval by MAA shareholders and Colonial shareholders;
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a Form S-4 having been declared effective and no stop order suspending the effectiveness of such Form S-4 having been issued and no proceeding to that effect shall havehaving been commenced or threatened by the SEC and not withdrawn;
the absence of any order or injunction issued by any governmental authority or other legal restraint or prohibition preventing the consummation of the mergers or the other transactions contemplated by the merger agreement;
the shares of MAA common stock and MAA Series I preferred stock to be issued in connection with the parent merger having been approved for listing on the NYSE, subject to official notice of issuance at or prior to the closing of the mergers; and
certain third party consents and approvals (described above under “—Covenants and Agreements— Efforts to Complete Transactions; Consents”) having been obtained and remaining in full force and effect, except where the failure to obtain the consent or approval would not be reasonably likely to have a material adverse effect on Colonial or MAA.
As of the date of this joint proxy statement/prospectus, all of the third party consents and approvals required as a condition to the obligation of the parties to complete the mergers as described in the final bullet point above had been obtained and not rescinded.
Additional Closing Conditions for the Benefit of the ColonialPost Properties Parties
The obligations of the ColonialPost Properties parties to effect the mergers and to consummate the other transactions contemplated by the merger agreement are subject to the satisfaction or, to the extent permitted by law, written waiver, at or prior to the partnershipparent merger effective time, of the following additional conditions:
the accuracy in all material respects as of the date of the merger agreement and as of the effective time of the partnershipparent merger (or, in the case of representations and warranties that by their terms address matters only as of another specified date, as of that date) of certain representations and warranties made in the merger agreement by the MAA parties regarding certain aspects of their capital structure, authority relative to the merger agreement and the required shareholder and unitholder votes to approve the mergers and the other transactions contemplated by the merger agreement;
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the accuracy of all other representations and warranties made in the merger agreement by the MAA parties (disregarding any materiality or material adverse effect qualifications contained in such representations and warranties) as of the date of the merger agreement and as of the effective time of the partnershipparent merger (or, in the case of representations and warranties that by their terms address matters only as of another specified date, as of that date), except for any such inaccuracies that do not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on MAA;
each of the MAA parties having performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, required to be performed by it under the merger agreement on or prior to the effective time of the partnershipparent merger;
no material adverse effect with respect to MAA has occurred, individually or in the aggregate, since June 3, 2013;August 15, 2016;
receipt by ColonialPost Properties of an officer’s certificate dated as of the closing date and signed by MAA’s chief executive officer or chief financial officer on behalf of the MAA parties, certifying that the closing conditions described in the fivefour preceding bullets have been satisfied;
receipt by ColonialPost Properties of an opinion dated as of the closing date from Baker, Donelson, Bearman, CaldwellBass, Berry & Berkowitz, PCSims PLC or other counsel reasonably satisfactory to Colonial,Post Properties, to the effect that for all taxable periods commencing with its taxable year ended December 31, 2004,2006, MAA has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and that its past, current and intended future organization and operations will permit the Combined Corporation to continue to qualify for taxation as a REIT under the Code for its taxable year which includes the effective time of the parent merger and thereafter;
receipt by ColonialPost Properties of an opinion dated as of the closing date from Hogan Lovells USKing & Spalding LLP or other counsel reasonably satisfactory to ColonialPost Properties regarding the parent merger’s qualification as a reorganization within the meaning of Section 368(a) of the Code; andCode.
the transfer of certain assets held directly by MAA
Additional Closing Conditions for the Benefit of the MAA Parties
The obligations of the MAA parties to effect the mergers and to consummate the other transactions contemplated by the merger agreement are subject to the satisfaction or, to the extent permitted by law, written waiver, at or prior to the effective time of the partnershipparent merger, of the following additional conditions:
the accuracy in all material respects as of the date of the merger agreement and as of the effective time of the partnershipparent merger (or, in the case of representations and warranties that by their terms address matters only as of another specified date, as of that date) of certain representations and warranties made in the merger agreement by the ColonialPost Properties parties regarding certain aspects of their capital structure, authority relative to the merger agreement and the required shareholder vote to approve the parent merger and the other transactions contemplated by the merger agreement;
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the accuracy of all other representations and warranties made in the merger agreement by the ColonialPost Properties parties (disregarding any materiality or material adverse effect qualifications contained in such representations and warranties) as of the date of the merger agreement and as of the effective time of the partnershipparent merger (or, in the case of representations and warranties that by their terms address matters only as of another specified date, as of that date), except for any such inaccuracies that do not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Colonial;
each of the ColonialPost Properties parties having performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, required to be performed by it under the merger agreement on or prior to the effective time of the partnership merger;
no material adverse effect with respect to ColonialPost Properties has occurred, individually or in the aggregate, since June 3, 2013;
receipt by MAA of an officer’s certificate dated as of the closing date and signed by Colonial’sPost Properties’ chief executive officer or chief financial officer on behalf of the ColonialPost Properties parties, certifying that the closing conditions described in the fivefour preceding bullets have been satisfied;
receipt by MAA of an opinion dated as of the closing date from Hogan Lovells USKing & Spalding LLP, or other counsel reasonably acceptable to MAA, to the effect that for all taxable periods commencing with its taxable year ended December 31, 20042006 and ending with its taxable year that ends with the parent merger, ColonialPost Properties (and each Post Properties REIT subsidiary) has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code;
receipt by MAA of an opinion dated as of the closing date from Goodwin Procter LLP or other counsel reasonably satisfactory to MAA regarding the parent merger’s qualification as a reorganization within the meaning of Section 368(a) of the Code; and
no more than 15% of the outstanding Colonial common shares as of the closing date are held by Colonial shareholders that have properly perfected their right to dissent and demand cash payment for their shares.
Termination of the Merger Agreement
Termination by Mutual Agreement
The merger agreement may be terminated at any time before the effective time of the partnershipparent merger by the mutual consent of MAA and ColonialPost Properties in a written instrument, which action must be taken or authorized by the MAA Board and the ColonialPost Properties Board.
Termination by Either Index to Financial Statements
ColonialPost Properties or MAA
The merger agreement may also be terminated prior to the effective time of the partnershipparent merger by either ColonialPost Properties or MAA if:
a governmental authority of competent jurisdiction has issued an order, decree or ruling or taken any other action permanently enjoining or otherwise prohibiting the mergers, and such order, decree, ruling or other action has become final and nonappealable (provided that this termination right will not be available to a party whose failure to comply with any provision of the merger agreement was the cause of, or resulted in, such action);
the mergers have not been consummated on or before 5:00 p.m. (New York time) on December 31, 2013February 28, 2017 (provided that this termination right will not be available to a party whose failure to comply with any provision of the merger agreement has been the cause of, or resulted in, the failure of the mergers to occur on or before such date);
there has been a breach by the other party of any of the covenants or agreements or any of the representations or warranties set forth in the merger agreement on the part of such other party, which breach, either individually or in the aggregate, would result in, if occurring or continuing on the closing date, the failure to be satisfied of certain closing conditions, unless such breach is reasonably capable of being cured, and the other party continues to use its reasonable best efforts to cure such breach prior to December 31, 2013February 28, 2017 (provided that this termination right will not be available to a party that is in breach of any of its own respective representations, warranties, covenants or agreements set forth in the merger agreement such that certain closing conditions are not satisfied);
MAA shareholders of either MAA or Colonial failedfail to approve the merger agreement, the parent merger and the other transactions contemplated by the merger agreement and the MAA charter amendment at the duly convened MAA special meeting (provided that this termination right will not be available to MAA if the failure to obtain MAA shareholder approval was primarily due to MAA’s breach of certain provisions of the merger agreement); or
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Termination by ColonialPost
The merger agreement may also be terminated prior to the effective time of the partnershipparent merger by ColonialPost Properties by written notice to MAA:
at any time prior to the approval of the parent merger and the other transactions contemplated by the merger agreement by the ColonialPost Properties shareholders, in order to enter into any alternative acquisition agreement with respect to a Superior Proposal; provided, that such termination will be null and void unless ColonialPost Properties concurrently pays the termination fee plus the expense reimbursement described below under “—Termination Fee and Expenses Payable by ColonialPost Properties to MAA”; or
if (i) the MAA Board has made a MAA board changeChange in recommendationRecommendation and ColonialPost Properties terminates the merger agreement within 10 business days of the date ColonialPost Properties receives notice of the change, or (ii) a MAA party has materially breached any of its obligations under the provisions of the merger agreement regarding no solicitation of transactions by the MAA parties (other than any immaterial or inadvertent breach thereof not intended to result in an acquisition proposal).
Termination by MAA
The merger agreement may also be terminated prior to the effective time of the partnershipparent merger by MAA by written notice to Colonial:Post Properties:
at any time prior to the approval of the parent merger and the other transactions contemplated by the merger agreement by the MAA shareholders, in order to enter into any alternative acquisition agreement with respect
agreement with respect to a Superior Proposal; provided, that such termination will be null and void unless MAA concurrently pays the termination fee plus the expense reimbursement described below under “—Termination Fee and Expenses Payable by MAA to Post Properties”; or |
if (i) the ColonialPost Properties Board has made a Colonial board changeChange in recommendationRecommendation and MAA terminates the merger agreement within 10 business days of the date MAA receives notice of the change, or (ii) a Colonial party has materially breached any of its obligations under the provisions of the merger agreement regarding no solicitation of transactions by the Colonial parties (other than any immaterial or inadvertent breach thereof not intended to result in an Acquisition Proposal).
Termination Fee and Expenses Payable by ColonialPost Properties to MAA
ColonialPost Properties has agreed to pay a termination fee of $75$117 million plus documented reasonable and necessary out-of-pocket expense actuallyexpenses incurred up to a maximum of $10 million if:
if all of the following events have occurred:
ColonialPost Properties receives an Acquisition Proposal with respect to ColonialPost Properties (provided that the references to “20%” and “80%” in the definition of “Acquisition Proposal” will be replaced with “50%“75%” for purposes of determining whether a termination fee is due and payable) that has been publicly announced prior to the date of the ColonialPost Properties special meeting or the date of the termination of the merger agreement, as applicable;
the merger agreement is terminated (i) by either MAA or ColonialPost Properties because (a) the mergers have not occurred by December 31, 2013February 28, 2017 or (b) either the MAA shareholders or the Colonial shareholders fail to approve the parent merger and the other transactions contemplated by the
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within 12 months after such termination, Colonial consummates a transaction regarding, or enters into a definitive agreement which is later consummated with respect to, an Acquisition Proposal; or
the merger agreement is terminated by Colonial at any time prior to the approval of the parent merger and the other transactions contemplated by the merger agreement by the Colonial shareholders in order to enter into any alternative acquisition agreement with respect to a Superior Proposal; or
the merger agreement is terminated by MAA because (i) the Colonial Board has made a Colonial board change in recommendation, or (ii) a Colonial party has materially breached any of its obligations under the provisions of the merger agreement regarding no solicitation of transactions by the Colonial parties (other than any immaterial or inadvertent breach thereof not intended to result in an Acquisition Proposal).
Colonial has agreed to pay documented reasonable and necessary out-of-pocket expenses actually incurred up to a maximum of $10 million if the merger agreement is terminated (i) by either Colonial or MAA because the ColonialPost Properties shareholders fail to approve the parent merger and the other transactions contemplated by the merger agreement at a duly convened meeting, or (ii) by MAA upon a material uncured breach by a ColonialPost Properties party of its representations, warranties, covenants or agreements set forth in the merger agreement.agreement, and in all cases, as of the date of the termination of the merger agreement, (A) no order or injunction has been issued by any governmental authority preventing the consummation of the mergers, (B) all conditions to the consummation of the mergers described above in “—Additional Closing Conditions for the Benefit of the Post Properties Parties” (other than the final bullet point in that section) have been satisfied (or are capable of being satisfied) and (C) the MAA shareholders have not failed to approve the parent merger and the other transactions contemplated by the merger agreement at a duly convened meeting; and
Further, Post Properties has agreed that if either:
Termination Fee
MAAbecause the Post Properties Board has agreed tomade a Change in Recommendation;
then Post Properties will pay a termination fee of $75(i) $58.5 million (if (A) Post Properties terminates the merger agreement on or prior to the end of the Initial Period (as defined below) pursuant to the first bullet point immediately above to enter into an alternative acquisition agreement with respect to a Superior Proposal, or (B) MAA terminates the merger agreement pursuant to the second bullet point immediately above if on or prior to the end of the Initial Period the Post Properties Board makes a Change in Recommendation or withdraws its recommendation in response to an alternative acquisition proposal) or (ii) $117 million (in any other circumstance), plus, in each case, documented reasonable and necessary out-of-pocket expense actuallyexpenses incurred up to a maximum of $10 million. For purposes herein, “Initial Period” means the later of (i) September 14, 2016 and (ii) one business day after the end of certain notice periods and “matching rights” (as described in “—No Solicitation of Transactions” above) in the event Post Properties has received, on or prior to September 14, 2016, an alternative acquisition proposal which the Post Properties Board determines to be a Superior Proposal.
Post Properties has agreed to pay documented reasonable and necessary out-of-pocket expenses incurred up to a maximum of $10 million if:
all of the following events have occurred:
MAA receives an Acquisition Proposal with respect to MAA (provided that the references to “20%” in the definition of “Acquisition Proposal” will be replaced with “50%” for purposes of determining whether a termination fee is due and payable) after the date of the merger agreement that has been publicly announced prior to the date of the MAA special meeting or the termination of the merger agreement, as applicable;
if the merger agreement is terminated (i) by either Post Properties or MAA or Colonial because (a) the mergers have not occurred by December 31, 2013, (b) either the MAA shareholders or the ColonialPost Properties shareholders fail to approve the parent merger and the other transactions contemplated by the merger agreement at a duly convened meetings,meeting.
Termination Fee and Expenses Payable by MAA to Post Properties
MAA has agreed to pay a termination fee of $245 million plus documented reasonable and necessary out-of-pocket expenses incurred up to a maximum of $10 million if all of the following events have occurred:
within 12 months after such termination, MAA consummates a transaction regarding, or enters into a definitive agreement which is later consummated with respect to, an Acquisition Proposal; orProposal.
Further, MAA has agreed that if either:
the merger agreement is terminated by MAA at any time prior to the approval of the parent merger and the other transactions contemplated by the merger agreement by the MAA shareholders in order to enter into any alternative acquisition agreement with respect to a Superior Proposal; or
the merger agreement is terminated by ColonialPost Properties because (i) the MAA Board has made a Change in Recommendation;
then MAA board change in recommendation, or (ii)will pay a termination fee of (i) $122.5 million (if (A) MAA party has materially breached any of its obligations under the provisions ofterminates the merger agreement regarding no solicitationon or prior to the end of transactionsthe Initial Period (as defined above in “—Termination Fee and Expenses Payable by Post Properties to MAA”) pursuant to the first bullet point immediately above to enter into an alternative acquisition agreement with respect to a Superior Proposal, or (B) Post Properties terminates the merger agreement pursuant to the second bullet point immediately above if on or prior to the end of the Initial Period the MAA parties (other thanBoard makes a Change in Recommendation or withdraws its recommendation in response to an alternative acquisition proposal) or (ii) $245 million (in any immaterial or inadvertent breach thereof not intendedother circumstance), plus, in each case, documented reasonable and necessary out-of-pocket expenses incurred up to result in an Acquisition Proposal).a maximum of $10 million.
MAA has agreed to pay documented reasonable and necessary out-of-pocket expenses actually incurred up to a maximum of $10 million if the merger agreement is terminated (i) by either ColonialPost Properties or MAA because the MAA shareholders fail to approve the parent merger and the other transactions contemplated by the merger agreement at a duly convened meeting, (ii) by either Colonial or MAA because the holders of limited partnership units in MAA LP failmeeting.
Payment of Expenses
Other than as described above under “—Termination of the Merger Agreement—Termination Fee and Expenses Payable by ColonialPost Properties to MAA” and “—Termination of the Merger Agreement—Termination Fee and Expenses Payable by MAA to Colonial,Post Properties,” the merger agreement provides that each party will pay its own fees and expenses in connection with the merger agreement.
Specific Performance
The parties to the merger agreement are entitled to seek injunctions, specific performance andor other equitable relief to prevent breaches of the merger agreement and to enforce specifically the terms and provisions of the merger agreement, without proof of damages or otherwise, in addition to any and all other remedies at law or in equity.
Amendment
The parties to the merger agreement may amend the merger agreement by an instrument in writing signed by each of the parties, which action must be taken or authorized by the respective boards of MAA Board and Colonial,the Post Properties Board, provided that, after approval of the merger agreement, the parent merger and the other transactions contemplated by the merger agreement by MAA’s shareholders, or the approval of the merger agreement, the parent merger and the other transactions contemplated by the merger agreement by Colonial’sPost Properties’ shareholders, or the approval of the partnership merger and the other transactions contemplated by the merger agreement by the holders of limited partnership units in MAA LP, no amendment may be made which by law requires further approval by such shareholders, or unitholders, as applicable, without such further approval.
Waiver
Prior to the effective time of the partnershipparent merger, MAA or Colonial,Post Properties, by action taken or authorized by their respective boards, may extend the time for performance of any obligations of the other or waive any inaccuracies in the representations and warranties of the other or the other party’s compliance with any agreements or conditions contained in the merger agreement.
Governing Law
The merger agreement is governed by the laws of the State of Delaware, without regard to any provisions relating to choice of laws among different jurisdictions, except that (i) the lawsprovisions of the StateGBCC and the TBCA applicable to the authorization, effectiveness and effects of Alabamathe parent merger and the provisions of the Georgia Revised Uniform Limited Partnership Act and the Tennessee Revised Uniform Limited Partnership Act applicable to the authorization, effectiveness and effects of the partnership merger will apply to the parent merger and the partnership merger, (ii) the applicable law of the State of Georgia will apply to the discharge of the fiduciary duties of the ColonialPost Properties Board, or any committeecommittees thereof, in connection with the merger agreement, and (ii)(iii) the lawsapplicable law of the State of Tennessee will apply to the parent merger and to the discharge of the fiduciary duties of the MAA Board, or any committeecommittees thereof, in connection with the merger agreement.
VOTING AGREEMENTSNO DISSENTERS’ RIGHTS
The following is a summary of selected material provisionsUnder Section 14-2-1302 of the Voting Agreements and is qualified in its entirety by referenceGBCC, holders of Post Properties common stock will have no right to dissent from the full textparent merger or to demand an appraisal of the Forms of Voting Agreement. This summary does not purport to be complete and may not contain all of the information about the Voting Agreements that may be important to you. You are encouraged to read each of the Forms of Voting Agreement carefully and their entirety. A copy of the Form of Voting Agreement entered into with certain trustees of Colonial is attached as Annex C to this joint proxy statement/prospectus and incorporated herein by reference. A copy of the Form of Voting Agreement entered into with certain directors and shareholders of MAA is attached as Annex D to this joint proxy statement/prospectus and incorporated herein by reference.
Concurrently with the execution of the merger agreement, Colonial and Colonial LP entered into separate Voting Agreements with H. Eric Bolton, Jr., MAA’s Chairman and Chief Executive Officer, W. Reid Sanders, a member of the MAA Board, and another shareholder of MAA who is not a director or officer of MAA, and MAA and MAA LP entered into separate Voting Agreements with Thomas H. Lowder, James K. Lowder and Harold W. Ripps, each members of the Colonial Board. As of August 20, 2013, the MAA directors and shareholders that are a party to a Voting Agreement with Colonial and Colonial LP collectively owned approximately 0.36% of the outstanding shares of MAAPost Properties common stock and approximately 37.37% ofbecause, among other things, the outstanding limited partnership units in MAA LP, and the Colonial trustees that are a party to a Voting Agreement with MAA and MAA LP collectively owned approximately 3.9% of the outstanding Colonial common shares and approximately 3.5% of the outstanding limited partnership units in Colonial LP (including limited partnership units held by Colonial).
MAA
Pursuant to the terms of the separate Voting Agreements entered into by H. Eric Bolton, Jr., W. Reid Sanders and another shareholder of MAA, subject to the terms and conditions contained in each Voting Agreement, each of Messrs. Bolton and Sanders and the other shareholder of MAA has separately agreed to vote all of his shares of MAAPost Properties common stock and limited partnership units in MAA LP, as applicable, whether currently owned or acquired at any time prior to the termination of the applicable Voting Agreement, in the following manners:
in favor of the parent merger;
in favor of the issuance of MAA common stock to be issued in the parent merger;
in favor of the partnership merger;
in favor of any amendment and restatement to the limited partnership agreement of MAA LP in connection with the partnership merger or the other transactions contemplated by the merger agreement;
against any other Acquisition Proposal for MAA;
against any action or agreement that would reasonably be expected to result in any closing condition contained in the merger agreement not being fulfilled; and
against any action that could reasonably be expected to impede, interfere with, materially delay, materially postpone or materially adversely affect consummation of the transactions contemplated by the merger agreement.
In addition, each of Messrs. Bolton and Sanders and the other shareholder of MAA has separately appointed and constituted Colonial (and certain designated representatives of Colonial), with full power of substitution, as his true and lawful attorneys-in-fact and irrevocable proxies to vote his shares of MAA common stock and limited partnership units in MAA LP, in accordance with the terms of the applicable Voting Agreement, which
proxy is effective only if the applicable shareholder fails to be counted as present, to consent or to vote his shares of MAA common stock and/or limited partnership units in MAA LP in accordance with the terms of the applicable Voting Agreement.
Colonial
Pursuant to the terms of the separate Voting Agreements entered into by Thomas H. Lowder, James K. Lowder and Harold W. Ripps, subject to the terms and conditions contained in each Voting Agreement, each of Messrs. T. Lowder, J. Lowder and Ripps has separately agreed to vote all of his Colonial common shares and limited partnership units in Colonial LP, as applicable, whether currently owned or acquired at any time prior to the termination of the applicable Voting Agreement, in the following manners:
in favor of the parent merger;
in favor of the partnership merger;
in favor of any amendment to the limited partnership agreement of Colonial LP proposed to facilitate the partnership merger or the other transactions contemplated by the merger agreement;
against any other Acquisition Proposal for Colonial;
against any action or agreement that would reasonably be expected to result in any closing condition contained in the merger agreement not being fulfilled; and
against any action that could reasonably be expected to impede, interfere with, materially delay, materially postpone or materially adversely affect consummation of the transactions contemplated by the merger agreement.
In addition, each of Messrs. T. Lowder, J. Lowder and Ripps has separately appointed and constituted MAA (and certain designated representatives of MAA), with full power of substitution, as his true and lawful attorneys-in-fact and irrevocable proxies to vote his Colonial common shares and limited partnership units in Colonial LP, in accordance with the terms of the applicable Voting Agreement, which proxy is effective only if the applicable shareholder fails to be counted as present, to consent or to vote his Colonial common shares and/or limited partnership units in Colonial LP in accordance with the terms of the applicable Voting Agreement.
Except as described above, nothing in the Voting Agreements limits the rights of the shareholder parties thereto to vote in favor of or against, or abstain with respect to, any matter presented to the shareholders or unitholders of MAA, MAA LP, Colonial or Colonial LP, as applicable. The separate Voting Agreements are entered into only in the individual’s capacity as a shareholder and unitholder and nothing in the Voting Agreements restricts, limits or affects in any respect any actions taken in such individual’s capacity as a director, trustee, officer or other fiduciary.
Under the terms of the Voting Agreements, each of the shareholder parties thereto has agreed that prior to the termination of the applicable Voting Agreement, he shall not, subject to certain limited exceptions:
directly or indirectly transfer (by operation of law or otherwise), either voluntarily or involuntarily, any (or any interests convertible into) shares of MAA common stock, limited partnership units in MAA LP, Colonial common shares or limited partnership units in Colonial LP, as applicable;
enter into any contract, option or other arrangement or understanding with respect to any transfer (by operation of law or otherwise) of any (or any interests convertible into) shares of MAA common stock, limited partnership units in MAA LP, Colonial common shares or limited partnership units in Colonial LP, as applicable;
enter into any swap or any other agreement, transaction or series of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of MAA common stock, limited partnership units in MAA LP, Colonial common shares or limited partnership units in Colonial LP, as applicable; and
deposit any shares of MAA common stock, limited partnership units in MAA LP, Colonial common shares or limited partnership units in Colonial LP, as applicable, into a voting trust or enter into a voting agreement or arrangement with respect to any such shares or limited partnership units, or grant any proxy or power of attorney with respect to any such shares or limited partnership units.
Termination of Voting Agreements
MAA
The separate Voting Agreements entered into by H. Eric Bolton, Jr., W. Reid Sanders and the other shareholder of MAA terminate upon the earlier to occur of:
the later to occur of (A) the approval and adoption of the merger agreement at the MAA special meeting, and (B) the approval of the merger agreement by the holders of limited partnership units in MAA LP; and
the termination of the merger agreement pursuant to its terms.
Colonial
The separate Voting Agreements entered into by Thomas H. Lowder, James K. Lowder and Harold W. Ripps terminate upon the earlier to occur of:
the approval and adoption of the merger agreement at the Colonial special meeting; and
the termination of the merger agreement pursuant to its terms.
COMPARATIVE STOCK PRICES AND DIVIDENDS
Shares of MAA common stock and Colonial common shares are traded on the NYSE under the symbols “MAA” and “CLP”, respectively. The following table presents trading information for MAA common stock and Colonial common shares on May 31, 2013, the last trading day before the execution of the merger agreement, and August 20, 2013, the latest practicable trading day before the date of this joint proxy statement/prospectus.
| MAA Common Stock | Colonial Common Shares | |||||||||||||||||||||||
Date | High | Low | Close | High | Low | Close | ||||||||||||||||||
May 31, 2013 | $ | 69.14 | $ | 67.92 | $ | 67.97 | $ | 22.47 | $ | 22.08 | $ | 22.11 | ||||||||||||
August 20, 2013 | $ | 62.49 | $ | 60.88 | $ | 62.26 | $ | 22.58 | $ | 21.96 | $ | 22.58 | ||||||||||||
For illustrative purposes, the following table provides Colonial equivalent per share information on each of the specified dates. Colonial equivalent per share amounts are calculated by multiplying MAA per share amounts by the exchange ratio of 0.360.
| MAA Common Stock | Colonial Equivalent Per Share | |||||||||||||||||||||||
Date | High | Low | Close | High | Low | Close | ||||||||||||||||||
May 31, 2013 | $ | 69.14 | $ | 67.92 | $ | 67.97 | $ | 24.89 | $ | 24.45 | $ | 24.47 | ||||||||||||
August 20, 2013 | $ | 62.49 | $ | 60.88 | $ | 62.26 | $ | 22.50 | $ | 21.92 | $ | 22.41 | ||||||||||||
Market Prices and Dividend Data
The following tables set forth the high and low sales prices of MAA common stock and Colonial common shares as reportedlisted on the NYSE and the quarterly cash dividends declared per share, for each of the quarterly periods indicated.
MAA
| High | Low | Dividend | ||||||||||
2011 | ||||||||||||
First Quarter | $ | 65.00 | $ | 60.41 | $ | 0.6275 | ||||||
Second Quarter | 68.62 | 62.12 | 0.6275 | |||||||||
Third Quarter | 73.36 | 57.04 | 0.6275 | |||||||||
Fourth Quarter | 63.62 | 55.10 | 0.6275 | |||||||||
2012 | ||||||||||||
First Quarter | $ | 67.11 | $ | 57.96 | $ | 0.66 | ||||||
Second Quarter | 70.22 | 64.67 | 0.66 | |||||||||
Third Quarter | 70.21 | 64.81 | 0.66 | |||||||||
Fourth Quarter | 66.68 | 60.38 | 0.66 | |||||||||
2013 | ||||||||||||
First Quarter | $ | 70.84 | $ | 64.54 | $ | 0.695 | ||||||
Second Quarter | 74.94 | 60.88 | 0.695 | |||||||||
Third Quarter (through August 20, 2013) | 69.99 | 60.72 | 0.695 | |||||||||
Colonial
| High | Low | Dividend | ||||||||||
2011 | ||||||||||||
First Quarter | $ | 20.05 | $ | 17.96 | $ | 0.15 | ||||||
Second Quarter | 21.37 | 18.60 | 0.15 | |||||||||
Third Quarter | 22.00 | 16.84 | 0.15 | |||||||||
Fourth Quarter | 21.18 | 16.24 | 0.15 | |||||||||
2012 | ||||||||||||
First Quarter | $ | 21.88 | $ | 20.14 | $ | 0.18 | ||||||
Second Quarter | 22.75 | 20.48 | 0.18 | |||||||||
Third Quarter | 23.64 | 20.67 | 0.18 | |||||||||
Fourth Quarter | 22.83 | 19.66 | 0.18 | |||||||||
2013 | ||||||||||||
First Quarter | $ | 23.05 | $ | 21.24 | $ | 0.21 | ||||||
Second Quarter | 24.96 | 21.49 | 0.21 | |||||||||
Third Quarter (through August 20, 2013) | 25.27 | 21.86 | 0.21 | |||||||||
Because the exchange ratio will not be adjusted for changes in the market price of either shares of MAA common stock or Colonial common shares, the market value of the shares of MAA common stock that holders of Colonial common shares will have the right to receive on the date the mergers are completed may vary significantly from the market value of the shares of MAA common stock that holders of Colonial common shares would receive if the mergers were completed on the date of this joint proxy statement/prospectus. As a result, you should obtain recent market prices of shares of MAA common stock and Colonial common shares prior to voting your shares. See “Risk Factors—Risk Factors Relating to the Mergers” beginning on page 32.
As provided in Section 10A-10-1.15 of the AREITL, if the parent merger is consummated, holders of Colonial common shares who follow the procedures specified by Article 13 of the ABCL will be entitled to determination and payment in cash of the “fair value” of their shares (as determined immediately before the effective time of the parent merger), excluding any appreciation or depreciation in value in anticipation of the parent merger, unless such exclusion would be inequitable, but including interest fromat the effective time of the parent merger untileach outstanding share of Post Properties common stock will be converted into the dateright to receive shares of payment.
MAA common stock as merger consideration. Additionally, under SectionThe following summary14-2-1302 of the provisionsGBCC, holders of Article 13 of the ABCL is not intended to be a complete statement of such provisions (the full text of which is attached as Annex H to this joint proxy statement/prospectus), and is qualified in its entirety by reference thereto.
Post Properties Series A holder of Colonial common shares electing to exercise dissenters’ rights (1) must deliver to Colonial at 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35203, Attention: Corporate Secretary, before the vote at the Colonial special meeting is taken, written notice of his or her intent to demand payment for his or her shares if the parent merger is effectuated, and (2) must not vote in favor of the parent merger.A vote in favor of the parent merger by a holder of Colonial common sharespreferred stock will result in the waiver of such shareholder’shave no right to demand payment for his or her shares.
The requirement of written notice to Colonial is in addition to and separatedissent from the requirement that such shares not be voted in favor of the parent merger, and the requirement of written notice is not satisfied by voting against the parent merger either in person or by proxy. The requirement that shares not be voted in favor of the parent merger will be satisfied if no proxy is returned and the shares are not voted in person. Because a properly executed and delivered proxy which is left blank will, unless revoked, be voted “FOR” approval of the parent merger, in order to be assured that his or her shares are not voted in favor of the parent merger, a dissenting shareholder who votes by proxy must not leave the proxy blank but must (1) vote “AGAINST” the approval of the parent merger or (2) affirmatively “ABSTAIN” from voting. Neither a vote against approval of the parent merger nor an abstention will satisfy the requirement that a written notice of intent to demand payment be deliveredan appraisal of their shares of Post Properties Series A preferred stock because, among other things, (i) holders of Post Properties Series A preferred stock have no right to Colonial before the vote on the parent merger.
A record shareholder may assert dissenters’ rights as to fewer than all ofmerger, (ii) the shares registered in his or her name only if he or she dissents with respect to all shares beneficially owned by any one personof Post Properties Series A preferred stock are listed on the NYSE, and notifies Colonial in writing of(iii) the name and address of each person on whose behalf he or she asserts dissenters’ rights. A beneficial shareholder of Colonial may assert dissenters’ rights as to shares held on his or her behalf only if he or she submits to Colonial the record shareholder’s written consent to the dissent prior to or contemporaneously with such assertion and he or she does so with respect to all shares of which he or she is the beneficial shareholder or over which he or she has the power to vote.Where no number of shares is expressly mentioned, the notice of intent to demand payment will be deemed to cover all shares held in the name of the record holder.
No later than 10 days after the parent merger, the Combined Corporation will send a written dissenters’ notice to each dissenting shareholder who did not vote in favor of the parent merger and who duly filed a written notice of intent to demand payment in accordance with Article 13 of the ABCL. The dissenters’ notice will specify, among other things, the deadline by which time the Combined Corporation must receive a payment demand from the dissenting shareholders and will include a form for demanding payment. The deadline to submit a dissenting shareholder’s payment demand will be no fewer than 30 days and no more than 60 days after the date the dissenters’ notice is delivered.It is the obligation of any dissenting shareholder to initiate all necessary action to perfect his or her dissenters’ rights within the time periods prescribed in Article 13 of the ABCL and the dissenters’ notice. If no payment demand is timely received from a dissenting shareholder in the manner set forth in the dissenters’ notice and under Article 13 of the ABCL, all dissenters’ rights of such dissenting shareholder will be lost, notwithstanding any previously submitted written notice of intent to demand payment.
Each dissenting shareholder who timely demands payment will retain all other rights of a shareholder unless and until those rightsMAA Series I preferred stock that are cancelled or modified by the parent merger. A dissenting shareholder who demands payment in accordance with the foregoing may not thereafter withdraw that demand and accept the terms offered under the parent merger unless the Combined Corporation consents thereto.
Within 20 days of making a formal payment demand, the dissenting shareholder must submit his or her share certificate or certificates to the Combined Corporation so that a notation indicating that demand has been made may be placed on such certificate or certificates and the certificate or certificates returned to the dissenting shareholder with the notation thereon.A shareholder’s failure to submit his or her certificate or certificates for notation will, at the Combined Corporation’s option, terminate the holder’s rights as a dissenter, unless a court of competent jurisdiction, for good and sufficient cause, directs otherwise.
Promptly after the parent merger, or upon receipt of a payment demand, the Combined Corporation shall offer to pay each dissenting shareholder who complied with Article 13 of the ABCL the amount the Combined Corporation estimates to be the fair value of such dissenting shareholder’s shares plus accrued interest. Each dissenting shareholder who agrees to accept the offer of paymentissued by MAA in full satisfaction of his or her demand must surrender to the Combined Corporation the certificate or certificates representing his or her shares in accordanceconnection with the terms of the dissenters’ notice. Upon receiving the certificate or certificates, the Combined Corporation will pay each accepting dissenting shareholder the fair value of his or her shares, plus accrued interest. Upon receiving payment, each dissenting shareholder ceases to have any interest in the shares.
Each dissenting shareholder who has made a payment demand may notify the Combined Corporation in writing of his or her own estimate of the fair value of his or her shares and the amount of interest due, and demand payment of his or her estimate, or reject the offer made to such shareholder by the Combined Corporation and demand payment of the fair value of his or her shares and interest due, if: (1) the dissenting shareholder believes that the amount offered by the Combined Corporation is less than the fair value of the shares or that the interest due is calculated incorrectly; (2) the Combined Corporation fails to make an offer as required by Article 13 of the ABCL within 60 days after the date set for demanding payment or (3) the Combined Corporation fails to take the proposed action and to remove the notation on the shareholder’s certificates within 60 days after the date set for demanding payment; provided, however, a dissenting shareholder waives the right to demand payment different from that offered by the Combined Corporation unless he or she notifies the Combined Corporation of his or her demand in writing within 30 days after the Combined Corporation offered payment for his or her shares.
If a demand for payment remains unsettled, the Combined Corporation must commence a proceeding within 60 days after receiving a dissenting shareholder’s payment demand and petition the court to determine the fair value of the shares and accrued interest. If the proceeding is not commenced within the 60 day period, each dissenting shareholder whose demand remains unsettled shall be entitled to receive the amount such dissenting shareholder demanded. Such a proceeding will be filed in the Circuit Court of Montgomery County, Alabama. The Combined Corporation will make all dissenting shareholders whose demands remain unsettled, whether or not residents of Alabama, parties to the proceeding as in an action against their shares, and all parties must be served with a copy of the petition.
Each dissenting shareholder made a party to the proceeding is entitled to judgment for the amount the court finds to be the fair value of his or her shares, plus accrued interest. Upon payment of the judgment and surrender to the Combined Corporation of the certificate or certificates representing the judicially appraised shares, a dissenting shareholder will cease to have any interest in the shares. The court may assess costs incurred in such a proceeding against the Combined Corporation or may assess the costs against all or some of the dissenting shareholders, in amounts the court finds equitable, to the extent the court finds that such dissenting shareholders acted arbitrarily, vexatiously or not in good faith in demanding payment different from that initially offered by the Combined Corporation. The court may also assess the reasonable fees and expenses of counsel and experts against the Combined Corporation if the court finds that it did not substantially comply with its requirements
regarding providing notice of dissenters’ rights and the procedures associated therewith under Article 13 of the ABCL or against either the Combined Corporation or all or some of the dissenting shareholders if the court finds that such party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided in Article 13 of the ABCL. If the court finds that services of counsel for any dissenting shareholder were of substantial benefit to other similarly situated dissenting shareholders, and that fees for such services should not be assessed against the Combined Corporation, then the court may award reasonable fees to such counsel that will be paid out of the amounts awarded to dissenting shareholders who benefited from such services.
Shareholders considering seeking appraisal should be aware that the fair value of their shares as so determined could be more than, the same as or less than the consideration they would receive pursuant to the parent merger if they did not seek appraisal of their shares and that investment banking opinions as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the parent merger are not opinions asalso listed on the NYSE and are identical in type and exchange ratio per share to and do not otherwise address, fair value under Article 13the shares of Post Properties Series A preferred stock.
Under Section 48-23-102 of the ABCL.
TBCA, holders of MAA shareholderscommon stock will have no right to dissent from the parent merger or to demand an appraisal of their shares of MAA common stock.stock because the shares of MAA common stock are listed on the NYSE.
The following is a summary of some of the terms of MAA’s capital stock and should be read in conjunction with the section entitled “Comparison of Rights of Shareholders of MAA charter, as further amended, MAA’s amended and restated bylaws, or the MAA bylaws, and certain provisionsShareholders of the Tennessee Business Corporation Act, or the TBCA.Post Properties” beginning on page 183. You should read the MAA charter, and the MAA bylaws and the applicable provisions of Tennessee lawthe TBCA for complete information on MAA’s capital stock. The following summary isdoes not purport to be complete and is subject to, and qualified in its entirety by reference to, the relevant provisions of the MAA charter, the MAA bylaws and bylaws.the TBCA. To obtain copies of these documents,the MAA charter and the MAA bylaws, see “Where You Can Find More Information” beginning on page 205.201.
The description of MAA capital stock in this section applies to the capital stock of the Combined Corporation after the parent merger. For additional information, see “Comparison of Rights of Shareholders of MAA and Shareholders of Colonial” beginning on page 186.
As of the date of this joint proxy statement/prospectus, MAA’s authorized capital stock consists of 100,000,000 shares of common stock, par value $0.01 per share, and 20,000,000 shares of preferred stock.stock, par value $0.01 per share. Subject to MAA shareholder approval of the MAA charter amendment proposal, MAA’s authorized capital stock will consist of 145,000,000 shares of common stock, par value $0.01 per share, and 20,000,000 shares of preferred stock, par value $0.01 per share.
As of August 22, 2013,September 26, 2016, the record date for the MAA special meeting, MAA had 42,740,45075,541,759 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. Upon consummation of the parent merger, the Combined Corporation is expected to have approximately 76,308,419113,533,146 shares of common stock issued and outstanding and no867,846 shares of preferred stock issued and outstanding.outstanding, which shares of preferred stock will be the shares of MAA Series I preferred stock to be issued in connection with the parent merger.
Holders of shares of MAA common stock are entitled to one vote per share on all matters to be voted on by common shareholders and, subject to any preferential rights granted by the MAA Board to any series of preferred stock then outstanding, are entitled to receive ratably such dividends as may be declared in respect of the common stock by the MAA Board in its discretion from funds legally available therefor. In the event of MAA’s liquidation, dissolution or winding-up, holders of common stock are entitled to share ratably in all assets remaining after payment of all debts and other liabilities and any liquidation preference payable on MAA’s then-outstanding preferred stock. Holders of MAA common stock have no preference,preferential, subscription, redemption, conversion, exchange, sinking fund or preemptive rights. Subject to the voting rights, if any, of any preferred stock outstanding at the time of a shareholder vote, action on a matter submitted for shareholder approval at a shareholders’ meeting, (other than theincluding an uncontested election of directors)directors, is generally approved if the votes cast by the holders of common stock in favor of the action exceed the votes cast opposing the action, whileaction. In a contested election, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election.vote. Holders of shares of MAA common stock do not have cumulative voting rights in the election of MAA’s directors. This means that the holders of a majority of the outstanding shares of MAA common stock will generally be entitled, subject to the rights, if any, of any preferred stock outstanding at any time to vote in the election of directors, to elect all of MAA’s directors standing for election. The outstanding shares of MAA common stock are fully paid and nonassessable, and the shares of MAA common stock to be issued in connection with the parent merger will be fully paid and nonassessable.
Shares of MAA common stock are subject to restrictions on ownership and transfer designed to preserve MAA’s qualification as a REIT for U.S. federal income tax purposes. See “—Certain Matters of Corporate Governance—Ownership Limitations” below.
Under the MAA charter, the MAA Board is authorized, without shareholder action, to cause the issuance of up to 20,000,000 shares of preferred stock, in such series, and with such preferences, dividend, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or other provisions, as may be fixed by the
MAA Board. As a result, the MAA Board may afford the holders of any series of preferred stock preferences, powers, and rights, voting or otherwise, that may dilute or otherwise adversely affect the economic, voting and other rights of holders of MAA common stock and may also provide any series of preferred stock with preferences over MAA common stock as to dividends and the distribution of assets in the event of MAA’s liquidation, dissolution or winding-up.
Although no shares of MAA preferred stock isare outstanding as of the date of this joint proxy statement/prospectus, MAA has from time-to-time in the past issued series of preferred stock and may do so again in the future.stock. In particular, the MAA Board has previously designated and established the terms of the following series of preferred stock:
2,000,000 shares of 9.5% Series A Cumulative Preferred Stock, none of which no shares are outstanding;
2,156,250 shares of 8.875% Series B Cumulative Preferred Stock, none of which no shares are outstanding;
2,000,000 shares of 9.375% Series C Cumulative Redeemable Preferred Stock, none of which no shares are outstanding;
1,000,000 shares of 9.5% Series E Cumulative Redeemable Preferred Stock, none of which no shares are outstanding;
3,000,000 shares of 9.25% Series F Cumulative Redeemable Preferred Stock, none of which no shares are outstanding;
400,000 shares of 8.625% Series G Cumulative Redeemable Preferred Stock, none of which no shares are outstanding; and
6,200,000 shares of 8.30% Series H Cumulative Redeemable Preferred Stock, none of which no shares are outstanding.
MAA has redeemed or retired all of the foregoing shares of the preferred stock referred tothat MAA issued in the foregoing bullet points.past. However, under Tennessee law, thesethe TCBA, those previously issued shares, although no longer outstanding, are still allocated to the respective series referred to above and therefore cannot (absent an appropriate amendment to the MAA charter) be reissued except as a part of such series and with the dividend rate and other terms and provisions of such series previously established by the MAA Board.
In addition, in connection with the parent merger, and as further described below, the MAA Board has designated 868,000 shares of MAA Series I preferred stock, 867,846 of which are expected to be issued and outstanding upon consummation of the parent merger.
Accordingly, as of the date of this joint proxy statement/prospectus, of the 20,000,000 shares of preferred stock that MAA is authorized to issue pursuant to the MAA charter, a total of 16,756,25017,624,250 of those shares have been allocated collectively to the respective series set forth in the bullet points above and the MAA Series I preferred stock to be issued in connection with the parent merger, leaving 3,243,7502,375,750 shares of preferred stock that may be issued from time-to-timetime to time in such amounts and series and with such terms and provisions as may be established from time-to-timetime to time by the MAA Board.
Shares of MAA preferred stock are subject to restrictions on ownership and transfer designed to preserve MAA’s qualification as a REIT for U.S. federal income tax purposes. See “—MAA Series I Preferred Stock—Restrictions on Ownership” and “—Certain Matters of Corporate Governance—Ownership Limitations” below.
The terms and provisions of the shares of MAA Series I preferred stock to be issued in connection with the parent merger will be stated in articles of amendment to the MAA charter designating and fixing the rights and preferences of the MAA Series I preferred stock, which is referred to herein as the MAA Series I preferred stock designating amendment. The MAA Series I preferred stock designating amendment will be filed prior to the parent merger, and the form of the MAA Series I preferred stock designating amendment is attached as Annex C to this joint proxy statement/prospectus and is incorporated herein by reference. MAA Series I preferred stock will have the same rights, preferences, privileges and voting powers as the Post Properties Series A preferred stock. The summary below describes the material terms and provisions of the shares of MAA Series I preferred stock to be issued in connection with the parent merger. This summary, however, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the MAA Series I preferred stock designating amendment.
Ranking
With respect to rights to receive dividends and to participate in distributions of payments in the event of a dissolution, liquidation or winding up of the affairs of MAA, the MAA Series I preferred stock will rank senior to MAA common stock and to any other class or series of MAA capital stock designated as ranking junior to the MAA Series I preferred stock.
Dividends
Holders of shares of MAA Series I preferred stock will be entitled to receive, when and as declared by the MAA Board out of funds legally available for the payment of dividends, cumulative cash dividends at the rate of $4.25 per share per year. Such dividends will accrue and be cumulative from the date of original issue and will be payable quarterly in arrears on or about the last day of each March, June, September and December or, if not a business day, the succeeding business day, with each such day being referred to herein as a dividend payment date. The first dividend on shares of MAA Series I preferred stock will be paid on the first dividend payment date that occurs following the parent merger. Any dividend payable on the shares of MAA Series I preferred stock for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in MAA’s share records at the close of business on the applicable record date, which will be the 15th day of the calendar month in which the applicable dividend payment date falls or such other date designated by the MAA Board for the payment of dividends that is not more than 30 nor less than 10 days prior to such dividend payment date.
No dividends on shares of MAA Series I preferred stock will be declared by the MAA Board or be paid or set apart for payment by MAA at such time as the terms and provisions of any agreement of MAA, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment will be restricted or prohibited by law.
Notwithstanding the foregoing, dividends on shares of MAA Series I preferred stock will accrue whether or not MAA has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accrued but unpaid dividends on shares of MAA Series I preferred stock will not bear interest and holders of shares of MAA Series I preferred stock will not be entitled to any dividends in excess of full cumulative dividends as described above.
Any dividend payment made on shares of MAA Series I preferred stock will first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.
Liquidation Preference
In the event of any dissolution, liquidation or winding up of the affairs of MAA, the holders of shares of MAA Series I preferred stock will be entitled to be paid out of the assets of MAA legally available for
distribution to its shareholders liquidating distributions in cash or property, at its fair market value as determined by the MAA Board, in the amount of a liquidation preference of $50.00 per share plus an amount equal to any accrued and unpaid dividends to the date of such liquidation, dissolution or winding up, before any distribution of assets is made to holders of shares of MAA common stock or any other MAA capital shares that rank junior to shares of MAA Series I preferred stock as to liquidation rights. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of shares of MAA Series I preferred stock will have no right or claim to any of the remaining assets of MAA. The consolidation or merger of MAA with or into any other entity or the sale, lease, transfer or conveyance of all or substantially all of the property or business of MAA will not be deemed to constitute a dissolution, liquidation or winding up of MAA.
Redemption
Shares of MAA Series I preferred stock will not be redeemable prior to October 1, 2026. On and after October 1, 2026, MAA, at its option, may redeem the MAA Series I preferred stock, in full or in part, at any time or from time to time, in cash at a redemption price of $50.00 per share, together with accrued and unpaid dividends thereon to the date fixed for redemption (except as provided below), without interest, to the extent MAA has funds legally available therefor. The redemption price of shares of MAA Series I preferred stock, but not including any accrued and unpaid dividends thereon, must be paid solely from the sale proceeds of other MAA capital stock, which for this purpose could include any 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. Holders of shares of MAA Series I preferred stock to be redeemed must surrender such shares at the place designated in such notice and will be entitled to the redemption price and any accrued and unpaid dividends payable upon such redemption following such surrender. If notice of redemption of any shares of MAA Series I preferred stock has been given and if the funds necessary for such redemption have been set aside by MAA in trust for the benefit of the holders of shares of MAA Series I preferred stock so called for redemption, then from and after the redemption date dividends will cease to accrue on such shares, such shares will no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. If fewer than all of the outstanding shares of MAA Series I preferred stock are to be redeemed, the shares of MAA Series I preferred stock to be redeemed will be selected pro rata, as nearly as may be practicable without creating fractional shares, or by any other equitable method determined by MAA.
Notice of redemption must be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two consecutive weeks commencing not less than 30 nor more than 60 days prior to the redemption date. A similar notice furnished by MAA must also be mailed by the registrar for the MAA Series I preferred stock, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of shares of MAA Series I preferred stock to be redeemed at their respective addresses as they appear on the registrar’s share transfer records. No failure to give such notice or any defect therein or in the mailing thereof will affect the validity of the proceedings for the redemption of any shares of MAA Series I preferred stock except as to the holder to whom notice was defective or not given. Each notice must state: (i) the redemption date; (ii) the redemption price; (iii) the number of shares of MAA Series I preferred stock to be redeemed; (iv) the place or places where such shares of MAA Series I preferred stock are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on the redemption date. If fewer than all shares of MAA Series I preferred stock held by any holder are to be redeemed, the notice mailed to such holder must also specify the number of shares to be redeemed from such holder.
Unless full accumulated dividends on all shares of MAA Series I preferred stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no MAA Series I preferred stock may be redeemed, except by conversion into or exchange for shares of MAA common stock or any other class or series of MAA capital stock expressly designated as ranking junior to the MAA Series I preferred stock, and
except that the foregoing restriction will not prevent the redemption of shares of MAA Series I preferred stock to preserve MAA’s REIT status or the purchase or acquisition of shares of MAA Series I preferred stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of MAA Series I preferred stock.
The holders of shares of MAA Series I preferred stock at the close of business on a dividend record date will be entitled to receive the dividend payable with respect to those shares on the corresponding dividend payment date, notwithstanding a redemption thereof between the dividend record date and the corresponding dividend payment date or MAA’s default in the payment of the dividend due. Except as provided above, MAA will make no payment or allowance for unpaid dividends, whether or not in arrears, on shares of the MAA Series I preferred stock to be redeemed.
The MAA Series I preferred stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption provisions, except as provided under “—MAA Series I Preferred Stock—Restrictions on Ownership” below.
Voting Rights
Except as expressly indicated below, or except as otherwise from time to time required by applicable law, the holders of shares of MAA Series I preferred stock will have no voting rights.
If dividends on shares of MAA Series I preferred stock are in arrears for six or more quarterly periods, whether or not such quarterly periods are consecutive, holders of shares of MAA Series I preferred stock, voting separately as a class with shares of all other series of preferred stock upon which like voting rights have been conferred and are exercisable, will be entitled to vote for the election of two additional directors to serve on the MAA Board until all dividend arrearages have been paid.
In addition, so long as any shares of MAA Series I preferred stock remain outstanding, MAA may not, without the affirmative vote or consent of holders of at least two-thirds of the shares of MAA Series I preferred stock outstanding at the time: (i) authorize or create, or increase the authorized or issued amount of, any class or series of shares of capital stock ranking prior to the MAA Series I preferred stock with respect to the payment of dividends or the distribution of assets upon dissolution, liquidation or winding up or reclassify any authorized shares into such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares; or (ii) subject to the next two sentences, amend, alter or repeal the provisions of the MAA charter, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the MAA Series I preferred stock. With respect to the occurrence of any of the events set forth in the preceding clause (ii), so long as the MAA Series I preferred stock remains outstanding with its terms materially unchanged, taking into account that upon the occurrence of such an event, MAA may not be the surviving entity, the occurrence of any such event will not be deemed to materially and adversely affect the any right, preference, privilege or voting power of the MAA Series I preferred stock. Likewise, any increase in the amount of authorized MAA preferred stock or the creating or issuance of any other series of MAA preferred stock, or any increase in the amount of authorized shares of MAA Series I preferred stock or any other series of MAA preferred stock, in each case ranking on a parity with or junior to the MAA Series I preferred stock with respect to payment of dividends or the distribution of assets upon dissolution, liquidation or winding up, will not be deemed to materially and adversely affect any right, preference, privilege or voting power of the MAA Series I preferred stock.
On any matter on which shares of the MAA Series I preferred stock are entitled to vote, as expressly provided above or as may be required by applicable law, each share of MAA Series I preferred stock will be entitled to one vote. With respect to each share of MAA Series I preferred stock, the holder thereof may designate a proxy, with each such proxy having the right to vote on behalf of such holder.
Conversion
Shares of MAA Series I preferred stock are not convertible into or exchangeable for any other property or securities of MAA.
Restrictions on Ownership
For MAA to qualify as a REIT under the Code, among other things, no more than 50% in value of MAA’s outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer shareholders (as defined in the Code to include certain entities) during the last half of a taxable year, and such capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. To enable MAA to continue to meet the requirements for qualification as a REIT, the MAA charter contains restrictions on ownership and transfer of its common stock and preferred stock that are designed to ensure compliance with these requirements. See “—Certain Matters of Corporate Governance—Ownership Limitations” below. In addition to such general restrictions, there are also restrictions set forth in the MAA Series I preferred stock designating amendment, which restrictions are described below.
Subject to certain limited exceptions, no person who is an “individual” within the meaning of Section 542(a)(2) of the Code may acquire ownership, after taking into account the applicable constructive ownership provisions of the Code, more than 6% of the outstanding shares of MAA Series I preferred stock, which is referred to herein as the Series I preferred stock ownership limit. Under the constructive ownership rules, shares of MAA Series I preferred stock owned by an entity, including a corporation, life insurance company, mutual fund or pension trust, are treated as owned by the ultimate individual beneficial owners of the entity. The Series I preferred stock ownership limit may be increased from time to time by the MAA Board, subject to certain limitations.
If any holder purports to transfer shares of MAA Series I preferred stock to a person and either the transfer would result in MAA failing to qualify as a REIT, or the holder knows that such transfer would cause the transferee to hold more than the Series I preferred stock ownership limit, the purported transfer will be null and void as to that number of shares the transfer of which would cause the violation, and the holder will be deemed not to have transferred such excess shares. In addition, if any person holds shares of MAA Series I preferred stock in excess of the Series I preferred ownership limit, such person will be deemed to hold the shares that cause the limit to be exceeded in trust for MAA, and will not receive dividends or distributions with respect to such shares and will not be entitled to exercise any voting rights with respect to such shares. In addition, such person will be required to sell such shares to MAA for the lesser of the amount paid for the shares or the average of the last reported sales prices for the ten trading days immediately preceding the redemption, or to sell such shares at the direction of MAA, in which case MAA must be paid for its expenses in connection with the sale plus any remaining amount of sale proceeds that exceeds the amount such person paid for the shares.
Each person who owns any shares of MAA Series I preferred stock, after taking into account the applicable constructive ownership provisions of the Code, and any person who holds shares of MAA Series I preferred stock for any such owner, will be required to provide MAA such information as MAA may request in good faith to determine MAA’s status as a REIT.
Power to Issue Additional Shares of Common and Preferred Stock
MAA may issue additional shares of common stock or shares of preferred stock in one or more series and classify and issueestablish the terms of each additional series of preferred stock. These actions can generally be taken without action or approval by MAA’s shareholders, unlessalthough in certain limited circumstances shareholder approval ismay be required by applicable law or rule of anya stock exchange or automated quotation system on which MAA stock may be listed or traded. Accordingly, MAA may issue a classadditional shares of common stock, or shares of one or more series of preferred
stock, that could delay, defer or prevent a transaction or a change in control of MAA that that might involve a premium price for MAA commoncapital stock or that the holders of MAA commoncapital stock otherwise believe to be in their best interest. MAA’s issuance of additional shares of capital stock in the future could dilute the voting and other rights of shares held by existing shareholders.
Certain Matters of Corporate Governance
Charter and Bylaw Provisions
The TBCA, the MAA charter and the MAA bylaws govern MAA shareholders’ rights and related matters. Certain provisions of the MAA charter and MAA bylaws, which are described below, may make it more difficult to change the composition of the MAA Board and may discourage or make more difficult any attempt by a person or group to obtain control of MAA.
Voting Requirement
Under the TBCA, the MAA charter generally may not be amended without shareholder approval. Except as provided below and subject to the voting rights, if any, of any preferred stock outstanding at the time of a shareholder vote, any amendment to the MAA charter submitted for shareholder approval at a shareholders’ meeting is generally approved if it receives the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote generally on the subject matter. Additionally, the MAA charter provides that the MAA Board cannot take any action intended to terminate MAA’s qualification as a REIT without the affirmative vote of at least two-thirds of the outstanding shares of common stock.
Under the TBCA, MAA’s shareholders may amend the MAA bylaws if the number of votes cast in favor of the amendment exceeds the number of votes cast against the amendment. Additionally, MAA’s directors may amend the MAA bylaws upon the affirmative vote of a majority of the directors then in office, unless thea bylaw provision approved by MAA’s shareholders prescribeexpressly provides that any such bylaw may not be amended or repealed by the MAA Board or unless the TBCA or the MAA charter otherwise provides.
Under the TBCA, MAA cannot merge with and into another entity or sell all or substantially all of its assets under such merger or sale is approved by a majority of the then outstanding shares of MAA’s common stock.
Special Meetings
Under the MAA bylaws, shareholders may require MAA to call special meetings of the shareholders only if such shareholders hold outstanding shares representing more than 10% of all votes entitled to be cast at any such special meeting.
Advance Notice of Director Nominations and New Business
The MAA bylaws provide that with respect to an annual meeting of shareholders, nominations of persons for election to the MAA Board and the proposal of other business to be considered by shareholders may be made only (i) by or at the direction of the MAA Board or (ii) by any MAA shareholder whowho: (A) was a shareholder of record at the time of giving the notice as provided for in the MAA bylaws and at the time of the annual meeting,meeting; (B) is entitled to vote at the meeting,meeting; and (C) has complied with the advance notice procedures set forth in the MAA bylaws. In addition, with respect to any special meeting of shareholders at which directors are to be elected, nominations of persons for election to the MAA Board may be made only (i) by or at the direction of the MAA Board or (ii) by any MAA shareholder whowho: (A) was a shareholder of record at the time of giving the notice as provided for in the MAA bylaws and at the time of the special meeting,meeting; (B) is entitled to vote at the meeting,meeting; and (C) has complied with the advance notice procedures set forth in the MAA bylaws.
The advance notice provisions of the MAA bylaws could have the effect of discouraging a takeover or other transaction in which holders of MAA commoncapital stock might receive a premium for their shares over the then prevailing market price or which such holders might believe to be otherwise in their best interests.
Limitation of Director’s Liability
The MAA charter eliminates, subject to certain exceptions, the personal liability of a director to MAA or its shareholders for monetary damages for breaches of such director’s fiduciary duty as a director. The MAA charter does not provide for the elimination of or any limitation on the personal liability of a director for:
any breach of a director’s duty of loyalty to MAA or its shareholders;
acts or omissions not in good faith or which involve intentional misconduct or knowing violations of law; or
unlawful corporate distributions.
Removal of Directors
The MAA bylaws provide that MAA shareholders may remove any director, with or without cause, but suchat any time, if the votes cast in favor of removal requiresexceed the affirmativevotes cast in opposition to removal at a meeting of shareholders called for that purpose. In addition, any director may be removed for cause, at any time, by a majority vote of holders of not less than 75% of all shares entitled to vote in the election of directorsentire MAA Board at a special meeting called for that purpose. This provision may make it more difficult for shareholders to remove directors.
Tennessee Anti-Takeover Statutes
In addition to certain provisions of the MAA charter and MAA bylaws provisions discussed above and below, Tennessee has adopted a series of statutes which can have an anti-takeover effect and may delay or prevent a tender offer or takeover attempt that a shareholder might consider in its best interest, including those attempts that might result in a premium over the market price for MAA commoncapital stock.
Under the Tennessee Investor Protection Act, unless the MAA Boarda Tennessee corporation’s board of directors has recommended a takeover offer to the shareholders, no offeror beneficially owning five percent or more of any class of equity securities of MAA,the offeree company, any of which was purchased within one year prior to the proposed takeover offer (unless the offeror, before making such purchase, has made a public announcement of its intention with respect to changing or influencing the management or control of MAA,the offeree company, has made a full, fair and effective disclosure of such intention to the person from whom the offeror intends to acquire such securities and has filed with the Tennessee Commissioner of Commerce and Insurance, orreferred to herein as the “Commissioner,”Commissioner, and MAAthe offeree company a statement signifying such intentions and containing such additional information as the Commissioner by rule prescribes), may offer to acquire any class of equity security of MAAthe offeree company pursuant to a tender offer if after the acquisition thereof the offeror would be directly or indirectly a beneficial owner of more than 10% of any class of outstanding equity securities of the offeree company, orwhich is referred to herein as a Takeover Offer. Such an offeror must provide that any equity securities of MAAthe offeree company deposited or tendered pursuant to a Takeover Offer may be withdrawn by an offeree at any time within seven days from the date the offer has become effective following filing with the Commissioner and MAAthe offeree company and public announcement of the terms or after 60 days from the date the offer has become effective. If an offeror makes a Takeover Offer for less than all the outstanding equity securities of any class, and if the number of securities tendered is greater than the number the offeror has offered to accept and pay for, the securities shallwill be accepted pro rata. If an offeror varies the terms of a Takeover Offer before its expiration date by increasing the consideration offered to offeree,offerees, the offeror shallwill pay the increased consideration for all equity securities accepted, whether accepted before or after the variation in the terms of the offer.
Under the Tennessee Business Combination Act, subject to certain exceptions, MAAa Tennessee corporation may not engage in any “business combination” with an “interested shareholder” for a period of five years following
the date that such shareholder became an interested shareholder unless prior to such date the MAA Boardboard of directors of the Tennessee corporation approved either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder.
A “business combination” is defined by the Tennessee Business Combination Act as any:
merger or consolidation;
share exchange;
sale, lease, exchange, mortgage, pledge or other transfer of assets representing 10% or more of:
the aggregate market value of the corporation’s consolidated assets;
the aggregate market value of the corporation’s shares; or
the corporation’s consolidated net income;
issuance or transfer of shares by the corporation to the interested shareholder;
plan of liquidation or dissolution proposed by the interested shareholder;
transaction or recapitalization which increases the proportionate share of any outstanding voting securities owned or controlled by the interested shareholder; or
financing arrangement whereby any interested shareholder receives a benefit, directly or indirectly, a benefit except proportionately as a shareholder.
An “interested shareholder” is defined as:
any person that is the beneficial owner of 10% or more of the voting power of any class or series of outstanding voting stock of the corporation; or
an affiliate or associate of the corporation who at any time within the five-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 10% or more of the voting power of any class or series of the outstanding stock of the corporation.
Consummation of a business combination that is subject to the five-year moratorium is permitted after such period when the transaction complies with all applicable charter and bylaw requirements and either (i) is approved by the holders of two-thirds of the voting stock not beneficially owned by the interested shareholder, or (ii) meets certain fair price criteria.
The Tennessee Greenmail Act prohibits MAAa Tennessee corporation from purchasing, directly or indirectly, any of its shares at a price above the market value of such shares (defined as the average of the highest and lowest closing market price for such shares during the 30 trading days preceding the purchase and sale or preceding the commencement of a tender offer or announcement of an intention to seek control of the corporation if the seller of such shares has commenced a tender offer or announced an intention to seek control of the corporation) from any person who holds more than three percent of the class of securities to be purchased if such person has held such shares for less than two years, unless the purchase has been approved by the affirmative vote of a majority of the outstanding shares of each class of voting stock issued by such corporation or the corporation makes an offer, of at least equal value per share, to all holders of shares of such class.
Ownership Limitations
For MAA to qualify as a REIT under the Code, among other things, no more than 50% in value of MAA’s outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer shareholders (as defined in the Code to include certain entities) during the last half of a taxable year, and such capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year. To ensure that MAA continues to meet the requirements for qualification as a REIT, the MAA charter provides, subject to certain limited exceptions, that no holder may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.9% of the outstanding shares of MAA’s capital stock, both common and preferred, which is referred to herein as the Ownership Limit. All shares of MAA’s capital stock which any person has the right to acquire upon exercise of outstanding rights, options or warrants, or upon conversion of convertible securities, shallwill be considered for purposes of determining the Ownership Limit if inclusion of those shares would cause such person to violate the Ownership Limit. The MAA Board may exempt from the Ownership Limit ownership or transfer of shares of capital stock while owned by or transferred to a person who has provided evidence and assurances acceptable to the MAA Board that MAA’s qualification as a REIT under the Code would not be jeopardized thereby. Absent such an exemption, any transfer of capital stock that would result in direct or indirect ownership of capital stock by a shareholder in excess of the Ownership Limit or that would result in MAA’s disqualification as a REIT under the Code, including any transfer that results in the capital stock being owned by fewer than 100 persons or results in MAA being “closely held” within the meaning of section 856(h) of the Code, shallwill be null and void, and the intended transferee will acquire no rights to the capital stock. If the MAA Board at any time determines that a transaction has taken place, or that any person intends to acquire shares of MAA’s capital stock, in violation of the restrictions described in the immediately preceding sentence, the MAA Board may take such action as it deems advisable to refuse to give effect to or to prevent such transaction, including refusing to give effect to any such transfer on MAA’s stock transfer books.
If, notwithstanding the foregoing restrictions on transfer, any person acquires shares of MAA’s capital stock in excess of the Ownership Limit, such shares shallwill be deemed “Excess Shares” held by such holder as agent on behalf of, and in trust for the exclusive benefit of, the transferees (which may include MAA) to whom such capital stock may be ultimately transferred without violating the Ownership Limit. While the Excess Shares are held in trust, the holder thereof will not be entitled to vote the Excess Shares or to receive dividends or other distributions on the Excess Shares.
Within six months after receiving notice of a transfer that results in shares of MAA’s capital stock being deemed Excess Shares, the MAA Board shall eitherwill direct the holder to sell the Excess Shares, or shallwill redeem the Excess Shares.Shares or will grant an exception to the Ownership Limit. If the MAA Board directs a holder of Excess Shares to sell such Excess Shares, such holder shallwill pay MAA out of the proceeds of such sale all expenses incurred by MAA in connection with such sale plus any remaining amount of such proceeds that exceeds that amount paid by such holder for the Excess Shares.
If the MAA Board determines to redeem the Excess Shares, the MAA Board will notify the holder of Excess Shares not less than one week prior to the redemption date determined by the MAA Board and stated in the notice of redemption. MAA will pay the holder a redemption price equal to the lesser of (a)of: (i) the principal price paid for the Excess Shares by the holder, (b)holder; (ii) a price per Excess Share equal to the market price (as determined in the manner set forth in MAA’sthe MAA charter) of the applicable capital stock, (c)stock; (iii) the market price (as so determined) on the date such holder would, but for the restrictions on transfers set forth in MAA’sthe MAA charter, be deemed to have acquired ownership of the Excess Shares (if market price is not determinable (as set forth in MAA’s charter), the net asset value per share on the date of the notice of redemption as determined in good faith by the MAA Board).Shares; and (d)(iv) the maximum price allowed under the Tennessee Greenmail Act described above under “—Tennessee Anti-Takeover Statutes” (such price being the average of the highest and lowest closing market price for the Excess Shares during the 30 trading days preceding the purchase of such Excess Shares or, if the holder of such Excess Shares has commenced a tender offer or has announced an intention to seek control of MAA, during the 30 trading days preceding the commencement of such tender offer or the making of such announcement). The redemption price may be paid, at MAA’s option, by delivering to the holder of the Excess Shares one common unit (subject to adjustment from time-to-timetime to time in the event of, among other things, stock splits, stock dividends or recapitalizations affecting MAA common stock or certain mergers, consolidations or asset transfers by MAA) issued by MAA LP for each Excess Share being redeemed.
Each shareholder shallwill upon demand be required to provide MAA with an affidavit setting forth any information with respect to its direct, indirect, constructive and beneficial ownership of MAA’s capital stock as the MAA Board deems necessary to comply with the provisions of the Code applicable to REITs or to determine
any such compliance. Each such affidavit shall also include the information required to be filed by shareholders in reports pursuant to Section 13(d) of the Exchange Act. A person planning to acquire capital stock in excess of the Ownership Limit is also required to provide MAA with a similar affidavit at least 15 days prior to the proposed acquisition. Each such affidavit will also include the information required to be filed by shareholders in reports pursuant to Section 13(d) of the Exchange Act.
The Ownership Limit may have the effect of precluding acquisition of control of MAA and could have the effect of discouraging a takeover or other transaction in which holders of commonMAA capital stock might receive a premium for their shares over the then prevailing market price or which such holders might believe to be otherwise in their best interests.
Pursuant to the TBCA, MAA cannot merge with and into another entity or sell all or substantially all of its assets unless such merger or sale is approved by a majority of the outstanding shares of MAA common stock.
The transfer agent and registrar for shares of MAAMAA’s common and preferred stock is American Stock Transfer & Trust Company, Brooklyn, New York.
COMPARISON OF RIGHTS OF SHAREHOLDERS OF MAA AND SHAREHOLDERS OF COLONIALPOST PROPERTIES
If the parent merger is consummated, shareholders of ColonialPost Properties will become shareholders of MAA. The rights of ColonialPost Properties shareholders are currently governed by and subject to the provisions of the AREITL,GBCC, and the declarationarticles of trustincorporation and bylaws of Colonial.Post Properties. Upon consummation of the parent merger, the rights of the former ColonialPost Properties shareholders who receive MAA common stock will be governed by the TBCA and the MAA charter and MAA bylaws, rather than the declarationGBCC and the articles of trustincorporation and bylaws of Colonial.Post Properties.
The following is a summary of the material differences between the rights of MAA shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) and ColonialPost Properties shareholders, but does not purport to be a complete description of those differences or a complete description of the terms of the MAA common stock and/or preferred stock subject to issuance in connection with the parent merger. The following summary is qualified in its entirety by reference to the relevant provisions of: (i) Tennessee law;the TBCA; (ii) Alabama law;the GBCC; (iii) the MAA charter; (iv) the Colonial declarationPost Properties articles of trust;incorporation; (v) the MAA bylaws; and (vi) the ColonialPost Properties bylaws.
This section does not include a complete description of all differences among the rights of MAA shareholders and ColonialPost Properties shareholders, nor does it include a complete description of the specific rights of such shareholders. The AREITL covers some of the same matters covered by the ABCL. However, there are some corporate governance matters that are addressed in the ABCL that are not dealt with in the AREITL. Colonial has addressed particular corporate governance matters in the Colonial declaration of trust and bylaws. For corporate governance matters not addressed in the AREITL or in the Colonial declaration of trust and bylaws, Colonial believes that the treatment of such matters in the ABCL may be a relevant consideration in determining applicable Alabama law.
Furthermore, the identification of some of the differences in the rights of such holders as material is not intended to indicate that other differences that may be equally important do not exist. You are urged to read carefully the relevant provisions of Tennesseethe TBCA and Alabama law,the GBCC, as well as the governing corporate instruments of each of MAA and Colonial,Post Properties, copies of which are available, without charge, to any person, including any beneficial owner to whom this joint proxy statement/prospectus is delivered, by following the instructions listed under “Where You Can Find More Information.”
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of | |||||
| Corporate Governance | MAA is a Tennessee corporation that has elected to be taxed as a REIT for U.S. federal income tax purposes. | |||||
The rights of MAA shareholders are governed by the TBCA, the MAA charter and the MAA bylaws. | Post Properties is a Georgia corporation that has elected to be taxed as a REIT for U.S. federal income tax purposes. The rights of | |||||
| Authorized Capital Stock | Assuming approval of the MAA charter amendment proposal, MAA is authorized to issue an aggregate of 165 million shares of capital stock, consisting of (1) 145 million shares of common stock, $0.01 par value per share; and (2) 20 million shares of preferred stock, $0.01 par value per share. At June 30, 2016, there were 75,524,086 shares of MAA common stock issued and outstanding, and there were no shares of MAA preferred stock issued and outstanding. | Post Properties is authorized to issue an aggregate of 120 million shares of capital stock, consisting of (1) 100 million shares of common stock, $0.01 par value per share; and (2) 20 million shares of preferred stock, $0.01 par value per share.
At June 30, | ||||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of | |||
Authorized Capital Stock (Cont.) | ||||
| Preferred Stock. The MAA Board is authorized to issue preferred stock from | Properties Series A preferred stock issued and outstanding. Preferred | |||
| Voting Rights Generally | Each shareholder of MAA common stock is entitled to one vote per share on all matters upon which shareholders are entitled to vote.
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| Cumulative Voting | Holders of shares of MAA common stock do not have the right to cumulate their votes with respect to the election of directors. | Holders of | ||
| Size of the Board of Directors | The number of directors must be between three and nine unless otherwise determined by at least 80% of the members of the MAA Board. The number of directors may be established or changed by at least 80% of the members of the MAA Board. Currently, the MAA Board consists of
Upon completion of the parent merger, by resolution unanimously adopted by the MAA Board, the board of directors of the Combined Corporation will be increased to | The | ||
| Independent Directors | A majority of the directors on the MAA Board must be independent directors except during a period of up to 60 days following the death, resignation, incapacity or removal of a director. | |||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
| Classified Board and Term of Directors | The MAA Board is not classified.
The directors of MAA hold office for a term expiring at the next succeeding annual meeting of shareholders and until their successors are duly elected and qualified. | The
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receives a notice that a shareholder has nominated a person for election to the
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| Removal of Directors | The TBCA provides that shareholders may remove directors with or without cause unless the charter provides that directors may be removed only for cause. However, if a director is elected by a particular voting group, that director may only be removed by the requisite vote of that voting group.
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The Post Properties bylaws provide that any or all directors may be removed from office at any time with or without | ||||
| Filling Vacancies of Directors | The TBCA provides that vacancies on the board of directors, including a vacancy resulting from an increase in the number of directors or a vacancy resulting from a removal with or without cause, may be filled by the shareholders, board of directors or, if the remaining directors constitute fewer than | The GBCC provides that vacancies on the board of directors, including a vacancy resulting from an increase in the number of directors or a vacancy resulting from a removal with or without cause, may be filled by the shareholders, board of directors or, if the remaining directors constitute fewer than | ||||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||||
Filling Vacancies of Directors (Cont.) | a quorum of the board, the affirmative vote of a majority of all the directors remaining in office. If the vacant office was held by a director elected by a voting group of shareholders, then only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders.
| a quorum of the board, the affirmative vote of a majority of all the directors remaining in office. If the vacant office was held by a director elected by a voting group of shareholders, then only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders.
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The TBCA provides that certain relatively technical amendments to a corporation’s charter may be adopted by the board of directors without shareholder approval. Other amendments to the charter shall be approved, subject to any condition the board of directors may place on its submission of the amendment to the shareholders, if the votes cast favoring the action exceed the votes cast opposing the action, unless the charter, board of directors or applicable law requires a greater vote.
Where permissible under the TBCA, including amendments to the MAA charter, the MAA Board has adopted a greater voting standard, requiring the affirmative vote of a majority of shares present in person or represented by proxy at a meeting and entitled to vote generally on the subject matter. | The The Post Properties articles of incorporation may not be amended without the affirmative vote of
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Under the TBCA, shareholder action is generally not necessary to amend the bylaws, unless the charter provides otherwise or the shareholders in amending or repealing a particular bylaw provide expressly that the board of directors may not amend or repeal | Under the GBCC, shareholder action is generally not necessary to amend the bylaws, unless the articles of incorporation provide otherwise or the shareholders in amending or repealing a particular bylaw provide expressly that the board of directors may not | |||||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
Bylaws Amendments (Cont.) | that bylaw. Shareholders may amend or repeal a corporation’s bylaws even though the bylaws may also be amended or repealed by the
The MAA bylaws may be amended or repealed and new bylaws may be adopted by (1) a majority vote of the MAA directors then in office or (2) the affirmative vote of the holders of at least a majority of the voting power of all of then-outstanding shares of the capital stock entitled to vote generally in the election of directors, voting together as a single class. |
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| Any amendments relating to the indemnification provisions set forth in | amend or repeal that bylaw. Shareholders may amend or repeal a corporation’s bylaws even though the bylaws may also be amended or repealed by the board of directors; provided, however, that unless the articles of incorporation provide otherwise, the shareholders may not amend (but may repeal) a bylaw adopted by the board of directors that fixes a greater voting requirement for the election of directors and that is adopted by the board of directors of a corporation having shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association or adopt a bylaw changing the plurality standard for the elections of directors. Furthermore, a bylaw establishing staggered terms for directors may only be adopted, amended or repealed by shareholders. The Post Properties bylaws may be altered, amended, repealed or new bylaws adopted by the affirmative vote of a majority of all directors then holding office, but any bylaws adopted by the Post Properties Board may be altered, amended, repealed or any new bylaws adopted, by the shareholders at an annual or special meeting, when notice of such proposed alteration, amendment, repeal or addition shall have been given in the notice of such meeting. The shareholders may prescribe that any bylaw or bylaws adopted by them shall not be altered, amended or repealed by the Post Properties Board. Action by the shareholders with respect to the Post Properties bylaws shall be taken by an affirmative vote of the majority of all shares outstanding and entitled to vote generally in the election of directors, voting as a single voting group. Any | |||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
| Mergers, Consolidations or Sales of Substantially all Assets | Under the TBCA, with respect to a sale or other disposition of all or substantially all of MAA’s assets, a merger of MAA with and into another corporation, or a share exchange involving one or more classes or series of MAA’s shares or a dissolution of MAA, the respective sale or other transaction, plan of merger, |
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| Ownership Limitations |
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| With certain limited exceptions, no person shall beneficially own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.9% of the outstanding shares of MAA’s capital stock. Upon demand, all shareholders are required to provide written information relating to maintenance of MAA’s REIT status. |
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| In the event of a purported transfer or other event that would, if effective, result in the ownership of shares in violation of the ownership limitation, that number of shares that would be owned by the transferee in | ||||
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excess of the ownership limitation are deemed “excess shares.” Excess shares are deemed to be held in trust by the purported transferee for the benefit of the person or persons to whom the
The MAA Board may exempt from the |
In the event of a purported transfer or other event that would, if effective, result in the
The Post Properties Board may from time to time increase the ownership limitation, or provide exceptions thereto, subject to certain limitations. |
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
| Annual Meetings of the Shareholders | An annual meeting of MAA shareholders shall be held at a time and place as fixed by MAA’s president or the MAA Board, but if no date and time is fixed, | |||
| Special Meetings of the Shareholders | Under the TBCA, the board of directors, any person authorized by the charter or bylaws, or (unless the charter provides otherwise) the holders of at least 10% of the votes entitled to be cast may call a special meeting of shareholders.
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| A special meeting will also be called by the secretary upon the written request of MAA shareholders representing more than 10% of the votes entitled to be cast at such meeting. | ||||
Business transacted at the special meeting of shareholders will be limited to the purposes specifically designated in the notice. | Under the GBCC, the board of directors, any person authorized by the articles of incorporation or bylaws, or (unless the articles of incorporation or bylaws provides otherwise) the holders of at least 25% of the votes entitled to be cast may call a special meeting of shareholders. The Post Properties bylaws provide that a special meeting of shareholders Only business within the purpose or purposes | |||
| Advance Notice Provisions for Shareholder Nominations and Shareholder Business Proposals | The MAA bylaws provide that nominations for election to the MAA Board and the proposal of business to be considered by the shareholders may be made only:
• by or at the direction of the MAA Board; or
• upon timely and proper notice by a shareholder who is a shareholder of record at the time of giving of notice and entitled to vote at the meeting.
In general, notice of shareholder nominations or business for an annual meeting must be delivered not earlier than 120 days nor later than 90 days prior to the first anniversary of the preceding year’s annual meeting, unless the annual meeting is advanced more than | The Post Properties bylaws provide that nominations for election to the Post Properties Board and the proposal of business to be considered by the shareholders may be made only: • by or at the direction of the Post Properties Board; or • upon timely and proper notice by a shareholder who is a shareholder of record at the time of giving of notice and entitled to vote at the meeting. In general, notice of shareholder nominations or business for an annual meeting must be delivered not earlier than 120 days nor later than 90 days prior to the first anniversary of the preceding year’s annual meeting, | ||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
Advance Notice Provisions for Shareholder Nominations and Shareholder Business Proposals (Cont.) | 30 days or delayed more than 60 days from the anniversary date, in which case notice must be delivered not earlier than the 120th day nor later than the 90th day prior to the annual meeting, or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the tenth day following the day on which the public announcement of the date of the meeting is first made. Notice of shareholder nominations for a special meeting must be delivered not earlier than the 120th day prior to the special meeting, and not later than the close of business on the 90th day prior to the meeting, or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the tenth day following the day on which the public announcement is first made of the date of the meeting and the nominees proposed by the MAA Board. |
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| Notice of Shareholder Meetings | Not less than 10 days nor more than 2 months before each meeting of shareholders, the secretary shall give notice of such meeting to each shareholder entitled to notice. A shareholder-requested special meeting shall be held not less than 35 days nor more than 120 days after the date of receipt of a shareholder-requested special meeting request. | |||||
| State Anti-Takeover Statutes | The Tennessee Control Share Acquisition Act generally provides that, except as stated below, “control shares” will not have any voting rights. Control shares are shares acquired by a person under certain circumstances which, when added to other shares owned, would give such person effective control over one-fifth or more, or a majority of all voting power (to the extent such acquired shares cause such person to exceed one-fifth or one-third of all voting power) in the election of a Tennessee corporation’s directors. However, voting rights will be restored to control shares by resolution approved by the affirmative vote of the holders of a majority of the | The GBCC restricts certain business combinations with “interested shareholders” and contains fair price requirements applicable to certain mergers with certain “interested shareholders” that are summarized below. The restrictions imposed by these statutes will not apply to a corporation unless it elects to be governed by these statutes. Post Properties has not elected to be covered by such restrictions. The Georgia business combination statute regulates business combinations such as mergers, consolidations, share exchanges and asset purchases where the acquired business has at least 100 shareholders residing in | ||||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
State Anti-Takeover Statutes (Cont.) | corporation’s voting stock, other than shares held by the owner of the control shares. If voting rights are granted to control shares which give the holder a majority of all voting power in the election of the corporation’s directors, then the corporation’s other shareholders may require the corporation to redeem their shares at fair value.
The Tennessee Control Share Acquisition Act is not applicable to MAA because |
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The Tennessee Investor Protection Act, or TIPA, provides that unless a Tennessee corporation’s board of directors has recommended a takeover offer to shareholders, no offeror beneficially owning 5% or more of any class of equity securities of the offeree company, any of which was purchased within the preceding year, may make a takeover offer for any class of equity security of the offeree company if after completion the offeror would be a beneficial owner of more than 10% of any class of outstanding equity securities of the company unless the offeror, before making such purchase: (i) makes a public announcement of
The offeror must provide that any equity securities of an offeree company deposited or tendered pursuant to a takeover offer may be withdrawn by an offeree at any time within 7 days from the date the offer has become effective following filing with the Commissioner and the offeree company and public announcement of the terms or after 60 | Georgia and has its principal office in Georgia, and where the acquiror became an “interested shareholder” of the corporation, unless either (1) the transaction resulting in such acquiror becoming an “interested shareholder” or the business combination received the approval of the corporation’s board of directors prior to the date on which the acquiror became an “interested shareholder,” or (2) the acquiror became the owner of at least 90% of the outstanding voting stock of the corporation, excluding shares held by directors, officers and affiliates of the corporation and shares held by certain other persons, in the same transaction in which the acquiror became an “interested shareholder.” For purposes of this statute, an “interested shareholder” generally is any person who directly or indirectly, alone or in concert with others, beneficially owns or controls 10% or more of the voting power of the outstanding voting shares of the corporation. The statute prohibits business combinations with an unapproved “interested shareholder” for a period of five years after the date on which such person became an “interested shareholder.” The statute restricting business combinations is broad in its scope and is designed to inhibit unfriendly acquisitions. The Georgia fair price statute prohibits certain business combinations between a Georgia business corporation and an “interested shareholder” unless (1) certain “fair price” criteria are satisfied, (2) the business combination is unanimously approved by the continuing directors, (3) the business combination is recommended by at least two-thirds of the continuing directors and approved by a majority of the votes entitled to be cast by holders of voting shares, other than voting shares beneficially owned by the “interested shareholder,” or (4) the interested shareholder has been such for at least three years and has not increased its ownership position in such three-year period by more than one percent in any twelve-month period. The fair price statute is designed to inhibit unfriendly acquisitions that do not satisfy the specified “fair price” requirements. | |||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
State Anti-Takeover Statutes (Cont.) | days from the date the offer has become effective. If the takeover offer is for less than all the outstanding equity securities of any class, such an offer must also provide for acceptance of securities pro rata if the number of securities tendered is greater than the number the offeror has offered to accept and pay for. If such an offeror varies the terms of the takeover offer before its expiration date by increasing the consideration offered to offerees, the offeror must pay the increased consideration for all equity securities accepted, whether accepted before or after the variation in the terms of the offer. |
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The TIPA does not apply to any offer involving a vote by holders of equity securities of the offeree company.
The Tennessee Business Combination Act generally prohibits a “business combination” by MAA or a subsidiary with an “interested shareholder” within 5 years after the shareholder becomes an interested shareholder. MAA or a subsidiary can, however, enter into a business combination within that period if, before the interested shareholder became such, the MAA Board approved the business combination or the transaction in which the interested shareholder became an interested shareholder. After that 5-year moratorium, the business combination with the interested shareholder can be consummated only if it satisfies certain fair price criteria or is approved by 2/3 of the other shareholders.
For purposes of the Tennessee Business Combination Act, a “business combination” includes mergers, share exchanges, sales and leases of assets, issuances of securities, and similar transactions. An “interested shareholder” is generally any person or entity that beneficially owns 10% or more of the voting power of any outstanding class or series of MAA stock. | ||||
| The Tennessee Greenmail Act applies to a Tennessee corporation that has a class of | ||||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
State Anti-Takeover Statutes (Cont.) | voting stock registered or traded on a national securities exchange or registered with the SEC pursuant to Section 12(g) of the Exchange Act. Under the Tennessee Greenmail Act, MAA may not purchase any of its shares at a price above the market value of such shares from any person who holds more than 3% of the class of securities to be purchased if such person has held such shares for less than 2 years, unless the purchase has been approved by the affirmative vote of a majority of the outstanding shares of each class of voting stock issued by MAA or MAA makes an offer, of at least equal value per share, to all shareholders of such class. |
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| Consideration of Other Constituencies | The Tennessee Business Combination Act provides that no corporation (nor its officers or directors) registered or traded on a national securities exchange or registered with the SEC shall be held liable for either having failed to approve the acquisition of shares by an interested shareholder on or before such interested shareholder’s share acquisition date, or for opposing any proposed merger, exchange, tender offer or significant disposition of the assets of the corporation or any of its subsidiaries because of a good faith belief that such merger, exchange, tender offer or significant disposition of assets would adversely affect the corporation’s employees, customers, suppliers, the communities in which such corporation or its subsidiaries operate or are located or any other relevant factor if such factors are permitted to be considered by the board of directors under the charter for such corporation in connection with a merger, exchange, tender offer or significant disposition of assets.
MAA’s charter does not contain an “opt-out” provision, and therefore, the Tennessee Business Combination Act | The | ||||
| Shareholder Rights Plan | MAA does not have a shareholder rights plan in effect. | |||||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
| Liability and Indemnification of Directors | Under the TBCA, MAA may indemnify any director against liability incurred in connection with a proceeding if (i) the director acted in good faith, (ii) the director reasonably believed, in the case of conduct in his or her official capacity, that such conduct was in MAA’s best interest, or, in all other cases, that his or her conduct was not opposed to the best interests of MAA and (iii) in connection with any criminal proceeding, the director had no reasonable cause to believe that his or her conduct was unlawful. In actions brought by or in the right of MAA, however, the TBCA provides that no indemnification may be made if the director or officer is adjudged to be liable to MAA. Similarly, the TBCA prohibits indemnification in connection with any |
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proceeding charging improper personal benefit to a director, if such director is adjudged liable on the basis that a personal benefit was improperly received. In cases where the director is wholly successful, on the merits or otherwise, in the defense of any proceeding instigated because of his or her status as a director, the TBCA mandates that the corporation indemnify the director against reasonable expenses incurred in the proceeding. Notwithstanding the foregoing, the TBCA provides that a court of competent jurisdiction, upon application, may order that a director or officer be indemnified for reasonable expense if, in consideration of all relevant circumstances, the court determines that such individual is fairly and reasonably entitled to indemnification, whether or not the standard of conduct set forth above was met. Officers, employees and agents who are not directors are entitled to the same degree of indemnification afforded to directors. | Under the GBCC, Post Properties may indemnify any director against liability incurred in connection with a proceeding if (i) the director acted in good faith, (ii) the director reasonably believed, in the case of conduct in his or her official capacity, that such conduct was in Post Properties’ best interest, or, in all other cases, that his or her conduct was not opposed to the best interests of Post Properties and (iii) in connection with any criminal proceeding, the director had no reasonable cause to believe that his or her conduct was unlawful.
In cases where the director is wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because of his or her status as a director, the GBCC mandates that the corporation indemnify the director against reasonable expenses incurred in the proceeding. Notwithstanding the foregoing, the GBCC provides that a court of competent jurisdiction, upon application, may order that a director or officer be indemnified for reasonable expense if, in consideration of all relevant circumstances, the court determines that such individual is fairly and reasonably entitled to indemnification, whether or not the standard of conduct set forth above was met. Officers who are not directors are entitled to the same degree of indemnification afforded | |||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
| Liability and Indemnification of Directors and Officers (Cont.) | The MAA charter provides that its directors shall not be liable to MAA or its shareholders for monetary damages for breach of fiduciary duty except for: (1) any breach of the director’s duty of loyalty; (2) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; or (3) unlawful distributions as provided in the TBCA. | to directors. Employees and agents who are not directors may be entitled to the same degree of indemnification afforded to directors to the extent, consistent with public policy, provided the corporation’s articles of incorporation, bylaws, general or specific action of its board of directors, or contract. | ||
| MAA’s charter provides that MAA shall indemnify and advance expenses to a director, officer, employee or agent to the fullest extent permitted under the TBCA. |
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Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of | |||
| Liability and Indemnification of Directors and Officers (Cont.) |
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| Distributions | The MAA Board may authorize, and MAA may pay to shareholders, such dividends as the MAA Board in its absolute discretion shall determine after setting aside any funds deemed necessary by the | The | ||
| Dissenters’ Rights | The TBCA provides that a shareholder of a corporation is generally entitled to receive payment of the fair value of its stock if the shareholder dissents from transactions including a proposed merger, share exchange or a sale of substantially all of the assets of the corporation.
However, dissenters’ rights generally are not available to holders of shares | The However, dissenters’ rights generally are not available to | ||
Rights of MAA Shareholders (which will be the rights of shareholders of the Combined Corporation following the parent merger) | Rights of Post Properties Shareholders | |||
| REIT Qualification | It is the duty of the MAA Board to ensure that MAA satisfies the requirements for qualification as a REIT. The MAA Board shall take no action to disqualify MAA as REIT or to otherwise revoke its election to be taxed as a REIT without the affirmative vote of 2/3rds of the number of shares of common stock entitled to vote on such a matter at a special meeting of MAA shareholders. | |||
| Preferred Stock | The MAA Series I preferred stock will have the same rights, preferences, privileges and voting powers as the Post Properties Series A preferred stock. Holders of MAA Series I preferred stock will have no voting rights, unless a proposal materially and adversely affects the rights, preferences, privileges or voting power of holders of MAA Series I preferred stock. For a summary of the material terms and provisions of the shares of MAA Series I preferred stock, see “Description of Capital Stock—MAA Series I Preferred Stock” beginning on page 174. | The MAA Series I preferred stock will have the same rights, preferences, privileges and voting powers as the Post Properties Series A preferred stock. Holders of Post Properties Series A preferred stock have no voting rights, unless a proposal materially and adversely affects the rights, preferences, privileges or voting power of holders of Post Properties Series A preferred stock. | ||
MAA 20142017 Annual Shareholder Meeting and Shareholder Proposals
Shareholder proposals intended to be presented at the 2014 annual meetingProposals of MAA shareholders intended for inclusion in the MAA proxy statement to be furnished to shareholders entitled to vote at the MAA 2017 Annual Meeting of Shareholders must have beencomply with the MAA bylaws and all applicable requirements of Rule 14a-8 promulgated under the Securities and Exchange Act of 1934, as amended, or the Exchange Act. The proposals must be sent to the Nominating and Corporate Governance Committee, Attention: Corporate Secretary, MAA, 6584 Poplar Avenue, Memphis, Tennessee 38138 and be received by MAA no later than November 22, 2013 in orderthe close of business on December 15, 2016.
Pursuant to the MAA bylaws, shareholders wishing to submit proposals or director nominations that are not to be included in the MAA proxy statementmaterials must give timely notice thereof in writing to the MAA Corporate Secretary. To be timely for the 2017 Annual Meeting of Shareholders, you must notify the MAA Corporate Secretary, in writing, no later than the close of business on February 16, 2017 nor earlier than the close of business on January 17, 2017. MAA also advises you to review the MAA bylaws, which contain additional requirements about advance notice of shareholder proposals and form of proxy relating to that meeting, which will bedirector nominations, including the annual meeting the Combined Corporation shareholdersdifferent notice submission date requirements in the event that MAA does not hold its 2017 Annual Meeting of Shareholders between April 17, 2017 and July 16, 2017. The Chairman of the mergers are completed on2017 Annual Meeting of Shareholders may determine, if the expected timetable.facts warrant, that a matter has not been properly brought before the meeting and, therefore, may not be considered at the meeting. In order to be included inaddition, the proxy statement, suchsolicited by the MAA Board for the 2017 Annual Meeting of Shareholders will confer discretionary voting authority with respect to any matter presented by a shareholder at that meeting for which MAA has not been provided with timely notice. Shareholder proposals must comply with the requirements asbe sent to form and substance established by the SEC for such proposals. A shareholder who wishes to make a proposal at theAttention: Corporate Secretary, MAA, annual meeting without submitting the proposal in the proxy statement and form of proxy relating to that meeting must comply with the notice and other requirements set forth in the MAA bylaws. Pursuant to the current MAA bylaws, that notice must have been submitted in writing and delivered to the secretary of MAA between January 21, 2014 and February 20, 2014.6584 Poplar Avenue, Memphis, Tennessee 38138.
Colonial 2014Post Properties 2017 Annual Shareholder Meeting and Shareholder Proposals
If the mergers are completed on the expected timetable, ColonialPost Properties does not intend to hold a 20142017 annual meeting of its shareholders. If, however the mergers are not completed and the Colonial 2014Post Properties 2017 annual meeting is held, shareholder proposals or director nominations intended to be presented at the meeting must have been received by ColonialPost Properties no later than November 13, 2013December 14, 2016 in order to be considered for inclusion in the proxy statement and form of proxy relating to that meeting. In order to be included in the proxy statement, such proposals or director nominations must comply with the requirements as to form and substance established by the SEC for such proposals.proposals or director nominations. A shareholder who wishes to make a proposal or director nomination at the ColonialPost Properties annual meeting without submitting the proposal or director nomination in the proxy statement and form of proxy relating to that meeting must comply with the notice and other requirements set forth in the bylaws of Colonial.Post Properties. Pursuant to the current bylaws of Colonial,Post Properties, that notice must have been submitted in writing and delivered to the secretary of ColonialPost Properties between January 24, 201426, 2017 and February 23, 2014.24, 2017.
It is a condition to the mergers that MAA and ColonialPost Properties receive opinions from Goodwin Procter LLP and Hogan Lovells USKing & Spalding LLP, respectively, concerning the U.S. federal income tax consequences of the parent merger. Certain matters of Tennessee law, including the validity of the shares of MAA offered by this joint proxy statement/prospectus, will be passed upon by Baker, Donelson, Bearman, CaldwellBass, Berry & Berkowitz, PC.Sims PLC.
The consolidated financial statements of Mid-America Apartment Communities, Inc. appearing in Mid-America Apartment Communities, Inc.’s and Mid-America Apartments, L.P.’s Annual Report (Form 10-K) for the year ended December 31, 20122015 (including the schedule appearing therein), and the effectiveness of Mid-America Apartment Communities, Inc.’s internal control over financial reporting as of December 31, 2012,2015, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
The statements of revenues and certain operating expenses of certain acquired properties, appearing in the MAA Current Report on Form 8-K filed with the SEC on March 22, 2013 and containing information under items 2.01 and 9.01 of such form (being the second of two Current Reports on Form 8-K filed by MAA on March 22, 2013) have been audited by Watkins Uiberall, PLLC, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated in this joint proxy statement/registration statement by reference. Such statements of revenues and certain operating expenses are incorporated by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements, and the related financial statement schedules,schedule, incorporated in this joint proxy statement/prospectus by reference from Colonial’s Current Report on Form8-K dated August 21, 2013, and the effectiveness of Colonial’s internal control over financial reporting incorporated by reference from Colonial’sPost Properties, Inc.’s Annual Report on Form10-K as of and for the year ended December 31, 2012,2015, and the effectiveness of its internal control over financial reporting have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference.(which reports (1) express an unqualified opinion on the consolidated financial statements and financial statement schedule and include an explanatory paragraph relating to the changes in method of accounting for and disclosure of discontinued operations for the year ended December 31, 2014 due to the adoption of Accounting Standards Update 2014-08, and (2) express an unqualified opinion on the effectiveness of internal control over financial reporting). Such consolidated financial statements and financial statement schedulesschedule have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements, and the related financial statement schedule, incorporated in this joint proxy statement/prospectus by reference from Post Apartment Homes, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2015, and the effectiveness of its internal control over financial reporting have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein (which reports (1) express an unqualified opinion on the consolidated financial statements and financial statement schedule and include an explanatory paragraph relating to the changes in method of accounting for and disclosure of discontinued operations for the year ended December 31, 2014 due to the adoption of Accounting Standards Update 2014-08, and (2) express an unqualified opinion on the effectiveness of internal control over financial reporting). Such consolidated financial statements and financial statement schedule have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
MAA and ColonialPost Properties each file annual, quarterly and current reports, proxy statements and other information with the SEC under the Exchange Act. You may read and copy any of this information at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at1-800-SEC-0330 for further information on the Public Reference Room. The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including MAA and Colonial,Post Properties, who file electronically with the SEC. The address of that site iswww.sec.gov.
Investors may also consult MAA’s or Colonial’sPost Properties’ website for more information about MAA or Colonial,Post Properties, respectively. MAA’s website iswww.maac.com. Colonial’sPost Properties’ website iswww.colonialprop.comwww.postproperties.com. Information included on these websites is not incorporated by reference into this joint proxy statement/prospectus.
MAA has filed with the SEC a registration statement of which this joint proxy statement/prospectus forms a part. The registration statement registers the shares of MAA common stock and MAA Series I preferred stock to be issued to ColonialPost Properties shareholders in connection with the parent merger. The registration statement, including the exhibits and schedules thereto, contains additional relevant information about MAA common stock and MAA Series I preferred stock. The rules and regulations of the SEC allow MAA and ColonialPost Properties to omit certain information included in the registration statement from this joint proxy statement/prospectus.
In addition, the SEC allows MAA and ColonialPost Properties to disclose important information to you by referring you to other documents filed separately with the SEC. This information is considered to be a part of this joint proxy statement/prospectus, except for any information that is superseded by information included directly in this joint proxy statement/prospectus. This joint proxy statement/prospectus contains summaries of certain provisions contained in some of the MAA or ColonialPost Properties documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by reference to the actual documents.
This joint proxy statement/prospectus incorporates by reference the documents listed below that MAA has previously filed with the SEC;provided,however, that we are not incorporating by reference, in each case, any documents, portions of documents or information deemed to have been furnished and not filed in accordance with SEC rules. The documents listed below contain important information about MAA, its financial condition or other matters.
Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
Quarterly Reports on Form 10-Q for the quarters ended March 31, 20132016 and June 30, 2013.
Current Reports on Form 8-K, filed on February 22, 2013, February 25, 2013, March 15, 2013, March 22, 2013 (two Current Reports),2016, May 23, 2013, May 24, 2013,18, 2016, June 3, 2013 (two Current Reports), June 18, 2013, August 2, 201316, 2016 and August 9, 201315, 2016 (other than documents or portions of those documents not deemed to be filed).
Proxy Statement for MAA’s 20132016 Annual Meeting of Shareholders, on Schedule 14A filed with the SEC on March 22, 2013.
In addition, MAA incorporates by reference herein any filings it makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial registration statement that contains this joint proxy statement/prospectus and prior to the effectiveness of this joint proxy statement/prospectus and any future filings it makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this joint proxy statement/prospectus and prior to the effective date of the mergers.MAA special meeting. Such documents are considered to be a part of this joint proxy statement/prospectus, effective as of the date such documents are filed. In the event of conflicting information in these documents, the information in the latest filed document should be considered correct.
You can obtain any of the documents listed above from the SEC, through the SEC’s website at the address described above or from MAA by requesting them in writing or by telephone at the following address:
Mid-America Apartment Communities, Inc.
Attention: Investor Relations Department
6584 Poplar Avenue
Memphis, Tennessee 38138
Telephone: (901) 682-6600
These documents are available from MAA without charge, excluding any exhibits to them unless the exhibit is specifically listed as an exhibit to the registration statement of which this joint proxy statement/prospectus forms a part.
This joint proxy statement/prospectus also incorporates by reference the documents listed below that ColonialPost Properties has previously filed with the SEC;provided,however, that we are not incorporating by reference, in each case, any documents, portion of documents or information deemed to have been furnished and not filed in accordance with SEC rules. The documents listed below contain important information about Colonial,Post Properties, its financial condition or other matters.
Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (excluding Items 6, 7 and 8).
Quarterly Reports on Form 10-Q for the quarters ended March 31, 20132016 and June 30, 2013.
Current Reports on Form 8-K, filed on January 7, 2013, January 29, 2013, FebruaryMay 9, 2016, June 1, 2013, April 29, 2013, June 3, 2013 (two Current Reports), June 6, 2013, July 11, 20132016 and August 21, 201315, 2016 (other than documents or portions of those documents not deemed to be filed).
Proxy Statement for Colonial’s 2013Post Properties’ 2016 Annual Meeting of Shareholders, on Schedule 14A filed with the SEC on March 13, 2013.
In addition, ColonialPost Properties incorporates by reference any filings it makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial registration statement that contains this joint proxy statement/prospectus and prior to the effectiveness of this joint proxy statement/prospectus and any future filings it makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this joint proxy statement/prospectus and prior to the date of the ColonialPost Properties special meeting. Such documents are considered to be a part of this joint proxy statement/prospectus, effective as of the date such documents are filed. In the event of conflicting information in these documents, the information in the latest filed document should be considered correct.
You can obtain any of these documents from the SEC, through the SEC’s website at the address described above, or ColonialPost Properties will provide you with copies of these documents, without charge, upon written or oral request to:
ColonialPost Properties, TrustInc.
Attention: Investor Relations4401 Northside Parkway
2101 Sixth Avenue North, Suite 750800
Birmingham, Alabama 35203Atlanta, Georgia 30327
Telephone: (800) 645-3917Attn: Corporate Secretary
(404) 846-5000
If you are a shareholder of MAA or a shareholder of ColonialPost Properties and would like to request documents, please do so by September 18, 2013November 1, 2016 to receive them before the MAA special meeting or the ColonialPost Properties special meeting, as applicable. If you request any documents from MAA or Colonial,Post Properties, MAA or Colonial,Post Properties, as applicable, will mail them to you by first class mail, or another equally prompt means, within one business day after MAA or ColonialPost Properties receives your request.
If you have any questions about the mergers or how to submit your proxy, or you need additional copies of this joint proxy statement/prospectus, the enclosed proxy card or voting instructions, you can also contact D.F.contactD.F. King, & Co., Inc., MAA’s proxy solicitor, or Morrow & Co., Colonial’sorInnisfree, Post Properties’ proxy solicitor, at the following addresses and telephone numbers:
If you are a MAA shareholder: D.F. King & Co., Inc. 48 Wall Street, 22nd Floor New York, NY 10005
Banks and brokers: (212) 269-5550 (call collect)
| If you are a
Banks and brokers:
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This document is a prospectus of MAA and is a joint proxy statement of MAA and ColonialPost Properties for the MAA special meeting and the ColonialPost Properties special meeting. Neither MAA nor ColonialPost Properties has authorized anyone to give any information or make any representation about the mergers or MAA or ColonialPost Properties that is different from, or in addition to, that contained in this joint proxy statement/prospectus or in any of the materials that MAA or ColonialPost Properties has incorporated by reference into this joint proxy statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. The information contained in this joint proxy statement/prospectus speaks only as of the date of this joint proxy statement/prospectus unless the information specifically indicates that another date applies.
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
| Page | ||||
| F-2 | ||||
Pro Forma Condensed Consolidated Balance Sheet as of June 30, | F-4 | |||
| F-5 | ||||
| F-6 | ||||
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements | F-7 | |||
MID-AMERICA APARTMENT COMMUNITIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On June 3, 2013August 15, 2016, Mid-America Apartment Communities, Inc., or MAA, and ColonialPost Properties, Trust,Inc., or Colonial,Post Properties, and certain of their respective affiliates, entered into a definitive agreement and plan of merger, which is referred to as the merger agreement, pursuant to which MAA and ColonialPost Properties will combine through a merger of ColonialPost Properties with and into MAA, with MAA surviving the merger, which is referred to as the parent merger.merger, with MAA surviving the merger as the combined company, which is referred to as the Combined Corporation.
Under the terms of the merger agreement, each ColonialPost Properties common share will be converted automatically into the right to receive 0.3600.71 of a newly issued share of MAA common stock and each of Post Properties’ 8½% Series A Cumulative Redeemable Preferred Shares, which we refer to as Post Properties preferred stock, will be converted automatically into the right to receive one newly issued share of 8.50% Series I Cumulative Redeemable Preferred Stock of MAA, which will have the same rights, preferences, privileges and voting powers as the Post Properties preferred stock. Following the parent merger, continuing MAA shareholders will hold approximately 5668 percent of the issued and outstanding shares of common stock of the Combined Corporation and former ColonialPost Properties shareholders will hold approximately 4432 percent. The parent merger is subject to customary closing conditions, including receipt of the approval of both the MAA and ColonialPost Properties shareholders, among other things. The transactions contemplated by the merger agreement, including the parent merger, are expected to close OctoberDecember 1, 2013.2016.
The following unaudited pro forma consolidated financial statements are based on MAA’s historical consolidated financial statements and Colonial’sPost Properties’ historical consolidated financial statements, each incorporated by reference in this joint proxy statement/prospectus and have been adjusted in the statements below to give effect to the parent merger transaction. The unaudited pro forma combined statements of operations for the six months ended June 30, 20132016 and the twelve months ended December 31, 20122015 give effect to the parent merger as if it had occurred on January 1, 2012,2015, the beginning of the earliest period presented. The unaudited pro forma combined balance sheet as of June 30, 20132016 gives effect to the parent merger as if it had occurred on June 30, 2013.2016. The historical consolidated financial statements of ColonialPost Properties have been adjusted to reflect certain reclassifications in order to conform to MAA’s financial statement presentation.
The unaudited pro forma consolidated financial statements were prepared using the acquisition method of accounting with MAA considered the acquirer of Colonial.Post Properties. See “Accounting Treatment of the Mergers.”Mergers”. Under the acquisition method of accounting, the purchase price is allocated to the underlying ColonialPost Properties tangible and intangible assets acquired and liabilities assumed based on their respective fair market values with the excess purchase price, if any, allocated to goodwill.
The pro forma adjustments and the purchase price allocation as presented are based on estimates and certain information that is currently available. The total consideration for the parent merger and the assignment of fair values to Colonial’sPost Properties’ assets acquired and liabilities assumed has not been finalized, is subject to change, could vary materially from the actual amounts at the time the parent merger is completed, and has not identified all adjustments necessary to conform Colonial’sPost Properties’ accounting policies to MAA’s accounting policies. A final determination of the fair value of Colonial’sPost Properties’ assets and liabilities, including intangible assets with both indefinite or finite lives, will be based on the actual net tangible and intangible assets and liabilities of ColonialPost Properties that exist as of the closing date of the parent merger and, therefore, cannot be made prior to the completion of the parent merger. In addition, the value of the consideration to be paid by MAA upon the consummation of the parent merger will be determined based on the closing price of MAA’s common stock on the closing date of the parent merger. As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analyses are performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma consolidated financial statements presented below. MAA estimated the fair value of Colonial’sPost Properties’ assets and liabilities based on discussions with Colonial’sPost Properties’ management, preliminary valuation studies, due diligence and information presented in Colonial’sPost Properties’ public filings. Until the parent merger is completed, both companies
are limited in their ability to share certain information. Upon completion of the parent merger, final valuations will be performed. Any increases or decreases in the fair value of relevant balance sheet amounts upon completion of the final valuations
will result in adjustments to the pro forma balance sheet and/or statements of operations. The final purchase price allocation may be different than that reflected in the pro forma purchase price allocation presented herein, and this difference may be material.
The aggregate purchase price for financial statement purposes will be based on the actual closing price per share of MAA common stock on the closing date, which could differ materially from the assumed value disclosed in the notes to the unaudited pro forma consolidated financial statements. If the actual closing price per share of MAA common stock on the closing date is higher than the assumed amount, it is expected that the final purchase price will be higher; conversely, if the actual closing price is lower, it is expected that the final purchase price will be lower. A hypothetical 10% change in MAA’s closing stock price on the closing date of the parent merger would have an approximate $211$365 million impact on the purchase price and subsequent goodwill balance, if any.
Assumptions and estimates underlying the unaudited adjustments to the unaudited pro forma consolidated financial statements are described in the accompanying notes. The historical consolidated financial statements have been adjusted in the unaudited pro forma consolidated financial statements to give effect to pro forma events that are: (1) directly attributable to the parent merger, (2) factually supportable, and (3) expected to have a continuing impact on the results of operations of the Combined Corporation following the parent merger. This information is presented for illustrative purposes only and is not indicative of the combined operating results or financial position that would have occurred if such transactions had occurred on the dates and in accordance with the assumptions described below, nor is it indicative of future operating results or financial position.
The unaudited pro forma consolidated financial statements, although helpful in illustrating the financial characteristics of the Combined Corporation under one set of assumptions, do not reflect the benefits of expected cost savings (or associated costs to achieve such savings), opportunities to earn additional revenue, or other factors that may result as a consequence of the parent merger and do not attempt to predict or suggest future results. Specifically, the unaudited pro forma combined statements of operations exclude projected operating efficiencies and synergies expected to be achieved as a result of the parent merger. The projected operating synergies are expected to include approximately $25$20 million in combined annual cost synergies. The unaudited pro forma consolidated financial statements also exclude the effects of costs associated with any restructuring or integration activities or asset dispositions resulting from the parent merger as they are currently not known, and to the extent they occur, are expected to be non-recurring and will not have been incurred at the closing date of the parent merger. However, such costs could affect the combined companyCombined Corporation following the parent merger in the period the costs are incurred or recorded. Further, the unaudited pro forma consolidated financial statements do not reflect the effect of any regulatory actions that may impact the results of the combined companyCombined Corporation following the parent merger.
The unaudited pro forma consolidated financial statements have been developed from and should be read in conjunction with:
the accompanying notes to the unaudited pro forma consolidated financial statements;
the historical audited consolidated financial statements of MAA as of and for the year ended December 31, 2012,2015, included in MAA’s Form 10-K, and the historical unaudited consolidated financial statements as of and for the six months ended June 30, 2013,2016, included in MAA’s Form 10-Q, both of which are incorporated by reference ininto this document;
the historical audited consolidated financial statements of ColonialPost Properties as of and for the year ended December 31, 2012,2015, included in Colonial’s Current Report onPost Properties’ Form 8-K dated August 21, 2013,10-K, and the historical unaudited consolidated financial statements as of and for the six months ended June 30, 2013,2016, included in Colonial’sPost Properties’ Form 10-Q, both of which are incorporated by reference ininto this document; and
other information relating to MAA and ColonialPost Properties contained in or incorporated by reference into this document. See “Where You Can Find More Information,” “Selected Historical Financial Information of MAA” and “Selected Historical Financial Information of Colonial.Post Properties.”
MID-AMERICA APARTMENT COMMUNITIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 20132016
(Dollars in thousands)
| MAA Historical (A) | Colonial Historical (A) | Pro Forma Adjustments | MAA Pro Forma | MAA Historical | Post Properties Historical (A) | Pro Forma Adjustments | MAA Pro Forma | |||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||
Real estate assets: | ||||||||||||||||||||||||||||||||||||||||
Land | $ | 396,734 | $ | 412,387 | $ | 74,182 | (B) | $ | 883,303 | $ | 943,179 | $ | 323,121 | $ | 918,988 | (B | ) | $ | 2,185,288 | |||||||||||||||||||||
Buildings and improvements | 3,237,281 | 2,653,469 | 121,681 | (B) | 6,012,431 | 7,096,432 | 2,415,596 | 571,709 | (B | ) | 10,083,737 | |||||||||||||||||||||||||||||
Furniture, fixtures and equipment | 100,513 | 187,346 | (11,940 | ) | (B) | 275,919 | 245,607 | 312,383 | (246,015 | ) | (B | ) | 311,975 | |||||||||||||||||||||||||||
Development and capital improvements in progress | 47,662 | 91,235 | (12,065 | ) | (B) | 126,832 | 53,509 | 215,427 | 122,373 | (B | ) | 391,309 | ||||||||||||||||||||||||||||
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| 3,782,190 | 3,344,437 | 171,858 | 7,298,485 | 8,338,727 | 3,266,527 | 1,367,055 | 12,972,309 | |||||||||||||||||||||||||||||||||
Less accumulated depreciation | (1,051,801 | ) | (762,463 | ) | 762,463 | (C) | (1,051,801 | ) | (1,628,891 | ) | (1,042,329 | ) | 1,042,329 | (C | ) | (1,628,891 | ) | |||||||||||||||||||||||
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| 2,730,389 | 2,581,974 | 934,321 | 6,246,684 | 6,709,836 | 2,224,198 | 2,409,384 | 11,343,418 | |||||||||||||||||||||||||||||||||
Land held for future development | 5,450 | 198,410 | (99,253 | ) | (B) | 104,607 | ||||||||||||||||||||||||||||||||||
Commercial properties, net | 7,880 | 108,992 | (31,210 | ) | (B) | 85,662 | ||||||||||||||||||||||||||||||||||
Undeveloped land | 40,514 | 16,730 | 3,760 | (B | ) | 61,004 | ||||||||||||||||||||||||||||||||||
Corporate properties, net | 9,390 | 5,920 | (2,736 | ) | (B | ) | 12,574 | |||||||||||||||||||||||||||||||||
Investments in real estate joint ventures | 3,178 | 4,379 | 868 | (D) | 8,425 | 50 | 3,695 | 68,918 | (D | ) | 72,663 | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Real estate assets, net | 2,746,897 | 2,893,755 | 804,726 | 6,445,378 | 6,759,790 | 2,250,543 | 2,479,326 | 11,489,659 | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | 8,792 | 20,944 | 29,736 | 26,279 | 3,875 | — | 30,154 | |||||||||||||||||||||||||||||||||
Restricted cash | 12,989 | 10,212 | 23,201 | 25,131 | 4,126 | — | 29,257 | |||||||||||||||||||||||||||||||||
Deferred financing costs, net | 12,492 | 11,587 | (11,587 | ) | (E) | 12,492 | 4,587 | 1,978 | (1,978 | ) | (E | ) | 4,587 | |||||||||||||||||||||||||||
Accounts Receivable | 13,949 | 24,760 | 38,709 | |||||||||||||||||||||||||||||||||||||
Notes Receivable | — | 41,962 | 41,962 | |||||||||||||||||||||||||||||||||||||
Other assets | 29,111 | 38,495 | 89,016 | (F) | 156,622 | 51,987 | 27,926 | 39,862 | (F | ) | 119,775 | |||||||||||||||||||||||||||||
Goodwill | 4,106 | — | 4,106 | 1,607 | — | — | 1,607 | |||||||||||||||||||||||||||||||||
Assets held for sale | 5,881 | 41,279 | 8,075 | (G) | 55,235 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total assets | $ | 2,834,217 | $ | 3,082,994 | $ | 890,230 | $ | 6,807,441 | $ | 6,869,381 | $ | 2,288,448 | $ | 2,517,210 | $ | 11,675,039 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||||||||||||||||||
Liabilities and equity: | ||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||
Unsecured notes payable | $ | 2,246,227 | $ | 743,823 | $ | 14,530 | (G | ) | $ | 3,004,580 | ||||||||||||||||||||||||||||||
Secured notes payable | $ | 1,106,541 | $ | 690,284 | $ | 76,530 | (H) | $ | 1,873,355 | 1,243,198 | 188,013 | 11,503 | (G | ) | 1,442,714 | |||||||||||||||||||||||||
Unsecured notes payable | 585,000 | 957,043 | 20,713 | (H) | 1,562,756 | |||||||||||||||||||||||||||||||||||
Accounts payable | 10,085 | 32,388 | 42,473 | 7,464 | 3,286 | — | 10,750 | |||||||||||||||||||||||||||||||||
Fair market value of interest rate swaps | 11,907 | 14,301 | 26,208 | 11,760 | 7,077 | — | 18,837 | |||||||||||||||||||||||||||||||||
Accrued Expenses | 42,556 | 56,331 | 25,608 | (I) | 124,495 | |||||||||||||||||||||||||||||||||||
Other liabilities | 53,728 | 14,083 | 67,811 | |||||||||||||||||||||||||||||||||||||
Accrued expenses and other liabilities | 218,658 | 131,835 | 32,217 | (H | ) | 382,710 | ||||||||||||||||||||||||||||||||||
Security deposits | 6,934 | 2,453 | 9,387 | 12,386 | 6,782 | — | 19,168 | |||||||||||||||||||||||||||||||||
Liabilities associated with assets held for sale | 148 | — | 148 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total liabilities | 1,816,899 | 1,766,883 | 122,851 | 3,706,633 | 3,739,693 | 1,080,816 | 58,250 | 4,878,759 | ||||||||||||||||||||||||||||||||
Redeemable Stock/noncontrolling interest | 5,521 | 179,576 | (179,576 | ) | (J) | 5,521 | ||||||||||||||||||||||||||||||||||
Redeemable Stock | 10,369 | 7,360 | (7,360 | ) | (J | ) | 10,369 | |||||||||||||||||||||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||||||||||||||||||||||
Preferred stock | — | 9 | — | (I | ) | 9 | ||||||||||||||||||||||||||||||||||
Common stock | 427 | 943 | (597 | ) | (J) | 773 | 754 | 546 | (165 | ) | (J | ) | 1,135 | |||||||||||||||||||||||||||
Additional paid-in capital | 1,569,090 | 1,965,196 | 19,198 | (J) | 3,553,484 | 3,630,094 | 1,119,574 | 2,510,387 | (J | ) | 7,260,055 | |||||||||||||||||||||||||||||
Accumulated distributions in excess of net income | (582,884 | ) | (665,530 | ) | 665,530 | (J) | (670,954 | ) | 156,958 | (156,958 | ) | (J | ) | |||||||||||||||||||||||||||
| (25,608 | ) | (I) | (608,492 | ) | (46,500 | ) | (H | ) | (717,454 | ) | ||||||||||||||||||||||||||||||
Treasury Stock | — | (150,163 | ) | 150,163 | (J) | — | — | (71,762 | ) | 71,762 | (J | ) | — | |||||||||||||||||||||||||||
Accumulated other comprehensive losses | (6,336 | ) | (14,093 | ) | 14,093 | (J) | (6,336 | ) | (4,150 | ) | (7,061 | ) | 7,061 | (J | ) | (4,150 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total MAA shareholders’ equity | 980,297 | 1,136,353 | 822,779 | 2,939,429 | ||||||||||||||||||||||||||||||||||||
Total shareholders’ equity | 2,955,744 | 1,198,264 | 2,385,587 | 6,539,595 | ||||||||||||||||||||||||||||||||||||
Noncontrolling interest | 31,500 | 182 | 124,176 | (K) | 155,858 | 163,575 | 2,008 | 80,733 | (K | ) | 246,316 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total equity | 1,011,797 | 1,136,535 | 946,955 | 3,095,287 | 3,119,319 | 1,200,272 | 2,466,320 | 6,785,911 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 2,834,217 | $ | 3,082,994 | $ | 890,230 | $ | 6,807,441 | $ | 6,869,381 | $ | 2,288,448 | $ | 2,517,210 | $ | 11,675,039 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
MID-AMERICA APARTMENT COMMUNITIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 20132016
(Dollars in thousands, except per share data)
| MAA Historical | Colonial Historical (A) | Pro Forma Adjustments | MAA Pro Forma | MAA Historical | Post Properties Historical (A) | Pro Forma Adjustments | MAA Pro Forma | |||||||||||||||||||||||||||||||||
Operating revenues: | ||||||||||||||||||||||||||||||||||||||||
Rental revenues | $ | 243,008 | $ | 163,407 | $ | (165 | ) | (L) | $ | 406,250 | $ | 494,991 | $ | 185,968 | $ | — | $ | 680,959 | ||||||||||||||||||||||
Other property revenues | 21,029 | 36,451 | 57,480 | 46,261 | 11,665 | — | 57,926 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total property revenues | 264,037 | 199,858 | (165 | ) | 463,730 | 541,252 | 197,633 | — | 738,885 | |||||||||||||||||||||||||||||||
Management fee income | 319 | 304 | 623 | |||||||||||||||||||||||||||||||||||||
Other operating revenues | — | 555 | — | 555 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total operating revenues | 264,356 | 200,162 | (165 | ) | 464,353 | 541,252 | 198,188 | — | 739,440 | |||||||||||||||||||||||||||||||
Property operating expenses | ||||||||||||||||||||||||||||||||||||||||
Property operating expenses: | ||||||||||||||||||||||||||||||||||||||||
Personnel | 29,027 | 19,154 | 48,181 | 51,055 | 16,188 | — | 67,243 | |||||||||||||||||||||||||||||||||
Building repairs and maintenance | 7,147 | 8,906 | 16,053 | 13,779 | 9,317 | — | 23,096 | |||||||||||||||||||||||||||||||||
Real estate taxes and insurance | 31,720 | 24,938 | 56,658 | 69,900 | 35,069 | — | 104,969 | |||||||||||||||||||||||||||||||||
Utilities | 13,677 | 16,142 | 29,819 | 44,380 | 9,548 | — | 53,928 | |||||||||||||||||||||||||||||||||
Landscaping | 5,819 | 4,038 | 9,857 | 10,994 | 2,523 | — | 13,517 | |||||||||||||||||||||||||||||||||
Other operating | 17,759 | 5,695 | 23,454 | 13,728 | 7,954 | — | 21,682 | |||||||||||||||||||||||||||||||||
Depreciation and amortization | 65,406 | 62,653 | 4,987 | (M) | 133,046 | 150,870 | 45,503 | �� | 20,763 | (L | ) | 217,136 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total property operating expenses | 170,555 | 141,526 | 4,987 | 317,068 | 354,706 | 126,102 | 20,763 | 501,571 | ||||||||||||||||||||||||||||||||
Acquisition expense | 499 | 8 | 507 | 1,134 | — | — | 1,134 | |||||||||||||||||||||||||||||||||
Property management expenses | 10,777 | 9,311 | 20,088 | 17,313 | 6,808 | — | 24,121 | |||||||||||||||||||||||||||||||||
General and administrative expenses | 6,628 | 9,306 | (N) | 15,934 | 13,596 | 8,647 | — | (M | ) | 22,243 | ||||||||||||||||||||||||||||||
Merger related expenses | 5,737 | 1,705 | 7,442 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income from continuing operations before non-operating items | 70,160 | 38,306 | (5,152 | ) | 103,314 | 154,503 | 56,631 | (20,763 | ) | 190,371 | ||||||||||||||||||||||||||||||
Interest and other non-property income | 70 | 930 | 1,000 | 94 | 128 | — | 222 | |||||||||||||||||||||||||||||||||
Interest expense | (30,906 | ) | (43,194 | ) | 8,153 | (O) | (65,947 | ) | (64,250 | ) | (15,687 | ) | 4,022 | (N | ) | (75,915 | ) | |||||||||||||||||||||||
Loss on debt extinguishment/modification | (169 | ) | — | (169 | ) | |||||||||||||||||||||||||||||||||||
Amortization of deferred financing costs | (1,607 | ) | (2,759 | ) | 2,759 | (P) | (1,607 | ) | ||||||||||||||||||||||||||||||||
Impairment, legal contingencies, and other losses | — | (1,002 | ) | (1,002 | ) | |||||||||||||||||||||||||||||||||||
Gain on debt extinguishment/modification | 3 | — | — | 3 | ||||||||||||||||||||||||||||||||||||
Net casualty gain after insurance and other settlement proceeds | 455 | 25 | 480 | 813 | — | — | 813 | |||||||||||||||||||||||||||||||||
Gain on sale of depreciable real estate assets | 823 | — | — | 823 | ||||||||||||||||||||||||||||||||||||
Gain on sale of non-depreciable real estate assets | 2,170 | — | — | 2,170 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before gain from real estate joint ventures | 38,003 | (7,694 | ) | 5,760 | 36,069 | |||||||||||||||||||||||||||||||||||
Income before income tax expense | 94,156 | 41,072 | (16,741 | ) | 118,487 | |||||||||||||||||||||||||||||||||||
Income tax expense | (745 | ) | (100 | ) | — | (845 | ) | |||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Income from continuing operations before joint venture activity | 93,411 | 40,972 | (16,741 | ) | 117,642 | |||||||||||||||||||||||||||||||||||
Gain from real estate joint ventures | 101 | 2,998 | 46 | (Q) | 3,145 | 27 | 1,232 | — | 1,259 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | 38,104 | (4,696 | ) | 5,806 | 39,214 | |||||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 1,409 | 154 | 573 | (R) | 2,136 | |||||||||||||||||||||||||||||||||||
Income from continuing operations | 93,438 | 42,204 | (16,741 | ) | 118,901 | |||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | 4,881 | 89 | (672 | ) | (O | ) | 4,298 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations available for MAA common shareholders | $ | 36,695 | $ | (4,850 | ) | $ | 5,233 | $ | 37,078 | |||||||||||||||||||||||||||||||
Net income available for shareholders | 88,557 | 42,115 | (16,069 | ) | 114,603 | |||||||||||||||||||||||||||||||||||
Dividends to preferred shareholders | — | 1,844 | — | 1,844 | ||||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 88,557 | $ | 40,271 | $ | (16,069 | ) | $ | 112,759 | |||||||||||||||||||||||||||||||
Weighted average common shares outstanding—basic | 42,523 | 87,958 | (S) | 74,391 | 75,263 | 53,470 | (P | ) | 113,227 | |||||||||||||||||||||||||||||||
Weighted average common shares outstanding—diluted | 44,294 | 87,958 | (S) | 79,286 | 75,502 | 53,486 | (P | ) | 113,477 | |||||||||||||||||||||||||||||||
Net income (loss) from continuing operations per share attributable to common shares—basic | $ | 0.86 | $ | (0.06 | ) | (S) | $ | 0.50 | ||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations per share attributable to common shares—diluted | $ | 0.86 | $ | (0.06 | ) | (S) | $ | 0.49 | ||||||||||||||||||||||||||||||||
Earnings per common share—basic: | ||||||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 1.17 | $ | 0.75 | (P | ) | $ | 0.99 | ||||||||||||||||||||||||||||||||
Earnings per common share—diluted: | ||||||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 1.17 | $ | 0.75 | (P | ) | $ | 0.99 | ||||||||||||||||||||||||||||||||
MID-AMERICA APARTMENT COMMUNITIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 20122015
(Dollars in thousands, except per share data)
| MAA Historical | Colonial Historical (A) | Pro Forma Adjustments | MAA Pro Forma | MAA Historical | Post Properties Historical (A) | Pro Forma Adjustments | MAA Pro Forma | |||||||||||||||||||||||||||||||||
Operating revenues: | ||||||||||||||||||||||||||||||||||||||||
Rental revenues | $ | 456,202 | $ | 304,364 | $ | (329 | ) | (T) | $ | 760,237 | $ | 952,196 | $ | 360,615 | $ | — | $ | 1,312,811 | ||||||||||||||||||||||
Other property revenues | 40,064 | 58,787 | 98,851 | 90,583 | 22,182 | — | 112,765 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total property revenues | 496,266 | 363,151 | (329 | ) | 859,088 | 1,042,779 | 382,797 | — | 1,425,576 | |||||||||||||||||||||||||||||||
Management fee income | 899 | 5,696 | 6,595 | |||||||||||||||||||||||||||||||||||||
Other operating revenues | — | 1,209 | — | 1,209 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total operating revenues | 497,165 | 368,847 | (329 | ) | 865,683 | 1,042,779 | 384,006 | — | 1,426,785 | |||||||||||||||||||||||||||||||
Property operating expenses | ||||||||||||||||||||||||||||||||||||||||
Property operating expenses: | ||||||||||||||||||||||||||||||||||||||||
Personnel | 57,190 | 35,796 | 92,986 | 103,000 | 30,720 | — | 133,720 | |||||||||||||||||||||||||||||||||
Building repairs and maintenance | 15,957 | 18,228 | 34,185 | 30,524 | 16,567 | — | 47,091 | |||||||||||||||||||||||||||||||||
Real estate taxes and insurance | 56,907 | 41,742 | 98,649 | 129,618 | 66,758 | — | 196,376 | |||||||||||||||||||||||||||||||||
Utilities | 27,248 | 31,878 | 59,126 | 89,769 | 20,276 | — | 110,045 | |||||||||||||||||||||||||||||||||
Landscaping | 11,163 | 7,436 | 18,599 | 19,458 | 4,439 | — | 23,897 | |||||||||||||||||||||||||||||||||
Other operating | 34,861 | 17,460 | 52,321 | 28,276 | 14,369 | — | 42,645 | |||||||||||||||||||||||||||||||||
Depreciation and amortization | 126,136 | 117,004 | 85,328 | (U) | 328,468 | 294,520 | 87,458 | 75,733 | (Q | ) | 457,711 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total property operating expenses | 329,462 | 269,544 | 85,328 | 684,334 | 695,165 | 240,587 | 75,733 | 1,011,485 | ||||||||||||||||||||||||||||||||
Acquisition expense | 1,581 | 1,285 | 2,866 | 2,777 | — | — | 2,777 | |||||||||||||||||||||||||||||||||
Property management expenses | 22,084 | 12,858 | 34,942 | 30,990 | 14,201 | — | 45,191 | |||||||||||||||||||||||||||||||||
General and administrative expenses | 13,762 | 22,615 | (V) | 36,377 | 25,716 | 18,558 | — | (R | ) | 44,274 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income from continuing operations before non-operating items | 130,276 | 62,545 | (85,657 | ) | 107,164 | 288,131 | 110,660 | (75,733 | ) | 323,058 | ||||||||||||||||||||||||||||||
Interest and other non-property income | 430 | 2,468 | 2,898 | |||||||||||||||||||||||||||||||||||||
Interest and other non-property income (expense) | (368 | ) | 410 | — | 42 | |||||||||||||||||||||||||||||||||||
Interest expense | (58,751 | ) | (92,085 | ) | 15,514 | (W) | (135,322 | ) | (122,344 | ) | (33,577 | ) | 8,155 | (S | ) | (147,766 | ) | |||||||||||||||||||||||
Loss on debt extinguishment/modification | (654 | ) | — | (654 | ) | |||||||||||||||||||||||||||||||||||
Amortization of deferred financing costs | (3,552 | ) | (5,697 | ) | 5,697 | (X) | (3,552 | ) | ||||||||||||||||||||||||||||||||
Impairment, legal contingencies, and other losses | — | (22,762 | ) | (22,762 | ) | |||||||||||||||||||||||||||||||||||
Net casualty loss after insurance and other settlement proceeds | (6 | ) | — | (6 | ) | |||||||||||||||||||||||||||||||||||
Gain (loss) on sale of non-depreciable assets | 45 | (4,306 | ) | (4,261 | ) | |||||||||||||||||||||||||||||||||||
Gain on debt extinguishment/modification | (3,602 | ) | (197 | ) | — | (3,799 | ) | |||||||||||||||||||||||||||||||||
Net casualty gain after insurance and other settlement proceeds | 473 | — | — | 473 | ||||||||||||||||||||||||||||||||||||
Gain on sale of depreciable real estate assets | 189,958 | 1,475 | — | 191,433 | ||||||||||||||||||||||||||||||||||||
Gain on sale of non-depreciable real estate assets | 172 | — | — | 172 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before (loss) gain from real estate joint ventures | 67,788 | (59,837 | ) | (64,446 | ) | (56,495 | ) | |||||||||||||||||||||||||||||||||
(Loss) gain from real estate joint ventures | (223 | ) | 31,862 | 92 | (Y) | 31,731 | ||||||||||||||||||||||||||||||||||
Income before income tax expense | 352,420 | 78,771 | (67,578 | ) | 363,613 | |||||||||||||||||||||||||||||||||||
Income tax expense | (1,673 | ) | (186 | ) | — | (1,859 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | 67,565 | (27,975 | ) | (64,354 | ) | (24,764 | ) | |||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 2,744 | (2,065 | ) | (2,100 | ) | (Z) | (1,421 | ) | ||||||||||||||||||||||||||||||||
Income from continuing operations before joint venture activity | 350,747 | 78,585 | (67,578 | ) | 361,754 | |||||||||||||||||||||||||||||||||||
Gain from real estate joint ventures | (2 | ) | 2,208 | — | 2,206 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations available for MAA common shareholders | 64,821 | $ | (25,910 | ) | $ | (62,254 | ) | $ | (23,343 | ) | ||||||||||||||||||||||||||||||
Income from continuing operations | 350,745 | 80,793 | (67,578 | ) | 363,960 | |||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | 18,458 | 170 | (5,455 | ) | (T | ) | 13,173 | |||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Net income available for shareholders | 332,287 | 80,623 | (62,123 | ) | 350,787 | |||||||||||||||||||||||||||||||||||
Dividends to preferred shareholders | — | 3,688 | — | 3,688 | ||||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 332,287 | $ | 76,935 | $ | (62,123 | ) | $ | 347,099 | |||||||||||||||||||||||||||||||
Weighted average common shares outstanding—basic | 41,039 | 87,251 | (AA) | 72,450 | 75,176 | 54,290 | (U | ) | 113,722 | |||||||||||||||||||||||||||||||
Weighted average common shares outstanding—diluted | 42,937 | 87,251 | (AA) | 72,450 | 75,176 | 54,306 | (U | ) | 113,733 | |||||||||||||||||||||||||||||||
Net income (loss) from continuing operations per share attributable to common shares—basic | $ | 1.58 | $ | (0.30 | ) | (AA) | $ | (0.32 | ) | |||||||||||||||||||||||||||||||
Net income (loss) from continuing operations per share attributable to common shares—diluted | $ | 1.57 | $ | (0.30 | ) | (AA) | $ | (0.32 | ) | |||||||||||||||||||||||||||||||
Earnings per common share—basic: | ||||||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 4.41 | $ | 1.41 | (U | ) | $ | 3.04 | ||||||||||||||||||||||||||||||||
Earnings per common share—diluted: | ||||||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 4.41 | $ | 1.41 | (U | ) | $ | 3.04 | ||||||||||||||||||||||||||||||||
MID-AMERICA APARTMENT COMMUNITIES, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1:
Overview
For purposes of the unaudited pro forma consolidated financial statements (the “proor the pro forma financial statements”),statements, we have assumed a total preliminary purchase price for the parent merger of approximately $2.1$3.7 billion, which consists of shares of MAA common stock, 8.50 % Series I Cumulative Redeemable Preferred Stock of MAA, or new MAA preferred stock, issued in exchange for shares of Post Properties preferred stock, and Class A common units, or new MAA LP units, issued in exchange for ColonialPost Properties LP units. Under the terms of the merger agreement, the transaction is currently valued at $21.97 per Colonial share/Colonial LP unit,Units. The total preliminary purchase price was calculated based on the closing price of MAA’s common stock on August 16, 2013.September 22, 2016, which was $95.88. Each issued and outstanding share of ColonialPost Properties common stock will receive 0.3600.71 of a share of MAA common stock totaling a maximum aggregate number of MAA common shares of approximately 3238 million shares. In addition to the common shares, the transaction will also result in approximately 2.6 million868 thousand additional new shares of MAA preferred stock from the conversion of each outstanding share of Post Properties preferred stock into the right to receive one share of new MAA preferred stock. The transaction will also result in approximately 80 thousand additional new MAA LP units from the conversion of ColonialPost Properties LP units into new MAA LP units using the 0.3600.71 conversion rate noted above. We estimate that the MAA stock price represents the fair value of the new MAA LP units.
The pro forma financial statements have been prepared assuming the parent merger is accounted for using the acquisition method of accounting under U.S. GAAP, (whichwhich we refer to as “acquisition accounting”)acquisition accounting, with MAA as the acquiring entity. Accordingly, under acquisition accounting, the total estimated purchase price is allocated to the acquired net tangible and identifiable intangible assets and liabilities assumed of ColonialPost Properties based on their respective fair values, as further described below.
To the extent identified, certain reclassifications have been reflected in the pro forma adjustments to conform Colonial’sPost Properties’ financial statement presentation to that of MAA, as described in Note 2. However, the unaudited pro forma financial statements may not reflect all adjustments necessary to conform the accounting policies of ColonialPost Properties to those of MAA due to limitations on the availability of information as of the date of this joint proxy statement/prospectus.
The pro forma adjustments represent MAA management’s estimates based on information available as of the date of this joint proxy statement/prospectus and are subject to change as additional information becomes available and additional analyses are performed. The pro forma financial statements do not reflect the impact of possible revenue or earnings enhancements, cost savings from operating efficiencies or synergies, or asset dispositions. Also, the pro forma financial statements do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the parent merger that are not expected to have a continuing impact. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrent with, closing the parent merger are not included in the pro forma statements of operations.
The pro forma statements of operations for the year ended December 31, 20122015 and for the six months ended June 30, 20132016 combine the historical consolidated statements of operations of MAA and Colonial,Post Properties, giving effect to the parent merger as if it had been consummated on January 1, 2012,2015, the beginning of the earliest period presented. The pro forma balance sheet combines the historical consolidated balance sheet of MAA and the historical consolidated balance sheet of ColonialPost Properties as of June 30, 2013,2016, giving effect to the parent merger as if it had been consummated on June 30, 2013.2016.
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Completion of the parent merger is subject to, among other things, approval by the shareholders of both companies. As of the date of this joint proxy statement/prospectus, the parent merger is expected to be completed OctoberDecember 1, 2013.2016.
Preliminary Estimated Purchase Price
The total preliminary estimated purchase price of approximately $2.1$3.7 billion was determined based on the number of Colonial’sPost Properties’ shares of common stock, preferred stock and ColonialPost Properties LP units,Units as of August 16, 2013.September 22, 2016. For purposes of the
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
pro forma financial statements, such common stock, preferred stock, and ColonialPost Properties LP unitsUnits are assumed to remain outstanding as of the closing date of the parent merger. Further, no effect has been given to any other new shares of common stock, Post Properties preferred stock or ColonialPost Properties LP unitsUnits that may be issued or granted subsequent to the date of this joint proxy statement/prospectus and before the closing date of the parent merger. In all cases in which MAA’s closing stock price is a determining factor in arriving at final consideration for the parent merger, the stock price assumed for the total preliminary purchase price is the closing price of MAA’s common stock on August 16, 2013September 22, 2016 ($61.0495.88 per share), the most recent date practicable in the preparation of this joint proxy statement/prospectus.
The purchase price will be computed using the closing price of MAA common stock on the closing date; therefore, the actual purchase price will fluctuate with the market price of MAA common stock until the parent merger is consummated. As a result, the final purchase price could differ significantly from the current estimate, which could materially impact the pro forma financial statements. For more information regarding the consideration exchanged in the parent merger, see “The Merger Agreement—Merger Consideration; Effects of the Parent Merger and the Partnership Merger.”Merger”.
The following table presents the changes to the value of stock consideration and the total preliminary purchase price (excluding preferred shares and the fair value of stock options to be issued) based on a 10% increase and decrease in the per share price of MAA common stock (in thousands, except per share data)the price of MAA common stock):
| Price of MAA Common Stock | Consideration Given (MAA Shares and Units to be Issued) | Calculated Value of Consideration | Price of MAA Common Stock | Consideration Given (MAA Shares and MAA LP Units to be Issued) | Calculated Value of Consideration | |||||||||||||||||||
As of August 16, 2013 | $ | 61.04 | 34,553 | $ | 2,109,098 | |||||||||||||||||||
As of September 22, 2016 | $ | 95.88 | 38,072 | $ | 3,650,302 | |||||||||||||||||||
Decrease of 10% | $ | 54.94 | 34,553 | $ | 1,898,189 | $ | 86.29 | 38,072 | $ | 3,285,233 | ||||||||||||||
Increase of 10% | $ | 67.14 | 34,553 | $ | 2,320,008 | $ | 105.47 | 38,072 | $ | 4,015,454 | ||||||||||||||
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The total preliminary estimated purchase price described above has been allocated to Colonial’sPost Properties’ tangible and intangible assets acquired and liabilities assumed for purposes of these pro forma financial statements, based on their estimated relative fair values assuming the parent merger was completed on the pro forma balance sheet date presented. The final allocation will be based upon valuations and other analyses for which there is currently insufficient information to make a definitive allocation. Accordingly, the purchase price allocation adjustments are preliminary and have been made solely for the purpose of providing pro forma financial statements. The final purchase price allocation will be determined after the parent merger is consummated and after completion of a thorough analysis to determine the fair value of Colonial’sPost Properties’ tangible assets and liabilities, including fixed assets and identifiable intangible assets and liabilities. As a result, the final acquisition accounting adjustments, including those resulting from conforming Colonial’sPost Properties’ accounting policies to those of MAA, could differ materially from the pro forma adjustments presented herein. The total preliminary purchase price was allocated as follows, based on Colonial’sPost Properties’ historical unaudited consolidated Balance Sheet as of June 30, 20132016, as adjusted for certain pro forma reclassifications to conform with the financial statement presentation of MAA, as follows (in thousands):
| Asset/Liability | Book Value | Fair Value Adjustment | Total Value | Book Value | Fair Value Adjustment | Total Value | ||||||||||||||||||
Real estate assets, net | $ | 2,893,755 | $ | 804,726 | $ | 3,698,481 | $ | 2,250,543 | $ | 2,479,326 | $ | 4,729,869 | ||||||||||||
Lease intangible assets | 378 | 94,529 | 94,907 | - | 39,862 | 39,862 | ||||||||||||||||||
Cash and cash equivalents | 20,944 | 0 | 20,944 | 3,875 | - | 3,875 | ||||||||||||||||||
Deferred costs, assets held for sale, and other assets, excluding lease intangible assets | 167,917 | (9,025 | ) | 158,892 | ||||||||||||||||||||
Deferred costs and other assets | 34,030 | (1,978 | ) | 32,052 | ||||||||||||||||||||
Notes payable | (1,647,327 | ) | (97,243 | ) | (1,744,570 | ) | (931,836 | ) | (26,033 | ) | (957,869 | ) | ||||||||||||
Fair market value of interest rate swaps | (14,301 | ) | 0 | (14,301 | ) | (7,077 | ) | - | (7,077 | ) | ||||||||||||||
Accounts payable, accrued expenses, and other liabilities | (105,255 | ) | (0 | ) | (105,255 | ) | (141,903 | ) | 14,284 | (127,619 | ) | |||||||||||||
| ||||||||||||||||||||||||
Total Preliminary Purchase Price | $ | 2,109,098 | $ | 3,713,093 | ||||||||||||||||||||
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 2:
| (A) | The |
Balance Sheet
The components of fixed assetscorporate properties, net of accumulated depreciation, were combined in separate components titled “Land, buildings,” “Building and equipment.improvements,” “Furniture, fixtures and equipment,” and “Accumulated depreciation.” These balances have been reclassified into the separate components titled “Land,” “Buildings and improvements,” “Furniture, fixtures and equipment,” “Land held for future development,” and “Commercial“Corporate properties, net.”
Statement of Operations
The components of “Property operating expense and maintenance,” “Investment and development,” “Other investing costs,” and “Other expenses” were reclassified to the property operating expense were combined into theexpenses line item titled “Property operating expense.” These balances have been reclassified into separate components titleditems: “Personnel,” “Building repairs and maintenance,” “Real estate taxes and insurance,” “Utilities,” “Landscaping,” and “Other operating expenses.operating.”
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The expenses that make upFranchise tax expense, income tax expense, and the balanceexpense from the amortization of line of credit deferred financing costs were included as components of the amount on the line titled “Impairment, legal contingencies, and other losses” were included as a component of “Operating income.“Other income (expense), net.” These expenses have been reclassified to “Non-operating income.“Property management expenses,”
Colonial’s historical Statement of Operations for the year ended December 31, 2012 was recast to reclassify the results of operations for certain disposed properties from continuing operations to discontinued operations. The recast Statement of Operations was filed by Colonial on Form8-K on August 21, 2013.
Certain MAA historical balances were also reclassified in order to present in the form that the combined company will present as noted below:
Balance Sheet
A component of “Other assets” has been reclassified into a separate component, reclassifying $13.9 million to “Accounts receivable.”
Balance Sheet Adjustments
| (B) | The real estate assets of |
| (C) |
| (D) |
| (E) |
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
| (F) | Other assets adjustment includes |
| (G) |
| The debt balances of |
| Adjustment represents estimated transaction costs anticipated to be paid by MAA and |
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
| (I) | Adjustment represents the elimination of all historical Post Properties preferred stock and replaces it with the new MAA preferred stock. |
| (J) | Adjustment represents |
| (K) | The adjustment to noncontrolling interest represents the allocation of equity to the limited partnership unitholders based on the estimated fair value assumptions above. |
Statement of Operations Adjustments –Adjustment—Six months ended June 30, 20132016
| (L) |
| Depreciation and amortization is adjusted to remove |
| We expect the parent merger to create general and administrative cost efficiencies but there can be no assurance that such costs will be achieved. Since these costs are not factually supportable, we have not included any estimate of projected cost savings. |
| Interest expense is reduced by |
| The adjustment to noncontrolling interest was made to reflect the limited partnership unitholders’ combined ownership percentage of |
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
| The calculation of diluted income from continuing operations per common share was as follows: |
| Six Months Ended June 30, 2013 (Dollars in thousands, except per share data) | ||||||||||||
| MAA Historical | Colonial Historical | MAA Pro Forma | ||||||||||
Adjusted income (loss) from continuing operations attributable to common shares, basic | $ | 36,661 | $ | (5,087 | ) | $ | 37,078 | |||||
Adjusted income (loss) from continuing operations attributable to common shares, diluted | $ | 38,104 | $ | (5,087 | )* | $ | 39,214 | |||||
Weighted average common shares outstanding, basic | 42,523 | 87,958 | 74,391 | |||||||||
Weighted average common shares outstanding, diluted | 44,294 | 87,958 | * | 79,286 | ** | |||||||
Net income (loss) from continuing operations per common share, basic | $ | 0.86 | $ | (0.06 | ) | $ | 0.50 | |||||
Net income (loss) from continuing operations per common share, diluted | $ | 0.86 | $ | (0.06 | ) | $ | 0.49 | |||||
| Six Months Ended June 30, 2016 (Dollars in thousands, except per share data) | ||||||||||||
| MAA Historical | Post Properties Historical | MAA Pro Forma | ||||||||||
Adjusted income from continuing operations attributable to common shares, basic | $ | 88,320 | $ | 40,180 | $ | 112,431 | ||||||
Adjusted income from continuing operations attributable to common shares, diluted | $ | 88,557 | $ | 40,180 | $ | 112,668 | ||||||
Weighted average common shares outstanding, basic | 75,263 | 53,470 | 113,227 | |||||||||
Weighted average common shares, diluted | 75,502 | 53,486 | 113,477 | |||||||||
Net income from continuing operations per common share, basic | �� | $ | 1.17 | $ | 0.75 | $ | 0.99 | |||||
Net income from continuing operations per common share, diluted | $ | 1.17 | $ | 0.75 | $ | 0.99 | ||||||
Note: The pro forma weighted average common shares assumes that the ColonialPost Properties weighted average common shares were converted to shares of MAA using an exchange ratio of 0.3600.71 of a share of MAA common stock for every ColonialPost Properties common share.
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Statement of Operations Adjustments –Adjustment—Year ended December 31, 20122015
| Depreciation and amortization is adjusted to remove |
| We expect the parent merger to create general and administrative cost efficiencies but there can be no assurance that such costs will be achieved. Since these costs are not factually supportable, we have not included any estimate of projected cost savings. |
| Interest expense is reduced by |
| The adjustment to noncontrolling interest was made to reflect the limited partnership unitholders’ combined ownership percentage of |
MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
| The calculation of diluted income from continuing operations per common share was as follows: |
| Year Ended December 31, 2012 (Dollars in thousands, except per share data) | ||||||||||||
| MAA Historical | Colonial Historical | MAA Pro Forma | ||||||||||
Adjusted income (loss) from continuing operations attributable to common shares, basic | $ | 64,761 | $ | (26,439 | ) | $ | (23,343 | ) | ||||
Adjusted income (loss) from continuing operations attributable to common shares, diluted | $ | 67,565 | $ | (26,439 | )* | $ | (23,343 | )** | ||||
Weighted average common shares outstanding, basic | 41,039 | 87,251 | 72,450 | |||||||||
Weighted average common shares outstanding, diluted | 42,937 | 87,251 | * | 72,450 | ** | |||||||
Net income (loss) from continuing operations per common share, basic | $ | 1.58 | $ | (0.30 | ) | $ | (0.32 | ) | ||||
Net income (loss) from continuing operations per common share, diluted | $ | 1.57 | $ | (0.30 | ) | $ | (0.32 | ) | ||||
Year Ended December 31, 2015 (Dollars in thousands, except per share data) | ||||||||||||
| MAA Historical | Post Properties Historical | MAA Pro Forma | ||||||||||
Adjusted income from continuing operations attributable to common shares, basic | $ | 331,515 | $ | 76,753 | $ | 346,145 | ||||||
Adjusted income from continuing operations attributable to common shares, diluted | $ | 331,515 | $ | 76,753 | $ | 346,145 | ||||||
Weighted average common shares outstanding, basic | 75,176 | 54,290 | 113,722 | |||||||||
Weighted average common shares, diluted | 75,176 | 54,306 | 113,733 | |||||||||
Net income from continuing operations per common share, basic | $ | 4.41 | $ | 1.41 | $ | 3.04 | ||||||
Net income from continuing operations per common share, diluted | $ | 4.41 | $ | 1.41 | $ | 3.04 | ||||||
Note: The pro forma weighted average common shares assumes that the ColonialPost Properties weighted average shares were converted to MAA common stock using an exchange ratio of 0.3600.71 of a share of MAA for every ColonialPost Properties common share.
Execution Version
Annex A
AGREEMENT AND PLAN OF MERGER
by and among
MID-AMERICA APARTMENT COMMUNITIES, INC.
MID-AMERICA APARTMENTS, L.P.
MARTHA MERGER SUB,POST PROPERTIES, INC.
POST GP HOLDINGS, INC.
and
POST APARTMENT HOMES, L.P.
COLONIAL PROPERTIES TRUST
and
COLONIAL REALTY LIMITED PARTNERSHIP
Dated as of June 3, 2013August 15, 2016
This Agreement and Plan of Merger (the “Agreement”) contains representations and warranties that Mid-America Apartment Communities, Inc., Mid-America Apartments, L.P. and Martha Merger Sub, L.P. (the “Mid-America Parties”) and Colonial Properties Trust and Colonial Realty Limited Partnership (the “Colonial Parties”) made to one another. These representations and warranties were made only for the purposes of the Agreement and solely for the benefit of the Mid-America Parties and the Colonial Parties as of specific dates, may be subject to important limitations and qualifications agreed to by the Mid-America Parties and the Colonial Parties and included in confidential disclosure schedules provided by the Mid-America Parties and the Colonial Parties in connection with the signing of the Agreement, and may not be complete. Furthermore, these representations and warranties may have been made for the purposes of allocating contractual risk between the Mid-America Parties and the Colonial Parties instead of establishing these matters as facts, and may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of the filing of the Agreement by Mid-America Apartment Communities, Inc. and Colonial Properties Trust and Colonial Realty Limited Partnership with the U.S. Securities and Exchange Commission. Accordingly, you should not rely upon the representations and warranties contained in the Agreement as characterizations of the actual state of facts, since they were intended to be for the benefit of, and to be limited to, the Mid-America Parties and the Colonial Parties.
TABLE OF CONTENTS
| Page | ||||||||
Article I DEFINITIONS | A-2 | |||||||
| Section 1.1 | Definitions | A-2 | ||||||
| Section 1.2 | Interpretation and Rules of Construction | |||||||
Article II THE MERGERS | ||||||||
| Section 2.1 | The Partnership Merger | |||||||
| Section 2.2 | The Parent Merger | |||||||
| Section 2.3 | Closing | |||||||
| Section 2.4 | Governing Documents | |||||||
| Section 2.5 | Board of Directors | |||||||
| Section 2.6 | Tax Consequences | |||||||
Article III EFFECTS OF THE MERGERS | ||||||||
| Section 3.1 | Effects on Shares | |||||||
| Section 3.2 | Effects on Partnership Interests | |||||||
| Section 3.3 | Adjustments | |||||||
| ||||||||
| Post Options and Restricted Stock | ||||||||
| Section 3.5 | Exchange of Certificates | |||||||
| Section 3.6 | Withholding Rights | |||||||
| ||||||||
Section | Structure | |||||||
| Section | Fractional Shares | |||||||
| Section | Lost Certificates | |||||||
Article IV REPRESENTATIONS AND WARRANTIES OF | ||||||||
| Section 4.1 | Organization and Qualification; Subsidiaries | |||||||
| Section 4.2 | Organizational Documents | |||||||
| Section 4.3 | Capital Structure | |||||||
| Section 4.4 | Authority | |||||||
| Section 4.5 | No Conflict; Required Filings and Consents | |||||||
| Section 4.6 | Permits; Compliance with Law | |||||||
| Section 4.7 | SEC Documents; Financial Statements | |||||||
| Section 4.8 | Absence of Certain Changes or Events | |||||||
| Section 4.9 | No Undisclosed Material Liabilities | |||||||
| Section 4.10 | No Default | |||||||
| Section 4.11 | Litigation | |||||||
| Section 4.12 | Taxes | |||||||
| Section 4.13 | Pension and Benefit Plans; Employees | |||||||
| Section 4.14 | Labor and Employment Matters | |||||||
| Section 4.15 | Information Supplied | |||||||
| Section 4.16 | Intellectual Property | |||||||
A-i
| Page | ||||||||
| Section 4.17 | Environmental Matters | |||||||
| Section 4.18 | Properties | |||||||
| Section 4.19 | Material Contracts | |||||||
| Section 4.20 | Insurance | |||||||
| Section 4.21 | Opinion of Post Financial Advisor | |||||||
| Section 4.22 | Vote Required | |||||||
| Section 4.23 | Brokers | |||||||
| Section 4.24 | Investment Company Act | |||||||
| Section 4.25 | Takeover Statutes | |||||||
| Section 4.26 | Related Party Transactions | |||||||
| Section 4.27 | No Dissenter’s Rights | A-37 | ||||||
| Section 4.28 | No Other Representations and Warranties | |||||||
A-i
Article V REPRESENTATIONS AND WARRANTIES OF MAA | |||||||||||||
| Section 5.1 | Organization and Qualification; Subsidiaries | ||||||||||||
| Section 5.2 | Organizational Documents | ||||||||||||
| Section 5.3 | Capital Structure | ||||||||||||
| Section 5.4 | Authority | ||||||||||||
| Section 5.5 | No Conflict; Required Filings and Consents | ||||||||||||
| Section 5.6 | Permits; Compliance with Law | ||||||||||||
| Section 5.7 | SEC Documents; Financial Statements | ||||||||||||
| Section 5.8 | Absence of Certain Changes or Events | ||||||||||||
| Section 5.9 | No Undisclosed Material Liabilities | ||||||||||||
| Section 5.10 | No Default | ||||||||||||
| Section 5.11 | Litigation | ||||||||||||
| Section 5.12 | Taxes | ||||||||||||
| Section 5.13 | Pension and Benefit Plans; Employees | ||||||||||||
| Section 5.14 | Labor and Employment Matters | ||||||||||||
| Section 5.15 | Information Supplied | ||||||||||||
| Section 5.16 | Intellectual Property | ||||||||||||
| Section 5.17 | Environmental Matters | ||||||||||||
| Section 5.18 | Properties | ||||||||||||
| Section 5.19 | Material Contracts | ||||||||||||
| Section 5.20 | Insurance | ||||||||||||
| Section 5.21 | Opinion of MAA Financial Advisor | ||||||||||||
| Section 5.22 | Vote Required | ||||||||||||
| Section 5.23 | Brokers | ||||||||||||
| Section 5.24 | Investment Company Act | ||||||||||||
| Section 5.25 | Takeover Statutes | ||||||||||||
| Section 5.26 | Related Party Transactions | ||||||||||||
A-ii
| Page | ||||||||
| Section 5.27 | No Other Representations and Warranties | |||||||
Article VI COVENANTS RELATING TO CONDUCT OF BUSINESS | ||||||||
| Section 6.1 | Conduct of Business by | |||||||
| Section 6.2 | Conduct of Business by MAA | |||||||
| Section 6.3 | No Control of Other Party’s Business | |||||||
Article VII ADDITIONAL AGREEMENTS | ||||||||
| Section 7.1 | Preparation of Proxy Statement; | |||||||
| Section 7.2 | Access to Information | |||||||
| Section 7.3 | Reasonable Best Efforts | |||||||
| Section 7.4 | Acquisition Proposals; Changes in Recommendation | A-66 | ||||||
| Section 7.5 | Public Announcements | |||||||
| Section 7.6 | Indemnification; Directors’ and Officers’ Insurance | |||||||
| Section 7.7 | Appropriate Action; Consents | |||||||
| Section 7.8 | Notification of Certain Matters; Transaction Litigation | |||||||
| ||||||||
| Pending Closing | ||||||||
| Section 7.10 | Section 16 Matters | |||||||
| Section 7.11 | Delisting | A-76 | ||||||
| Section 7.12 | Director and Officer Resignations | A-77 | ||||||
| Section 7.13 | Certain Tax Matters | |||||||
| Section | Voting of Shares; Voting of | |||||||
| Section | Termination of | |||||||
| Section | Governance | |||||||
| Section | Tax Representation Letters | |||||||
| Section | Accrued Dividends | A-79 | ||||||
| Section 7.19 | Dividends | |||||||
| Section | Employment Matters | |||||||
| ||||||||
| ||||||||
A-ii
Article VIII CONDITIONS PRECEDENT | |||||||||||||
| Section 8.1 | Conditions to Each Party’s Obligation to Effect the Mergers | ||||||||||||
| Section 8.2 | Conditions to Obligations of the MAA Parties | ||||||||||||
| Section 8.3 | Conditions to Obligations of the | ||||||||||||
Article IX TERMINATION AND AMENDMENT | |||||||||||||
| Section 9.1 | Termination | ||||||||||||
| Section 9.2 | Effect of Termination | ||||||||||||
| Section 9.3 | Termination Fees and Expense Amount | ||||||||||||
| Section 9.4 | Amendment | ||||||||||||
| Section 9.5 | Extension; Waiver | ||||||||||||
Article X GENERAL PROVISIONS | |||||||||||||
| Section 10.1 | Non-Survival of Representations, Warranties and Agreements | ||||||||||||
A-iii
| Page | ||||||||
| Section 10.2 | Notices | |||||||
| Section 10.3 | Counterparts | |||||||
| Section 10.4 | Entire Agreement; No Third-Party Beneficiaries | |||||||
| Section 10.5 | Severability | |||||||
| Section 10.6 | Assignment | |||||||
| Section 10.7 | Governing Law | |||||||
| Section 10.8 | Specific Performance; Venue | |||||||
| Section 10.9 | WAIVER OF JURY TRIAL | |||||||
| Section 10.10 | Authorship | |||||||
EXHIBITS AND SCHEDULES
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A-iiiA-iv
EXHIBITS AND SCHEDULES
Exhibit A — Form of Mid-America Apartment Communities, Inc. Employee Waiver
Exhibit B — Form of Articles of Amendment to the Charter of MAA Designating and Fixing the Rights and Privileges of the MAA Series I Preferred Stock
Exhibit C-1 — Post Properties, Inc. Tax Representation Letter (Form 1)
Exhibit C-2 — Post Properties, Inc. Tax Representation Letter (Form 2)
Exhibit D-1 — Mid-America Apartment Communities, Inc. Tax Representation Letter (Form 1)
Exhibit D-2 — Mid-America Apartment Communities, Inc. Tax Representation Letter (Form 2)
Exhibit E — Form of Post Properties, Inc. REIT Opinion
Exhibit F — Form of Mid-America Apartment Communities, Inc. 368 Opinion
Exhibit G — Form of Mid-America Apartment Communities, Inc. REIT Opinion
Exhibit H — Form of Post Properties, Inc. 368 Opinion
Schedule A — Knowledge of Post Properties, Inc.
Schedule B — Knowledge of Mid-America Apartment Communities, Inc.
Post Properties, Inc. Disclosure Letter
Mid-America Apartment Communities, Inc. Disclosure Letter
A-v
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of June 3, 2013August 15, 2016 (this “Agreement”), is by and among MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (“MAA”), MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“MAA LP”), MARTHA MERGER SUB, L.P.POST PROPERTIES, INC., a Delaware limited partnership and a subsidiary of MAA LPGeorgia corporation (“OP Merger SubPost”), COLONIAL PROPERTIES TRUST, an Alabama real estate investment trustPOST GP HOLDINGS, INC., a Georgia corporation (“ColonialPost GP”), and COLONIAL REALTY LIMITED PARTNERSHIP,POST APARTMENT HOMES, L.P., a DelawareGeorgia limited partnership (“ColonialPost LP”). MAA, MAA LP, OP Merger Sub, ColonialPost, Post GP and ColonialPost LP are each sometimes referred to herein as a “Party” and collectively as the “Parties”. MAA and MAA LP are collectively referred to herein as the “MAA Parties”. Post, Post GP and Post LP are collectively referred to herein as the “Post Parties”.
WHEREAS, the board of directors of MAA (the “MAA Board”) and the board of trusteesdirectors of ColonialPost (the “ColonialPost Board”) have determined that it is in the best interests of their respective companies and respective shareholders for MAA and ColonialPost to combine their businesses by way of a merger of ColonialPost with and into MAA, with MAA being the surviving entity (the “Parent Merger”), on the terms and subject to the conditions set forth in this Agreement and in accordance with the Alabama Real Estate Investment Trust LawGeorgia Business Corporation Code (as amended, the “AREITLGBCC”), the Alabama Business and Nonprofit Entities Code, to the extent applicable (the “ABNEC”), and the Tennessee Business Corporation Act (as amended, the “TBCA”);
WHEREAS, MAA, as the sole general partner of MAA LP, Colonial,and Post GP, as the sole general partner of ColonialPost LP, and MAA LP, as the sole general partner of OP Merger Sub, deem it advisable and in the best interest of their respective limited partners that, priorfor MAA LP and Post LP to the Parent Merger, OP Merger Sub shall mergecombine their businesses by way of a merger of Post LP with and into ColonialMAA LP, with ColonialMAA LP continuing asbeing the surviving entity and an indirectly wholly-owned subsidiary of MAA LP after the Mergers (such merger transaction, the(the “Partnership Merger” and, together with the Parent Merger, the “Mergers”), on the terms and subject to the conditions set forth in this Agreement and in accordance with the DelawareGeorgia Revised Uniform Limited Partnership Act (as amended, the “DRULPAGRULPA”) and the Tennessee Revised Uniform Limited Partnership Act (as amended, the “TRULPA”);
WHEREAS, each of the MAA Board and the ColonialPost Board has taken all actions required for the execution of this Agreement by MAA and Colonial,Post, respectively, and approved the consummation of the Mergers and the other the transactions contemplated hereby upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, MAA, in its capacity as the general partner of MAA LP, Colonial,and Post GP, in its capacity as the general partner of ColonialPost LP, and MAA LP, in its capacity as the general partner of OP Merger Sub, have each taken all actions required for the execution of this Agreement by MAA LP Colonialand Post LP, and OP Merger Sub, respectively, and to approve the consummation by MAA LP Colonialand Post LP, and OP Merger Sub, respectively, of the transactions contemplated hereby;
WHEREAS, as an inducement to the ColonialPost Parties to enter into this Agreement, concurrently with the execution of this Agreement, certain of MAA’s executive officersemployees have entered into an agreement, in the form attached hereto asExhibitA (the “MAA ExecutiveEmployee Waivers”), dated as of the date hereof, pursuant to which such executive officersemployees have agreed, among other things, that the Mergers and the other transactions contemplated by this Agreement shall not constitute a change in control as defined in the executive officer’semployee’s applicable restricted stock and employment agreements;
WHEREAS, as an inducement to the MAA Parties to enter into this Agreement, certain of Colonial’s shareholders listed onSchedule A hereto have entered into a voting agreement, dated as of the date hereof, in the form attached hereto asExhibit B (the “Colonial Voting Agreement”) pursuant to which such shareholders have agreed, among other matters, to vote the Colonial Common Shares held by them for approval of the Parent Merger and the other transactions contemplated by this Agreement;
WHEREAS, as an inducement to the Colonial Parties to enter into this Agreement, certain of MAA’s shareholders listed onSchedule B hereto have entered into a voting agreement, dated as of the date hereof, in the
form attached hereto asExhibit C (the “MAA Voting Agreement”) pursuant to which such shareholders have agreed, among other matters, to vote (i) the MAA Common Stock held by them for approval of the Parent Merger, the issuance of the MAA Common Stock to be issued in the Parent Merger and the other transactions contemplated by this Agreement, and (ii) the MAA OP Units, if any, held by them in favor of the MAA Partner Approval;
WHEREAS, the Parties desire to make certain representations, warranties and agreements in connection with the execution of this Agreement and to prescribe various conditions to the Mergers; and
WHEREAS, for U.S. federal income tax purposes, it is intended that (i) the Parent Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement is intended to be and is adopted as a “plan of reorganization” with respect to the Parent Merger for purposes of Sections 354 and 361 of the Code, and (ii) the Partnership Merger shall qualify as and constitute an “asset-over” form of merger under Treasury Regulations Section 1.708-1(c)(3)(i) with MAA LP being a continuation of MAA LPthe continuing partnership pursuant to Treasury Regulations Section 1.708-1(c)(1).
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, intending to be legally bound, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1Definitions.
(a) For purposes of this Agreement:
“Action” means any claim, action, suit, proceeding, arbitration, mediation or other investigation.
“Affiliate” of a specified Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.
“Business Day” means any day other than a Saturday, Sunday or any day on which banks located in New York, New York are authorized or required to be closed.
“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.
“Colonial BylawsClosing Date” means the Bylaws of Colonial, as amended and supplemented and in effect on the date hereof.
“Colonial Common Shares” means common shares of beneficial interest in Colonial, par value $0.01 per share.
“Colonial Declaration of Trust” means the Declaration of Trust of Colonial, as amended and supplemented and in effect on the date hereof.
“Colonial Equity Incentive Plans” means the Colonial 2008 Omnibus Incentive Plan, as amended, the Colonial Third Amended and Restated Share Option and Restricted Share Plan, as amended, and the Colonial Non-Employee Trustee Share Option Plan, as amended.
“Colonial ESPP” means Colonial’s Employee Share Purchase Plan, as amended.
“Colonial LP Agreement” means the Fourth Amended and Restated Agreement of Limited Partnership of Colonial LP, dated as of January 27, 2012, as amended, modified or supplemented from time to time.
“Colonial Material Adverse Effect” means any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, financial condition or results of operations of Colonial and the Colonial Subsidiaries taken as a whole or (b) that will or would reasonably be expected to, prevent or materially impair the ability of the Colonial Parties to consummate the Mergers in the manner contemplated hereby before the Outside Date;provided,however, that for purposes of clause (a) “Colonial Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of Colonial to meet any internal or external projections or forecasts or any estimates of earnings, revenues, or other metrics for any period (provided, that any event, circumstance, change or effect giving rise to such failure may be taken into account in determining whether there has been a Colonial Material Adverse Effect), (ii) any events, circumstances, changes or effects that affect the multifamily residential real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal or regulatory conditions, (v) the commencement, escalation or worsening of a war or armed hostilitiesScheduled Closing Date or the occurrence of acts of terrorism or sabotage, (vi) the negotiation, execution or announcement of this Agreement, or the consummation or anticipation of consummation of the Mergers or the other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of MAA, (viii) earthquakes, hurricanes, floods or other natural disasters, (ix) any damage or destruction of any Colonial Property that is substantially covered by insurance, or (x) changes in Law or GAAP, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not materially disproportionately affect Colonial and the Colonial Subsidiaries, takenExtended Closing Date, as a whole, relative to other similarly situated participants in the multifamily residential real estate REIT industry in the United States, and in the case of clause (viii) do not materially disproportionately affect Colonial and the Colonial Subsidiaries, taken as a whole, relative to other participants in the multifamily residential real estate REIT industry in the geographic regions in which Colonial and the Colonial Subsidiaries operate or own or lease properties.applicable.
“Colonial OP Unit” shall mean a limited partnership interest in Colonial LP designated as a “Class A Unit” and a “Partnership Unit” under the Colonial LP Agreement.
“Colonial Option” means any option to purchase Colonial Common Shares under the Colonial Equity Incentive Plans or otherwise.
“Colonial Party” means any of Colonial or Colonial LP.
“Colonial Restricted Share Award” means an award of Colonial Common Shares granted under the Colonial Equity Incentive Plans that are unvested or subject to a substantial risk of forfeiture.
“Colonial Shareholder Meeting” means the meeting of the holders of Colonial Common Shares for the purpose of seeking the Colonial Shareholder Approval, including any postponement or adjournment thereof.
“Colonial Subsidiary” means Colonial LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) Colonial and/or Colonial LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) Colonial and/or any Person that is a Colonial Subsidiary by reason of the application of clause (a) or clause (c) of this definition of “Colonial Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) Colonial and/or Colonial LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest.
“Confidentiality Agreement” means the letter agreement, dated October 30, 2012July 24, 2016, from MAA to ColonialPost and confirmed and agreed to by Colonial.Post.
“EmployeeBenefit Plan” means any “employee benefit plan” (within the meaning of Section 3(3) of ERISA) and any employment, consulting, termination, severance, change in control, separation, retention, stock option, restricted stock, restricted stock unit, profits interest unit, equity, outperformance, stock purchase, deferred compensation, bonus, incentive compensation, fringe benefit, health, medical, dental, vision, disability, accident, life insurance, welfare benefit, cafeteria, vacation, paid time off, perquisite, retirement, pension, profit sharing or savings or any other compensation or employee benefit plan, agreement, program, policy or other arrangement, whether or not subject to ERISA, whether funded or unfunded, written or unwritten, for the benefit of any current or former employee, officer, manager, director or consultant.
“Environmental Law” means any Law (including common law) applicable to Post or MAA, as the case may be, relating to the pollution or protection of the environment (including air, surface water, groundwater, land surface or subsurface land), or human health or safety (as such matters relate to Hazardous Substances), including Laws relating to the use, handling, presence, transportation, treatment, storage, disposal, release or discharge of Hazardous Substances.
“Environmental Permit” shall mean any permit, approval, license or other authorization required under any applicable Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any entity, trade or business (whether or not incorporated) that, together with any other entity, trade or business (whether or not incorporated), is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Expense Amount” means an amount, not to exceed $10,000,000, equal to the sum of all documented reasonable and necessary Expenses paid or payable by any of the ColonialPost Parties or any of the MAA Parties, as applicable, in connection with this Agreement, the Mergers or any of the other transactions contemplated hereby.
“Expenses” means all expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a Party hereto and its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the preparation, printing, and filing of the Form S-4, the preparation, printing, filing and mailing of the Joint Proxy Statement and all SEC and other regulatory filing fees incurred in connection with the Form S-4 and the Joint Proxy Statement, the solicitation of shareholder or partner approvals, the preparation, printing and mailing of the MAA Consent Solicitation, engaging the services of the Exchange Agent, obtaining third party consents, any other filings with the SEC and all other matters related to the closing of the Mergers and the other transactions contemplated by this Agreement.
“GAAP” means the United States generally accepted accounting principles.
“GovernmentalAuthority” means any United States (federal, state or local) or foreign government or arbitration panel, or any governmental or quasi-governmental, regulatory, judicial, or administrative authority, board, bureau, agency, commission or self-regulatory organization.
“HazardousSubstances” means (i) those substances listed in, defined in or regulated as hazardous, toxic, pollutants, contaminants or harmful to human health or the environment under any Environmental Law, including the following U.S. federal statutes and their state counterparts, as each may be amended from time to time, and all regulations thereunder: the Resource Conservation and Recovery Act, CERCLA, the Toxic Substances Control Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act and the Clean Air Act; (ii) petroleum and petroleum products, including crude oil and any fractions thereof; and (iii) polychlorinated biphenyls, mold, methane, asbestos, and radon.
“Indebtedness” shall mean, with respect to any Person, (i) all Indebtedness, notes payable, accrued interest payable or other obligations for borrowed money, whether secured or unsecured, (ii) all obligations under conditional sale or other title retention agreements, or incurred as financing, in either case with respect to property acquired by such Person, (iii) all obligations issued, undertaken or assumed asfor the payment of the deferred purchase price for any property or assets, (iv) all obligations under capital leases, (v) all obligations in respect of bankers acceptances or letters of credit, (vi) all obligations under interest rate cap, swap, collar or similar transaction or currency hedging transactions, and (vii) any guarantee (other than customary non-recourse carve-out or “badboy” guarantees) of any of the foregoing, whether or not evidenced by a note, mortgage, bond, indenture or similar instrument.
“Initial Period” means the later of (a) 11:59 p.m. (New York time) on the thirtieth (30th) day after the date of this Agreement, and (b) 11:59 p.m. (New York time) on the first (1st) day after the end of all Notice Periods specified inSection 7.4(b)(iv) (including all subsequent Notice Periods as described in clauses (1) and (2) ofSection 7.4(b)(iv)) applicable to a Superior Proposal from a particular Person (including as revised or modified);provided,however, that in the case of clause (b), an initial Notice of Recommendation Change with respect to such Superior Proposal shall have been provided on or prior to the thirtieth (30th) day after the date of this Agreement.
“Intellectual Property” shall mean all United States and foreign (i) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) trademarks, service marks, trade dress, logos, trade names, corporate names, Internet domain names, design rights and other source identifiers, together with the goodwill symbolized by any of the foregoing, (iii) copyrightable works and copyrights, (iv) confidential and proprietary information, including trade secrets, know-how, ideas, formulae, models and methodologies, (v) all rights in the foregoing and in other similar intangible assets, and (vi) all applications and registrations for the foregoing.
“InvestmentCompanyAct” means the Investment Company Act of 1940, as amended.Index to Financial Statements
“IRS” means the United States Internal Revenue Service or any successor agency.
“Knowledge” (A)(a) where used herein with respect to the ColonialPost Parties means the actual (and not constructive or imputed) knowledge of the persons named inSchedule CA and (B)(b) where used herein with respect to the MAA Parties means the actual (and not constructive or imputed) knowledge of the persons named inSchedule DB.
“Law” means any and all domestic (federal, state or local) or foreign laws, rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority.
“Lien” shall mean with respect to any asset (including any security), any mortgage, deed of trust, option, claim, condition, covenant, lien, right of way, easement, pledge, charge, security interest, preferential arrangement, option or other third party right (including right of first refusal or first offer), restriction, right of way, easement, or title defectoffer or encumbrance of any kind in respect of such asset, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.kind.
“MAABylaws” means the Bylaws of MAA as amended and supplemented and in effect on the date hereof.
“MAACharter” means the Amended and Restated Charter of MAA, as amended and supplemented and in effect on the date hereof.
“MAACommonStock” means shares of common stock in MAA, par value $0.01 per share.
“MAAEquityIncentivePlans” means the MAA Amended and Restated 2013 Stock Incentive Plan, the MAA 2004 Stock Plan, the MAA Director Deferred Compensation Plan,2012 Long Term Incentive Program, the MAA 2013 Long Term Incentive Program, the MAA 2014 Long Term Incentive Program, the MAA 2015 Long Term Incentive Program, the MAA 2016 Long Term Incentive Program, the MAA 2012 NEO Bonus Plan,Program, the MAA 2016 Annual Incentive Program, the Colonial Properties Trust 2008 Long TermOmnibus Incentive Plan, as amended, the MAA 2012 Long Term IncentiveNon-Qualified Deferred Compensation Plan for Outside Company Directors, as amended, the MAA Employee Stock Ownership Plan, and the MAA 2013 Long Term IncentiveEmployee Stock Purchase Plan, as each may be amended from time to time.
“MAA Leases” means each lease or sublease (including any triple-net lease) for commercial or retail space under which MAA or a MAA Subsidiary is a lessor or sublessor with respect to each of the applicable MAA Properties, together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto.
“MAA LPAgreement” means the SecondThird Amended and Restated Agreement of Limited Partnership of MAA LP, dated as of November 24, 1997,October 1, 2013, as amended, modified or supplemented from time to time.
“MAAMaterialAdverseEffect” means any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, financial condition or results of operations of MAA and the MAA Subsidiaries taken as a whole or (b) that will or would reasonably be expected to, prevent or materially impair the ability of the MAA Parties to consummate the Mergers in the manner contemplated hereby before the Outside Date;hereby; provided,,however,, that for purposes of clause (a) “MAA Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of MAA to meet any internal or external projections or forecasts or any estimates of earnings, revenues, or other metrics for any period (provided,(provided, that any event, circumstance, change or effect giving rise to such failure may be taken into account in determining whether there has been a MAA Material Adverse Effect)Effect if not otherwise falling into one of the other exceptions contained in this definition), (ii) any events, circumstances, changes or effects that affect the multifamily residential real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial, banking, credit or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal, tax, political or regulatory conditions, (v) the commencement, escalation or worsening of a war (whether or not declared) or armed hostilities or the occurrence of acts of terrorism or sabotage (including cyberterrorism or cyber-attacks), (vi) the negotiation, execution or
announcement of this Agreement, or the consummation or anticipation of consummation of the Mergers or the other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of Colonial,Post, (viii) earthquakes, hurricanes, floods or other natural disasters, (ix) any damage or destruction of any assets or property of MAA Propertyor any MAA Subsidiary caused by casualty that is substantially covered by insurance, or (x) changes in Law or GAAP or any interpretations thereof or any accounting principles, practices or policies that MAA or any MAA Subsidiary is required to adopt, (xi) any Action brought, asserted or threatened by or on behalf of any holder or holders of capital stock, units or other equity interests in MAA or any MAA Subsidiary arising out of or relating to this Agreement, the Mergers or any of the other transactions contemplated by this Agreement, or (xii) any continuation of an adverse trend or condition or the escalation of, or any developments with respect to, any Action listed on Section 1.1 of the MAA Disclosure Letter, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not materially disproportionately affect MAA and the MAA Subsidiaries, taken as a whole, relative to other similarly situated participants in the multifamily residential real estate REIT industry in the United States, and in the case of clause (viii) do not materially disproportionately affect MAA and the MAA Subsidiaries, taken as a whole, relative to other participants in the multifamily residential real estate REIT industry in the geographic regions in which MAA and the MAA Subsidiaries operate or own or lease properties. The Parties agree that the mere fact of a decrease in the market price or a change in the trading volume of MAA Common Stock shall not, in and of itself, constitute a MAA Material Adverse Effect, but any event, circumstance, change or effect underlying such decrease or change shall be considered in determining whether there has been a MAA Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition.
“MAAOPUnit” shall mean a limited partnership interest in MAA LP designated as a “Partnership Unit” under the MAA LP Agreement.
“MAAOption” means any option to purchase MAA Common Stock under the MAA Equity Incentive Plans or otherwise.
“MAAParty” means any of MAA or MAA LP or OP Merger Sub.LP.
“MAA Series IPreferred Stock” means MAA’s 8.50% Series I Cumulative Redeemable Preferred Shares, with the terms of the MAA Series I Preferred Stock set forth in articles of amendment to the MAA Charter substantially in the form set forth inExhibit B, having the rights, preferences, privileges and voting powers substantially the same as those of the Post Preferred Stock immediately prior to the Parent Merger.
“MAAShareholderMeeting” means the meeting of the holders of MAA Common Stock for the purpose of seeking the MAA Shareholder Approval, including any postponement or adjournment thereof.
“MAASubsidiary” means MAA LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) MAA and/or MAA LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) MAA and/or any Person that is a MAA Subsidiary by reason of the application of clause (a) or clause (c) of this definition of “MAA Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) MAA and/or MAA LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest.
“NYSE” means the New York Stock Exchange.
“Order” means a judgment, order or decree of any Governmental Authority.
“Person” or “person” means an individual, corporation, partnership, limited partnership, limited liability company, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or other entity or a Governmental Authority or a political subdivision, agency or instrumentality of a Governmental Authority.
“Post Articlesof Incorporation” means the Articles of Incorporation of Post, as amended and supplemented and in effect on the date hereof.
“Post Bylaws” means the Bylaws of Post, as amended and supplemented and in effect on the date hereof.
“Post Common Stock” means shares of common stock in Post, par value $.01 per share.
“Post Equity Incentive Plans”means the Post Amended and Restated 2003 Incentive Stock Plan, the Post Properties, Inc. 2003 Incentive Stock Plan, and the Post Deferred Compensation Plan for Directors and Eligible Employees, as each may be amended from time to time.
“Post ESPP” means Post’s 2015 Non-Qualified Employee Stock Purchase Plan, as amended.
“Post Leases” means each lease or sublease (including any triple-net lease) for commercial or retail space under which Post or a Post Subsidiary is a lessor or sublessor with respect to each of the applicable Post Properties, together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto.
“Post LP Agreement” means the Second Amended and Restated Agreement of Limited Partnership of Post LP, dated as of October 24, 1997, as amended, modified or supplemented from time to time.
“Post Material Adverse Effect” means any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, financial condition or results of operations of Post and the Post Subsidiaries taken as a whole or (b) that will or would reasonably be expected to, prevent or materially impair the ability of the Post Parties to consummate the Mergers in the manner contemplated hereby;provided,however, that for purposes of clause (a) “Post Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of Post to meet any internal or external projections or forecasts or any estimates of earnings, revenues, or other metrics for any period (provided, that any event, circumstance, change or effect giving rise to such failure may be taken into account in determining whether there has been a Post Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition), (ii) any events, circumstances, changes or effects that affect the multifamily residential real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial, banking, credit or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal, tax, political or regulatory conditions, (v) the commencement, escalation or worsening of a war (whether or not declared) or armed hostilities or the occurrence of acts of terrorism or sabotage (including cyberterrorism or cyber-attacks), (vi) the negotiation, execution or announcement of this Agreement, or the consummation or anticipation of consummation of the Mergers or the other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of MAA, (viii) earthquakes, hurricanes, floods or other natural disasters, (ix) any damage or destruction of any assets or property of Post or any Post Subsidiary caused by casualty that is substantially covered by insurance, (x) changes in Law or GAAP or any interpretations thereof or any accounting principles, practices or policies that Post or any Post Subsidiary is required to adopt, (xi) any Action brought, asserted or threatened by or on behalf of any holder or holders of capital stock, units or other equity interests in Post or any Post Subsidiary arising out of or relating to this Agreement, the Mergers or any of the other transactions contemplated by this Agreement, or (xii) any continuation of an adverse trend or condition or the escalation of, or any developments with respect to, any Action listed on Section 1.1 of the Post Disclosure Letter, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not materially disproportionately affect Post and the Post Subsidiaries, taken as a whole, relative to other similarly situated participants in the multifamily residential real estate REIT industry in the United States, and in the case of clause (viii) do not materially disproportionately affect Post and the Post Subsidiaries, taken as a whole, relative to other participants in the multifamily residential real estate REIT industry in the geographic regions in which Post and the Post Subsidiaries operate or own or lease properties. The Parties agree that the mere fact of a decrease in the market
price or a change in the trading volume of Post Common Stock shall not, in and of itself, constitute a Post Material Adverse Effect, but any event, circumstance, change or effect underlying such decrease or change shall be considered in determining whether there has been a Post Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition.
“Post OP Unit” shall mean a limited partnership interest in Post LP designated as a “Partnership Unit” under the Post LP Agreement.
“PostOption” means any option to purchase Post Common Stock under the Post Equity Incentive Plans or otherwise.
“PostParty” means any of Post, Post GP or Post LP.
“Post Preferred Unit” shall mean a limited partnership interest in Post LP designated as a “Series A Preferred Partnership Unit” under the Post LP Agreement.
“Post REIT Subsidiary” shall mean each Post Subsidiary that is intended to be treated as a REIT for tax purposes.
“Post Restricted Stock Award” means an award of Post Common Stock granted under the Post Equity Incentive Plans that are unvested or subject to a substantial risk of forfeiture.
“PostShareholderMeeting” means the meeting of the holders of Post Common Stock for the purpose of seeking the Post Shareholder Approval, including any postponement or adjournment thereof.
“PostSubsidiary” means Post GP, Post LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) Post and/or Post LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) Post and/or any Person that is a Post Subsidiary by reason of the application of clause (a) or clause (c) of this definition of “Post Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) Post and/or Post LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest. For purposes of this Agreement, 1499 Massachusetts Avenue, Inc. shall be a Post Subsidiary.
“Representative” means, with respect to any Person, such Person’s directors, officers, employees, consultants, advisors (including attorneys, accountants, consultants, investment bankers, and financial advisors), agents and other representatives.
“SEC” means the United States Securities and Exchange Commission (including the staff thereof).
“SecuritiesAct” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means the Post Subsidiary or the MAA Subsidiary, as applicable.
“Tax” or “Taxes” means any U.S. federal, state, local and foreign income, gross receipts, license, withholding, property, recording, stamp, transfer, sales, use, abandoned property, escheat, franchise, employment, payroll, excise, environmental and other taxes, tariffs or governmental charges of any nature whatsoever, together with penalties, interest or additions thereto.
“Tax ReturnClosing Date” means the Scheduled Closing Date or the Extended Closing Date, as applicable.
“Confidentiality Agreement” means the letter agreement, dated July 24, 2016, from MAA to Post and confirmed and agreed to by Post.
“EmployeeBenefit Plan” means any return, declaration, report, claim“employee benefit plan” (within the meaning of Section 3(3) of ERISA) and any employment, consulting, termination, severance, change in control, separation, retention, stock option, restricted stock, restricted stock unit, profits interest unit, equity, outperformance, stock purchase, deferred compensation, bonus, incentive compensation, fringe benefit, health, medical, dental, vision, disability, accident, life insurance, welfare benefit, cafeteria, vacation, paid time off, perquisite, retirement, pension, profit sharing or savings or any other compensation or employee benefit plan, agreement, program, policy or other arrangement, whether or not subject to ERISA, whether funded or unfunded, written or unwritten, for refund,the benefit of any current or information returnformer employee, officer, manager, director or statementconsultant.
“Environmental Law” means any Law (including common law) applicable to Post or MAA, as the case may be, relating to Taxes,the pollution or protection of the environment (including air, surface water, groundwater, land surface or subsurface land), or human health or safety (as such matters relate to Hazardous Substances), including Laws relating to the use, handling, presence, transportation, treatment, storage, disposal, release or discharge of Hazardous Substances.
“Environmental Permit” shall mean any permit, approval, license or other authorization required under any applicable Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any entity, trade or business (whether or not incorporated) that, together with any other entity, trade or business (whether or not incorporated), is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Expense Amount” means an amount, not to exceed $10,000,000, equal to the sum of all documented reasonable and necessary Expenses paid or payable by any of the Post Parties or any of the MAA Parties, as applicable, in connection with this Agreement, the Mergers or any of the other transactions contemplated hereby.
“Expenses” means all expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a Party hereto and its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the preparation, printing, and filing of the Form S-4, the preparation, printing, filing and mailing of the Joint Proxy Statement and all SEC and other regulatory filing fees incurred in connection with the Form S-4 and the Joint Proxy Statement, the solicitation of shareholder or partner approvals, engaging the services of the Exchange Agent, obtaining third party consents, any other filings with the SEC and all other matters related to the closing of the Mergers and the other transactions contemplated by this Agreement.
“GAAP” means the United States generally accepted accounting principles.
“GovernmentalAuthority” means any United States (federal, state or local) or foreign government or arbitration panel, or any governmental or quasi-governmental, regulatory, judicial, or administrative authority, board, bureau, agency, commission or self-regulatory organization.
“HazardousSubstances” means (i) those substances listed in, defined in or regulated as hazardous, toxic, pollutants, contaminants or harmful to human health or the environment under any Environmental Law, including the following U.S. federal statutes and their state counterparts, as each may be amended from time to time, and all regulations thereunder: the Resource Conservation and Recovery Act, CERCLA, the Toxic Substances Control Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act and the Clean Air Act; (ii) petroleum and petroleum products, including crude oil and any fractions thereof; and (iii) polychlorinated biphenyls, mold, methane, asbestos, and radon.
“Indebtedness” shall mean, with respect to any Person, (i) all Indebtedness, notes payable, accrued interest payable or other obligations for borrowed money, whether secured or unsecured, (ii) all obligations under conditional sale or other title retention agreements, or incurred as financing, in either case with respect to property acquired by such Person, (iii) all obligations for the payment of the deferred purchase price for any property or assets, (iv) all obligations under capital leases, (v) all obligations in respect of bankers acceptances or letters of credit, (vi) all obligations under interest rate cap, swap, collar or similar transaction or currency hedging transactions, and (vii) any guarantee (other than customary non-recourse carve-out or “badboy” guarantees) of any of the foregoing, whether or not evidenced by a note, mortgage, bond, indenture or similar instrument.
“Initial Period” means the later of (a) 11:59 p.m. (New York time) on the thirtieth (30th) day after the date of this Agreement, and (b) 11:59 p.m. (New York time) on the first (1st) day after the end of all Notice Periods specified inSection 7.4(b)(iv) (including all subsequent Notice Periods as described in clauses (1) and (2) ofSection 7.4(b)(iv)) applicable to a Superior Proposal from a particular Person (including as revised or modified);provided,however, that in the case of clause (b), an initial Notice of Recommendation Change with respect to such Superior Proposal shall have been provided on or prior to the thirtieth (30th) day after the date of this Agreement.
“Intellectual Property” shall mean all United States and foreign (i) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) trademarks, service marks, trade dress, logos, trade names, corporate names, Internet domain names, design rights and other source identifiers, together with the goodwill symbolized by any of the foregoing, (iii) copyrightable works and copyrights, (iv) confidential and proprietary information, including trade secrets, know-how, ideas, formulae, models and methodologies, (v) all rights in the foregoing and in other similar intangible assets, and (vi) all applications and registrations for the foregoing.
“InvestmentCompanyAct” means the Investment Company Act of 1940, as amended.
“IRS” means the United States Internal Revenue Service or any successor agency.
“Knowledge” (a) where used herein with respect to the Post Parties means the actual (and not constructive or imputed) knowledge of the persons named inSchedule A and (b) where used herein with respect to the MAA Parties means the actual (and not constructive or imputed) knowledge of the persons named inSchedule B.
“Law” means any and all domestic (federal, state or local) or foreign laws, rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority.
“Lien” shall mean with respect to any asset (including any security), any mortgage, deed of trust, option, claim, condition, covenant, lien, right of way, easement, pledge, charge, security interest, preferential arrangement, right of first refusal or first offer or encumbrance of any kind.
“MAABylaws” means the Bylaws of MAA as amended and supplemented and in effect on the date hereof.
“MAACharter” means the Amended and Restated Charter of MAA, as amended and supplemented and in effect on the date hereof.
“MAACommonStock” means shares of common stock in MAA, par value $0.01 per share.
“MAAEquityIncentivePlans” means the MAA Amended and Restated 2013 Stock Incentive Plan, the MAA 2004 Stock Plan, the MAA 2012 Long Term Incentive Program, the MAA 2013 Long Term Incentive Program, the MAA 2014 Long Term Incentive Program, the MAA 2015 Long Term Incentive Program, the MAA 2016 Long Term Incentive Program, the MAA 2012 NEO Bonus Program, the MAA 2016 Annual Incentive Program, the Colonial Properties Trust 2008 Omnibus Incentive Plan, as amended, the MAA Non-Qualified Deferred Compensation Plan for Outside Company Directors, as amended, the MAA Employee Stock Ownership Plan, and the MAA Employee Stock Purchase Plan, as each may be amended from time to time.
“MAA Leases” means each lease or sublease (including any triple-net lease) for commercial or retail space under which MAA or a MAA Subsidiary is a lessor or sublessor with respect to each of the applicable MAA Properties, together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto.
“MAA LPAgreement” means the Third Amended and Restated Agreement of Limited Partnership of MAA LP, dated as of October 1, 2013, as amended, modified or supplemented from time to time.
“MAAMaterialAdverseEffect” means any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, financial condition or results of operations of MAA and the MAA Subsidiaries taken as a whole or (b) that will or would reasonably be expected to, prevent or materially impair the ability of the MAA Parties to consummate the Mergers in the manner contemplated hereby; provided, however, that for purposes of clause (a) “MAA Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of MAA to meet any internal or external projections or forecasts or any estimates of earnings, revenues, or other metrics for any period (provided, that any event, circumstance, change or effect giving rise to such failure may be taken into account in determining whether there has been a MAA Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition), (ii) any events, circumstances, changes or effects that affect the multifamily residential real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial, banking, credit or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal, tax, political or regulatory conditions, (v) the commencement, escalation or worsening of a war (whether or not declared) or armed hostilities or the occurrence of acts of terrorism or sabotage (including cyberterrorism or cyber-attacks), (vi) the negotiation, execution or
announcement of this Agreement, or the consummation or anticipation of consummation of the Mergers or the other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of Post, (viii) earthquakes, hurricanes, floods or other natural disasters, (ix) any damage or destruction of any assets or property of MAA or any MAA Subsidiary caused by casualty that is substantially covered by insurance, (x) changes in Law or GAAP or any interpretations thereof or any accounting principles, practices or policies that MAA or any MAA Subsidiary is required to adopt, (xi) any Action brought, asserted or threatened by or on behalf of any holder or holders of capital stock, units or other equity interests in MAA or any MAA Subsidiary arising out of or relating to this Agreement, the Mergers or any of the other transactions contemplated by this Agreement, or (xii) any continuation of an adverse trend or condition or the escalation of, or any developments with respect to, any Action listed on Section 1.1 of the MAA Disclosure Letter, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not materially disproportionately affect MAA and the MAA Subsidiaries, taken as a whole, relative to other similarly situated participants in the multifamily residential real estate REIT industry in the United States, and in the case of clause (viii) do not materially disproportionately affect MAA and the MAA Subsidiaries, taken as a whole, relative to other participants in the multifamily residential real estate REIT industry in the geographic regions in which MAA and the MAA Subsidiaries operate or own or lease properties. The Parties agree that the mere fact of a decrease in the market price or a change in the trading volume of MAA Common Stock shall not, in and of itself, constitute a MAA Material Adverse Effect, but any event, circumstance, change or effect underlying such decrease or change shall be considered in determining whether there has been a MAA Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition.
“MAAOPUnit” shall mean a limited partnership interest in MAA LP designated as a “Partnership Unit” under the MAA LP Agreement.
“MAAOption” means any option to purchase MAA Common Stock under the MAA Equity Incentive Plans or otherwise.
“MAAParty” means any of MAA or MAA LP.
“MAA Series IPreferred Stock” means MAA’s 8.50% Series I Cumulative Redeemable Preferred Shares, with the terms of the MAA Series I Preferred Stock set forth in articles of amendment to the MAA Charter substantially in the form set forth inExhibit B, having the rights, preferences, privileges and voting powers substantially the same as those of the Post Preferred Stock immediately prior to the Parent Merger.
“MAAShareholderMeeting” means the meeting of the holders of MAA Common Stock for the purpose of seeking the MAA Shareholder Approval, including any schedulepostponement or attachment thereto,adjournment thereof.
“MAASubsidiary” means MAA LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) MAA and/or MAA LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) MAA and/or any Person that is a MAA Subsidiary by reason of the application of clause (a) or clause (c) of this definition of “MAA Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) MAA and/or MAA LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest.
“NYSE” means the New York Stock Exchange.
“Order” means a judgment, order or decree of any Governmental Authority.
“Person” or “person” means an individual, corporation, partnership, limited partnership, limited liability company, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or other entity or a Governmental Authority or a political subdivision, agency or instrumentality of a Governmental Authority.
“Post Articlesof Incorporation” means the Articles of Incorporation of Post, as amended and supplemented and in effect on the date hereof.
“Post Bylaws” means the Bylaws of Post, as amended and supplemented and in effect on the date hereof.
“Post Common Stock” means shares of common stock in Post, par value $.01 per share.
“Post Equity Incentive Plans”means the Post Amended and Restated 2003 Incentive Stock Plan, the Post Properties, Inc. 2003 Incentive Stock Plan, and the Post Deferred Compensation Plan for Directors and Eligible Employees, as each may be amended from time to time.
“Post ESPP” means Post’s 2015 Non-Qualified Employee Stock Purchase Plan, as amended.
“Post Leases” means each lease or sublease (including any triple-net lease) for commercial or retail space under which Post or a Post Subsidiary is a lessor or sublessor with respect to each of the applicable Post Properties, together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto.
“Post LP Agreement” means the Second Amended and Restated Agreement of Limited Partnership of Post LP, dated as of October 24, 1997, as amended, modified or supplemented from time to time.
“Post Material Adverse Effect” means any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, financial condition or results of operations of Post and the Post Subsidiaries taken as a whole or (b) that will or would reasonably be expected to, prevent or materially impair the ability of the Post Parties to consummate the Mergers in the manner contemplated hereby;provided,however, that for purposes of clause (a) “Post Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of Post to meet any internal or external projections or forecasts or any estimates of earnings, revenues, or other metrics for any period (provided, that any event, circumstance, change or effect giving rise to such failure may be taken into account in determining whether there has been a Post Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition), (ii) any events, circumstances, changes or effects that affect the multifamily residential real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial, banking, credit or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal, tax, political or regulatory conditions, (v) the commencement, escalation or worsening of a war (whether or not declared) or armed hostilities or the occurrence of acts of terrorism or sabotage (including cyberterrorism or cyber-attacks), (vi) the negotiation, execution or announcement of this Agreement, or the consummation or anticipation of consummation of the Mergers or the other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of MAA, (viii) earthquakes, hurricanes, floods or other natural disasters, (ix) any damage or destruction of any assets or property of Post or any Post Subsidiary caused by casualty that is substantially covered by insurance, (x) changes in Law or GAAP or any interpretations thereof or any accounting principles, practices or policies that Post or any Post Subsidiary is required to adopt, (xi) any Action brought, asserted or threatened by or on behalf of any holder or holders of capital stock, units or other equity interests in Post or any Post Subsidiary arising out of or relating to this Agreement, the Mergers or any of the other transactions contemplated by this Agreement, or (xii) any continuation of an adverse trend or condition or the escalation of, or any developments with respect to, any Action listed on Section 1.1 of the Post Disclosure Letter, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not materially disproportionately affect Post and the Post Subsidiaries, taken as a whole, relative to other similarly situated participants in the multifamily residential real estate REIT industry in the United States, and in the case of clause (viii) do not materially disproportionately affect Post and the Post Subsidiaries, taken as a whole, relative to other participants in the multifamily residential real estate REIT industry in the geographic regions in which Post and the Post Subsidiaries operate or own or lease properties. The Parties agree that the mere fact of a decrease in the market
price or a change in the trading volume of Post Common Stock shall not, in and of itself, constitute a Post Material Adverse Effect, but any event, circumstance, change or effect underlying such decrease or change shall be considered in determining whether there has been a Post Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition.
“Post OP Unit” shall mean a limited partnership interest in Post LP designated as a “Partnership Unit” under the Post LP Agreement.
“PostOption” means any option to purchase Post Common Stock under the Post Equity Incentive Plans or otherwise.
“PostParty” means any of Post, Post GP or Post LP.
“Post Preferred Unit” shall mean a limited partnership interest in Post LP designated as a “Series A Preferred Partnership Unit” under the Post LP Agreement.
“Post REIT Subsidiary” shall mean each Post Subsidiary that is intended to be treated as a REIT for tax purposes.
“Post Restricted Stock Award” means an award of Post Common Stock granted under the Post Equity Incentive Plans that are unvested or subject to a substantial risk of forfeiture.
“PostShareholderMeeting” means the meeting of the holders of Post Common Stock for the purpose of seeking the Post Shareholder Approval, including any amendmentpostponement or adjournment thereof.
“PostSubsidiary” means Post GP, Post LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) Post and/or Post LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) Post and/or any Person that is a Post Subsidiary by reason of the application of clause (a) or clause (c) of this definition of “Post Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) Post and/or Post LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest. For purposes of this Agreement, 1499 Massachusetts Avenue, Inc. shall be a Post Subsidiary.
“Representative” means, with respect to any Person, such Person’s directors, officers, employees, consultants, advisors (including attorneys, accountants, consultants, investment bankers, and financial advisors), agents and other representatives.
“SEC” means the United States Securities and Exchange Commission (including the staff thereof).
“SecuritiesAct” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means the Post Subsidiary or the MAA Subsidiary, as applicable.
“Tax” or “Taxes” means any U.S. federal, state, local and foreign income, gross receipts, license, withholding, property, recording, stamp, transfer, sales, use, abandoned property, escheat, franchise, employment, payroll, excise, environmental and other taxes, tariffs or governmental charges of any nature whatsoever, together with penalties, interest or additions thereto.
“Termination Fee” means $75,000,000.
“Third Party” means any Person or group of Persons other than a Party to this Agreement or their respective Affiliates.
“VWAP of MAA Common Stock” shall mean the volume weighted average price of MAA Common Stock for the ten (10) trading days immediately prior to the Closing Date, starting with the opening of trading on the first trading day to the closing of the second to last trading day prior to the Closing Date, as reported by Bloomberg.
“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any state law analogs or statutes of similar effect, including any statutes that require advance notice of plant closings, mass layoffs or similar group personnel or employment actions.
(b) The following terms have the respective meanings set forth in the sections set forth below opposite such term:
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Section 1.2Interpretation and Rules of Construction. In this Agreement, except to the extent otherwise provided or that the context otherwise requires:
(a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated;
(b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;
(c) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation” unless the context expressly provides otherwise;
(d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer
(e) the phrase “made available” in this Agreement means that the information referred to has been made available if requested by the Party to whom such information is to be made available;
(f) any pronoun shall include the corresponding masculine, feminine and neuter forms;
(g) all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein; and
(h) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.
ARTICLE II
THE MERGERS
Section 2.1The Partnership Merger.
(a) Upon the terms and subject to satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the DRULPA, at the Partnership Merger Effective Time, OP Merger Sub shall merge with and into Colonial LP, with Colonial LP continuing as the surviving entity and an indirect wholly-owned subsidiary of MAA LP, and MAA LP continuing as the operating partnership of MAA. The Partnership Merger shall have the effects provided in this Agreement and as specified in the DRULPA.
(b) The Parties shall cause the Partnership Merger to be consummated by filing, as soon as practicable on the Closing Date a certificate of merger with the Secretary of State of the State of Delaware in accordance with the DRULPA, in such form as required by, and executed in accordance with the relevant provisions of, the DRULPA. The Parties shall make all other filings, recordings or publications required under the DRULPA in connection with the Partnership Merger.
(c) The Partnership Merger shall become effective upon such time as the certificate of merger has been filed with the Secretary of State for the State of Delaware, or such later time which the Parties hereto shall have agreed upon and designated in such filings in accordance with the DRULPA as the effective time of the Partnership Merger, but not to exceed thirty (30) days after the certificate of merger has been accepted for record by the Office of the Secretary of State of the State of Delaware (the “Partnership Merger Effective Time”).
Section 2.2The Parent Merger.
(a) Upon the terms and subject to satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the applicable provisions of the AREITL, the ABNEC and the TBCA, at the Parent Merger Effective Time, Colonial shall be merged with and into MAA, with MAA continuing as the surviving entity pursuant to the plan of merger substantially in the form attached asExhibit D hereto (the “Plan of Merger”). The Parent Merger will have the effects set forth in the AREITL, the ABNEC (as applicable) and the TBCA.
(b) The Parties shall cause the Parent Merger to be consummated as soon as practicable on the Closing Date immediately after the Partnership Merger Effective Time, and shall file (i) articles of merger, which shall set forth the Plan of Merger, with the Office of the Secretary of State for the State of Alabama in accordance with
the AREITL and the applicable provisions of the ABNEC, in such form as required by, and executed in accordance with the relevant provisions of, the AREITL and the ABNEC, and (ii) articles of merger with the Secretary of State of the State of Tennessee in accordance with the TBCA, in such form as required by, and executed in accordance with the relevant provisions of, the TBCA. The Parties shall make all other filings, recordings or publications required under the AREITL, the ABNEC and TBCA in connection with the Parent Merger.
(c) The Parent Merger shall become effective upon the later of such time as the articles of merger have been accepted for record by the Office of the Secretary of State for the State of Alabama or the articles of merger have been accepted for record by the Secretary of State of the State of Tennessee, or such later time which the Parties hereto shall have agreed upon and designated in such filings in accordance with the ABNEC and the TBCA as the effective time of the Parent Merger, but not to exceed thirty (30) days after the articles of merger, as applicable, have been accepted for record by the relevant governmental office (the “Parent Merger Effective Time”), it being understood and agreed that the Parties shall cause the Parent Merger Effective Time to occur on the Closing Date as soon as practicable following the Partnership Merger Effective Time.
Section 2.3Closing. The closing (the “Closing”) of the Mergers will take place at the date and time mutually agreed upon by the Parties (but in no event later than the third (3rd) Business Day after all the conditions set forth inArticle VIII (other than those conditions that by their nature are to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived by the Party entitled to the benefit of the same), or at such other date and time to be specified in writing by the Parties (the “Closing Date” means the Scheduled Closing Date or the Extended Closing Date, as applicable.
“Confidentiality Agreement” means the letter agreement, dated July 24, 2016, from MAA to Post and confirmed and agreed to by Post.
“EmployeeBenefit Plan” means any “employee benefit plan” (within the meaning of Section 3(3) of ERISA) and any employment, consulting, termination, severance, change in control, separation, retention, stock option, restricted stock, restricted stock unit, profits interest unit, equity, outperformance, stock purchase, deferred compensation, bonus, incentive compensation, fringe benefit, health, medical, dental, vision, disability, accident, life insurance, welfare benefit, cafeteria, vacation, paid time off, perquisite, retirement, pension, profit sharing or savings or any other compensation or employee benefit plan, agreement, program, policy or other arrangement, whether or not subject to ERISA, whether funded or unfunded, written or unwritten, for the benefit of any current or former employee, officer, manager, director or consultant.
“Environmental Law” means any Law (including common law) applicable to Post or MAA, as the case may be, relating to the pollution or protection of the environment (including air, surface water, groundwater, land surface or subsurface land), or human health or safety (as such matters relate to Hazardous Substances), including Laws relating to the use, handling, presence, transportation, treatment, storage, disposal, release or discharge of Hazardous Substances.
“Environmental Permit” shall mean any permit, approval, license or other authorization required under any applicable Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any entity, trade or business (whether or not incorporated) that, together with any other entity, trade or business (whether or not incorporated), is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Expense Amount” means an amount, not to exceed $10,000,000, equal to the sum of all documented reasonable and necessary Expenses paid or payable by any of the Post Parties or any of the MAA Parties, as applicable, in connection with this Agreement, the Mergers or any of the other transactions contemplated hereby.
“Expenses” means all expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a Party hereto and its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the preparation, printing, and filing of the Form S-4, the preparation, printing, filing and mailing of the Joint Proxy Statement and all SEC and other regulatory filing fees incurred in connection with the Form S-4 and the Joint Proxy Statement, the solicitation of shareholder or partner approvals, engaging the services of the Exchange Agent, obtaining third party consents, any other filings with the SEC and all other matters related to the closing of the Mergers and the other transactions contemplated by this Agreement.
“GAAP” means the United States generally accepted accounting principles.
“GovernmentalAuthority” means any United States (federal, state or local) or foreign government or arbitration panel, or any governmental or quasi-governmental, regulatory, judicial, or administrative authority, board, bureau, agency, commission or self-regulatory organization.
“HazardousSubstances” means (i) those substances listed in, defined in or regulated as hazardous, toxic, pollutants, contaminants or harmful to human health or the environment under any Environmental Law, including the following U.S. federal statutes and their state counterparts, as each may be amended from time to time, and all regulations thereunder: the Resource Conservation and Recovery Act, CERCLA, the Toxic Substances Control Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act and the Clean Air Act; (ii) petroleum and petroleum products, including crude oil and any fractions thereof; and (iii) polychlorinated biphenyls, mold, methane, asbestos, and radon.
“Indebtedness” shall mean, with respect to any Person, (i) all Indebtedness, notes payable, accrued interest payable or other obligations for borrowed money, whether secured or unsecured, (ii) all obligations under conditional sale or other title retention agreements, or incurred as financing, in either case with respect to property acquired by such Person, (iii) all obligations for the payment of the deferred purchase price for any property or assets, (iv) all obligations under capital leases, (v) all obligations in respect of bankers acceptances or letters of credit, (vi) all obligations under interest rate cap, swap, collar or similar transaction or currency hedging transactions, and (vii) any guarantee (other than customary non-recourse carve-out or “badboy” guarantees) of any of the foregoing, whether or not evidenced by a note, mortgage, bond, indenture or similar instrument.
“Initial Period” means the later of (a) 11:59 p.m. (New York time) on the thirtieth (30th) day after the date of this Agreement, and (b) 11:59 p.m. (New York time) on the first (1st) day after the end of all Notice Periods specified inSection 7.4(b)(iv) (including all subsequent Notice Periods as described in clauses (1) and (2) ofSection 7.4(b)(iv)), applicable to a Superior Proposal from a particular Person (including as revised or modified);provided,however, that in the case of clause (b), an initial Notice of Recommendation Change with respect to such Superior Proposal shall have been provided on or prior to the thirtieth (30th) day after the date of this Agreement.
“Intellectual Property” shall mean all United States and foreign (i) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) trademarks, service marks, trade dress, logos, trade names, corporate names, Internet domain names, design rights and other source identifiers, together with the goodwill symbolized by any of the foregoing, (iii) copyrightable works and copyrights, (iv) confidential and proprietary information, including trade secrets, know-how, ideas, formulae, models and methodologies, (v) all rights in the foregoing and in other similar intangible assets, and (vi) all applications and registrations for the foregoing.
“InvestmentCompanyAct” means the Investment Company Act of 1940, as amended.
“IRS” means the United States Internal Revenue Service or any successor agency.
“Knowledge” (a) where used herein with respect to the Post Parties means the actual (and not constructive or imputed) knowledge of the persons named inSchedule A and (b) where used herein with respect to the MAA Parties means the actual (and not constructive or imputed) knowledge of the persons named inSchedule B.
“Law” means any and all domestic (federal, state or local) or foreign laws, rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority.
“Lien” shall mean with respect to any asset (including any security), any mortgage, deed of trust, option, claim, condition, covenant, lien, right of way, easement, pledge, charge, security interest, preferential arrangement, right of first refusal or first offer or encumbrance of any kind.
“MAABylaws” means the Bylaws of MAA as amended and supplemented and in effect on the date hereof.
“MAACharter” means the Amended and Restated Charter of MAA, as amended and supplemented and in effect on the date hereof.
“MAACommonStock” means shares of common stock in MAA, par value $0.01 per share.
“MAAEquityIncentivePlans” means the MAA Amended and Restated 2013 Stock Incentive Plan, the MAA 2004 Stock Plan, the MAA 2012 Long Term Incentive Program, the MAA 2013 Long Term Incentive Program, the MAA 2014 Long Term Incentive Program, the MAA 2015 Long Term Incentive Program, the MAA 2016 Long Term Incentive Program, the MAA 2012 NEO Bonus Program, the MAA 2016 Annual Incentive Program, the Colonial Properties Trust 2008 Omnibus Incentive Plan, as amended, the MAA Non-Qualified Deferred Compensation Plan for Outside Company Directors, as amended, the MAA Employee Stock Ownership Plan, and the MAA Employee Stock Purchase Plan, as each may be amended from time to time.
“MAA Leases” means each lease or sublease (including any triple-net lease) for commercial or retail space under which MAA or a MAA Subsidiary is a lessor or sublessor with respect to each of the applicable MAA Properties, together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto.
“MAA LPAgreement” means the Third Amended and Restated Agreement of Limited Partnership of MAA LP, dated as of October 1, 2013, as amended, modified or supplemented from time to time.
“MAAMaterialAdverseEffect” means any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, financial condition or results of operations of MAA and the MAA Subsidiaries taken as a whole or (b) that will or would reasonably be expected to, prevent or materially impair the ability of the MAA Parties to consummate the Mergers in the manner contemplated hereby; provided, however, that for purposes of clause (a) “MAA Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of MAA to meet any internal or external projections or forecasts or any estimates of earnings, revenues, or other metrics for any period (provided, that any event, circumstance, change or effect giving rise to such failure may be taken into account in determining whether there has been a MAA Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition), (ii) any events, circumstances, changes or effects that affect the multifamily residential real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial, banking, credit or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal, tax, political or regulatory conditions, (v) the commencement, escalation or worsening of a war (whether or not declared) or armed hostilities or the occurrence of acts of terrorism or sabotage (including cyberterrorism or cyber-attacks), (vi) the negotiation, execution or
announcement of this Agreement, or the consummation or anticipation of consummation of the Mergers or the other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of Post, (viii) earthquakes, hurricanes, floods or other natural disasters, (ix) any damage or destruction of any assets or property of MAA or any MAA Subsidiary caused by casualty that is substantially covered by insurance, (x) changes in Law or GAAP or any interpretations thereof or any accounting principles, practices or policies that MAA or any MAA Subsidiary is required to adopt, (xi) any Action brought, asserted or threatened by or on behalf of any holder or holders of capital stock, units or other equity interests in MAA or any MAA Subsidiary arising out of or relating to this Agreement, the Mergers or any of the other transactions contemplated by this Agreement, or (xii) any continuation of an adverse trend or condition or the escalation of, or any developments with respect to, any Action listed on Section 1.1 of the MAA Disclosure Letter, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not materially disproportionately affect MAA and the MAA Subsidiaries, taken as a whole, relative to other similarly situated participants in the multifamily residential real estate REIT industry in the United States, and in the case of clause (viii) do not materially disproportionately affect MAA and the MAA Subsidiaries, taken as a whole, relative to other participants in the multifamily residential real estate REIT industry in the geographic regions in which MAA and the MAA Subsidiaries operate or own or lease properties. The Parties agree that the mere fact of a decrease in the market price or a change in the trading volume of MAA Common Stock shall not, in and of itself, constitute a MAA Material Adverse Effect, but any event, circumstance, change or effect underlying such decrease or change shall be considered in determining whether there has been a MAA Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition.
“MAAOPUnit” shall mean a limited partnership interest in MAA LP designated as a “Partnership Unit” under the MAA LP Agreement.
“MAAOption” means any option to purchase MAA Common Stock under the MAA Equity Incentive Plans or otherwise.
“MAAParty” means any of MAA or MAA LP.
“MAA Series IPreferred Stock” means MAA’s 8.50% Series I Cumulative Redeemable Preferred Shares, with the terms of the MAA Series I Preferred Stock set forth in articles of amendment to the MAA Charter substantially in the form set forth inExhibit B, having the rights, preferences, privileges and voting powers substantially the same as those of the Post Preferred Stock immediately prior to the Parent Merger.
“MAAShareholderMeeting” means the meeting of the holders of MAA Common Stock for the purpose of seeking the MAA Shareholder Approval, including any postponement or adjournment thereof.
“MAASubsidiary” means MAA LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) MAA and/or MAA LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) MAA and/or any Person that is a MAA Subsidiary by reason of the application of clause (a) or clause (c) of this definition of “MAA Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) MAA and/or MAA LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest.
“NYSE” means the New York Stock Exchange.
“Order” means a judgment, order or decree of any Governmental Authority.
“Person” or “person” means an individual, corporation, partnership, limited partnership, limited liability company, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or other entity or a Governmental Authority or a political subdivision, agency or instrumentality of a Governmental Authority.
“Post Articlesof Incorporation” means the Articles of Incorporation of Post, as amended and supplemented and in effect on the date hereof.
“Post Bylaws” means the Bylaws of Post, as amended and supplemented and in effect on the date hereof.
“Post Common Stock” means shares of common stock in Post, par value $.01 per share.
“Post Equity Incentive Plans”means the Post Amended and Restated 2003 Incentive Stock Plan, the Post Properties, Inc. 2003 Incentive Stock Plan, and the Post Deferred Compensation Plan for Directors and Eligible Employees, as each may be amended from time to time.
“Post ESPP” means Post’s 2015 Non-Qualified Employee Stock Purchase Plan, as amended.
“Post Leases” means each lease or sublease (including any triple-net lease) for commercial or retail space under which Post or a Post Subsidiary is a lessor or sublessor with respect to each of the applicable Post Properties, together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto.
“Post LP Agreement” means the Second Amended and Restated Agreement of Limited Partnership of Post LP, dated as of October 24, 1997, as amended, modified or supplemented from time to time.
“Post Material Adverse Effect” means any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, financial condition or results of operations of Post and the Post Subsidiaries taken as a whole or (b) that will or would reasonably be expected to, prevent or materially impair the ability of the Post Parties to consummate the Mergers in the manner contemplated hereby;provided,however, that for purposes of clause (a) “Post Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of Post to meet any internal or external projections or forecasts or any estimates of earnings, revenues, or other metrics for any period (provided, that any event, circumstance, change or effect giving rise to such failure may be taken into account in determining whether there has been a Post Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition), (ii) any events, circumstances, changes or effects that affect the multifamily residential real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial, banking, credit or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal, tax, political or regulatory conditions, (v) the commencement, escalation or worsening of a war (whether or not declared) or armed hostilities or the occurrence of acts of terrorism or sabotage (including cyberterrorism or cyber-attacks), (vi) the negotiation, execution or announcement of this Agreement, or the consummation or anticipation of consummation of the Mergers or the other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of MAA, (viii) earthquakes, hurricanes, floods or other natural disasters, (ix) any damage or destruction of any assets or property of Post or any Post Subsidiary caused by casualty that is substantially covered by insurance, (x) changes in Law or GAAP or any interpretations thereof or any accounting principles, practices or policies that Post or any Post Subsidiary is required to adopt, (xi) any Action brought, asserted or threatened by or on behalf of any holder or holders of capital stock, units or other equity interests in Post or any Post Subsidiary arising out of or relating to this Agreement, the Mergers or any of the other transactions contemplated by this Agreement, or (xii) any continuation of an adverse trend or condition or the escalation of, or any developments with respect to, any Action listed on Section 1.1 of the Post Disclosure Letter, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not materially disproportionately affect Post and the Post Subsidiaries, taken as a whole, relative to other similarly situated participants in the multifamily residential real estate REIT industry in the United States, and in the case of clause (viii) do not materially disproportionately affect Post and the Post Subsidiaries, taken as a whole, relative to other participants in the multifamily residential real estate REIT industry in the geographic regions in which Post and the Post Subsidiaries operate or own or lease properties. The Parties agree that the mere fact of a decrease in the market
price or a change in the trading volume of Post Common Stock shall not, in and of itself, constitute a Post Material Adverse Effect, but any event, circumstance, change or effect underlying such decrease or change shall be considered in determining whether there has been a Post Material Adverse Effect if not otherwise falling into one of the other exceptions contained in this definition.
“Post OP Unit” shall mean a limited partnership interest in Post LP designated as a “Partnership Unit” under the Post LP Agreement.
“PostOption” means any option to purchase Post Common Stock under the Post Equity Incentive Plans or otherwise.
“PostParty” means any of Post, Post GP or Post LP.
“Post Preferred Unit” shall mean a limited partnership interest in Post LP designated as a “Series A Preferred Partnership Unit” under the Post LP Agreement.
“Post REIT Subsidiary” shall mean each Post Subsidiary that is intended to be treated as a REIT for tax purposes.
“Post Restricted Stock Award” means an award of Post Common Stock granted under the Post Equity Incentive Plans that are unvested or subject to a substantial risk of forfeiture.
“PostShareholderMeeting” means the meeting of the holders of Post Common Stock for the purpose of seeking the Post Shareholder Approval, including any postponement or adjournment thereof.
“PostSubsidiary” means Post GP, Post LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) Post and/or Post LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) Post and/or any Person that is a Post Subsidiary by reason of the application of clause (a) or clause (c) of this definition of “Post Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) Post and/or Post LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest. For purposes of this Agreement, 1499 Massachusetts Avenue, Inc. shall be a Post Subsidiary.
“Representative” means, with respect to any Person, such Person’s directors, officers, employees, consultants, advisors (including attorneys, accountants, consultants, investment bankers, and financial advisors), agents and other representatives.
“SEC” means the United States Securities and Exchange Commission (including the staff thereof).
“SecuritiesAct” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means the Post Subsidiary or the MAA Subsidiary, as applicable.
“Tax” or “Taxes” means any U.S. federal, state, local and foreign income, gross receipts, license, withholding, property, recording, stamp, transfer, sales, use, abandoned property, escheat, franchise, employment, payroll, excise, environmental and other taxes, tariffs or governmental charges of any nature whatsoever, together with penalties, interest or additions thereto.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Termination Fee” means the Tier 1 Termination Fee or the Tier 2 Termination Fee, as applicable.
“ThirdParty” means any Person or group of Persons other than a Party to this Agreement or their respective Affiliates.
“Tier 1 Termination Fee” means, if payable by Post, $58,500,000, or if payable by MAA, $122,500,000 as the case may be, payable if: (a)(i) Post terminates this Agreement on or prior to the end of the Initial Period pursuant toSection 9.1(f)(i) to enter into an Acquisition Agreement with respect to a Superior Proposal, or (ii) MAA terminates this Agreement on or prior to the end of the Initial Period pursuant toSection 9.1(g)(i) to enter into an Acquisition Agreement with respect to a Superior Proposal, or (b)(i) MAA terminates this Agreement pursuant toSection 9.1(g)(ii) if on or prior to the end of the Initial Period the Post Board makes a Change in Post Recommendation or withdraws its reasonable discretionrecommendation in response to acceleratean Acquisition Proposal, or delay(ii) Post terminates this Agreement pursuant toSection 9.1(f)(ii) if on or prior to the end of the Initial Period the MAA Board makes a Change in MAA Recommendation or withdraws its recommendation in response to an Acquisition Proposal.
“Tier 2 Termination Fee” means, if payable by Post, $117,000,000, or if payable by MAA, $245,000,000, as the case may be, payable if Post or MAA, as applicable, shall be required to pay a Termination Fee pursuant toSection 9.3 in any circumstance that is not set forth in the definition of Tier 1 Termination Fee.
“VWAP of MAA Common Stock” shall mean the volume weighted average price of MAA Common Stock for the ten (10) trading days immediately prior to the Closing Date, starting with the opening of trading on the first trading day to the closing of the second to last trading day prior to the Closing Date, as reported by Bloomberg.
“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any state law analogs or statutes of similar effect, including any statutes that require advance notice of plant closings, mass layoffs or similar group personnel or employment actions.
(b) The following terms have the respective meanings set forth in the sections set forth below opposite such term:
Defined Terms | Location of Definition | |
Acceptable Confidentiality Agreement | Section 7.4(b)(i) | |
Acquisition Agreement | Section 7.4(a) | |
Acquisition Proposal | Section 7.4(a) | |
Agreement | Preamble | |
Book-Entry Share | Section 3.1(b) | |
Certificate | Section 3.1(b) | |
Change in Post Recommendation Change in MAA Recommendation Citigroup Claim Claim Expenses | Section 7.4(b)(iii) Section 7.4(b)(iii) Section 5.21 Section 7.6(a) Section 7.6(a) | |
Clarification Request Closing | Section 7.4(e)(i) Section 2.3(a) | |
Closing Acknowledgement | Section 2.3(b)(iii) | |
Closing Postponement Notice | Section 2.3(b)(ii) |
Defined Terms | Location of Definition | |
Code | Preamble | |
Condition Satisfaction Date | Section 2.3(a) | |
Continuing Employee | Section 7.20(a) | |
Delaware Courts | Section 10.8(a) | |
ESPP Participants ESPP Suspension Date | Section 7.15(c) Section 7.15(c) | |
Exchange Agent | Section 3.5(a) | |
Exchange Fund | Section 3.5(a) | |
Exchange Ratio Extended Closing Date Fee Payee Fee Payor | Section 3.1(b) Section 2.3(a) Section 9.3(d)(i) Section 9.3(d)(i) | |
Form S-4 | Section 4.5(b) | |
Fractional Share Consideration GBCC GRULPA | Section 3.1(b) Preamble Preamble | |
Indemnified Parties Indemnifying Parties | Section 7.6(a) Section 7.6(a) | |
Initial Closing Documents | Section 2.3(b)(i) | |
Interim Period | Section 6.1(a) | |
Intervening Event Notice Period | Section 7.4(b)(v) | |
Joint Proxy Statement | Section 3.5(a) | |
JP Morgan | Section 4.21 | |
Letter of Transmittal | Section 3.5(c)(i) | |
MAA | Preamble | |
MAA 368 Opinion | Section 8.2(f) | |
MAA Board | Preamble | |
MAA Disclosure Letter | Article V | |
MAA Employee Benefit Plan MAA Employee Waivers | Section 5.13(a) Preamble | |
MAA Insurance Policies | Section 5.20 | |
MAA LP | Preamble | |
MAA Material Contract | Section 5.19(b) | |
MAA Parties | Preamble | |
MAA Permits | Section 5.6(a) | |
MAA Permitted Liens | Section 5.18(b) | |
MAA Preferred Stock | Section 5.3(a) | |
MAA Preferred Units | Section 3.2(b) | |
MAA Properties | Section 5.18(a) | |
MAA Recommendation | Section 5.4(b) | |
MAA REIT Opinion | Section 8.3(e) | |
MAA SEC Documents MAA Shareholder Approval | Section 5.7(a) Section 5.22 | |
MAA Subsidiary Partnership | Section 5.12(g) | |
MAA Tax Protection Agreements | Section 5.12(g) | |
MAA Third Party | Section 5.18(h) | |
MAA Title Insurance Policies | Section 5.18(j) | |
Maximum Premium | Section 7.6(c) | |
Merger Consideration | Section 3.1(b) | |
Mergers | Preamble | |
New MAA OP Units | Section 3.2(a) | |
Notice of Recommendation Change | Section 7.4(b)(iv) |
Defined Terms | Location of Definition | |
Notice Period | Section 7.4(b)(iv) | |
Organizational Documents | Section 7.6(a) | |
Outside Date Parent Merger | Section 9.1(c) Preamble | |
Parent Merger Effective Time | Section 2.2(c) | |
Parties | Preamble | |
Partnership Merger | Preamble | |
Partnership Merger Effective Time | Section 2.1(c) | |
Plans and Specifications | Section 4.18(k) | |
Post | Preamble | |
Post 368 Opinion | Section 8.3(f) | |
Post Board | Preamble | |
Post Designees | Section 2.5 | |
Post Development Contracts | Section 4.18(k) | |
Post Development Property | Section 4.18(k) | |
Post Disclosure Letter Post DRIP Post Employee Benefit Plans | Article IV Section 4.3(c) Section 4.13(a) | |
Post GP | Preamble | |
Post Insurance Policies | Section 4.20 | |
Post LP | Preamble | |
Post Material Contract | Section 4.19(b) | |
Post Parties | Preamble | |
Post Partner Approval | Section 4.22 | |
Post Pending Acquisitions | Section 6.1(b)(vii) | |
Post Permits | Section 4.6(a) | |
Post Permitted Liens | Section 4.18(b) | |
Post Preferred Stock | Section 4.3(a) | |
Post Properties | Section 4.18(a) | |
Post Recommendation | Section 4.4(b) | |
Post REIT Opinions | Section 8.2(e) | |
Post SEC Documents | Section 4.7(a) | |
Post Series A Preferred Stock | Section 4.3(a) | |
Post Shareholder Approval | Section 4.22 | |
Post Subsidiary Partnership | Section 4.12(g) | |
Post Tax Protection Agreement | Section 4.12(g) | |
Post Third Party | Section 4.18(h) | |
Post Title Insurance Policies | Section 4.18(j) | |
Preferred Book-Entry Share | Section 3.1(e) | |
Preferred Certificates | Section 3.1(e) | |
Preferred Merger Consideration | Section 3.1(e) | |
Process Agent | Section 10.8(c) | |
Qualified REIT Subsidiary Qualifying Income | Section 4.12(b) Section 9.3(d)(i) | |
REIT | Section 4.12(b) | |
REIT Dividends | Section 7.19(b) | |
Scheduled Closing Date | Section 2.3(a) | |
Specified Action | Section 7.8(f) | |
Superior Proposal | Section 7.4(c) | |
Takeover Statutes | Section 4.25 | |
Taxable REIT Subsidiary TBCA | Section 4.12(b) Preamble |
Defined Terms | Location of Definition | |
Transfer Taxes | Section 7.13(b) | |
TRULPA | Preamble | |
willful breach | Section 9.2 |
Section 1.2 Interpretation and Rules of Construction. In this Agreement, except to the extent otherwise provided or that the context otherwise requires:
(a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated;
(b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;
(c) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation” unless the context expressly provides otherwise;
(d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement, except to the extent otherwise specified;
(e) the phrase “made available” in this Agreement means that the information referred to has been made available if requested by the Party to whom such information is to be made available;
(f) any pronoun shall include the corresponding masculine, feminine and neuter forms;
(g) all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein; and
(h) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.
ARTICLE II
THE MERGERS
Section 2.1 The Partnership Merger.
(a) Upon the terms and subject to satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the GRULPA and the TRULPA, at the Partnership Merger Effective Time, Post LP shall merge with and into MAA LP, with MAA LP continuing as the surviving entity. The Partnership Merger shall have the effects provided in this Agreement and as specified in the GRULPA and the TRULPA.
(b) The Parties shall cause the Partnership Merger to be consummated as soon as practicable on the Closing Date, and shall file (i) the certificate of merger with the Secretary of State of the State of Georgia in accordance with the GRULPA, in such form as required by, and executed in accordance with the relevant provisions of, the GRULPA, and (ii) the certificate of merger with the Secretary of State of the State of Tennessee in accordance with the TRULPA, in such form as required by, and executed in accordance with the relevant provisions of, the TRULPA. The Parties shall make all other filings, recordings or publications required, if any, under the GRULPA and the TRULPA in connection with the Partnership Merger.
(c) The Partnership Merger shall become effective upon the later of such time as the certificate of merger has been filed with the Secretary of State of the State of Georgia or the certificate of merger has been filed with the Secretary of State of the State of Tennessee, or such later time which the Parties hereto shall have agreed upon and designated in such filings in accordance with the GRULPA and the TRULPA as the effective
time of the Partnership Merger, but not to exceed thirty (30) days after the applicable certificate of merger has been accepted for record by the relevant governmental office (the “Partnership Merger Effective Time”).
Section 2.2 The Parent Merger.
(a) Upon the terms and subject to satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the applicable provisions of the GBCC and the TBCA, at the Parent Merger Effective Time, Post shall merge with and into MAA, with MAA continuing as the surviving entity. The Parent Merger will have the effects provided in this Agreement and as set forth in the GBCC and the TBCA.
(b) The Parties shall cause the Parent Merger to be consummated as soon as practicable on the Closing Date immediately after the Partnership Merger Effective Time, and shall file (i) the articles of merger with the Secretary of State of the State of Georgia in accordance with the GBCC, in such form as required by, and executed in accordance with the relevant provisions of, the GBCC, and (ii) the articles of merger with the Secretary of State of the State of Tennessee in accordance with the TBCA, in such form as required by, and executed in accordance with the relevant provisions of, the TBCA. The Parties shall make all other filings, recordings or publications, if any, required under the GBCC and the TBCA in connection with the Parent Merger.
(c) The Parent Merger shall become effective upon the later of such time as the articles of merger have been filed with the Secretary of State of the State of Georgia or the articles of merger have been filed with the Secretary of State of the State of Tennessee, or such later time which the Parties hereto shall have agreed upon and designated in such filings in accordance with the GBCC and the TBCA as the effective time of the Parent Merger, but not to exceed thirty (30) days after the applicable articles of merger have been accepted for record by the relevant governmental office (the “Parent Merger Effective Time”); it being understood and agreed that the Parties shall cause the Parent Merger Effective Time to occur on the Closing Date as soon as practicable following the Partnership Merger Effective Time.
Section 2.3 Closing.
(a) The closing (the “Closing”) of the Mergers will take place at the date and time mutually agreed upon by the Parties (but in no event later than the second (2nd) Business Day of the calendar month in which(the “Scheduled ClosingDate”) after all of the conditions set forth inArticle VIII have been satisfied or waived, as set forth above, or as close as reasonably practicable thereto, provided that the Closing Date shall occur no less than two (2) Business Days and no more than fifteen (15) calendar days following the date on which all such conditions have been satisfied or waived (other than those conditions that by their nature are to be satisfied or waived at the Closing)Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived by the Party entitled to the benefit of the same) (the date on which such conditions (other than those conditions that by their nature are to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions) are satisfied or waived being the “Condition Satisfaction Date”), or at such other date and time to be specified in writing by the Parties,provided,however, that, subject to the provisions ofSection 2.3(b), MAA may elect in writing by notice to Post in accordance withSection 2.3(b) at its discretion to schedule the Closing Date on the last Business Day of the calendar month during which the Condition Satisfaction Date occurs, or on the first Business Day of the immediately succeeding calendar month (the “Extended Closing Date”). The Closing shall take place at the offices of Goodwin Procter LLP, The New York Times Building, 620 Eighth Avenue, New York,NY 10018-1405, or at such other place as agreed to by the Parties.
(b) On the Scheduled Closing Date:
(i) (A) Post shall deliver to MAA the certificate contemplated bySection 8.2(c) certifying as to such matters as of the Scheduled Closing Date, (B) King & Spalding LLP shall deliver the Post REIT Opinions to MAA, (C) Goodwin Procter LLP shall deliver the MAA 368 Opinion to MAA, (D) MAA shall deliver to Post the certificate contemplated bySection 8.3(c) certifying as to such matters as of the Scheduled Closing Date, (E) Bass, Berry & Sims PLC shall deliver the MAA REIT Opinion to Post and (F) King & Spalding LLP shall deliver the Post 368 Opinion to Post (collectively, the “Initial Closing Documents”);
(ii) Following receipt of the Initial Closing Documents, if MAA elects to postpone the Scheduled Closing Date to the Extended Closing Date, MAA shall deliver to Post on the Scheduled Closing Date a written notice, which notice shall (A) expressly acknowledge the occurrence of the Condition Satisfaction Date, (B) state that
MAA has elected to postpone the Scheduled Closing Date to the Extended Closing Date and (C) expressly acknowledge the irrevocable waivers by the MAA Parties and the satisfaction of the closing conditions by the Post Parties as provided inSection 2.3(c)(i)(A) (the “Closing Postponement Notice”); and
(iii) In the event that Post shall receive a Closing Postponement Notice from MAA, on the Scheduled Closing Date, Post shall be required to deliver to MAA on the Scheduled Closing Date a written acknowledgement, which acknowledgement shall (A) expressly acknowledge the occurrence of the Condition Satisfaction Date and (B) expressly acknowledge the irrevocable waivers by the Post Parties and the satisfaction of the closing conditions by the MAA Parties as provided inSection 2.3(c)(i)(B) (the “Closing Acknowledgement”).
(c) If, on the Scheduled Closing Date, the Initial Closing Documents are not delivered or MAA does not deliver a Closing Postponement Notice, then the Scheduled Closing Date shall be the Closing Date. If, on the Scheduled Closing Date, the Initial Closing Documents are delivered and MAA delivers its Closing Postponement Notice, then Post shall be required to deliver the Closing Acknowledgement and:
(i) (A) The conditions to the obligations of the MAA Parties to effect the Mergers and to consummate the other transactions contemplated by this Agreement set forth inSection 8.1(a),Section 8.1(d),Section8.2(a),Section 8.2(b),Section 8.2(c),Section 8.2(d),Section 8.2(e) andSection 8.2(f) shall be deemed to be irrevocably satisfied in their entirety for purposes of the Closing with no further bring down of any such conditions and irrevocably waived by the MAA Parties in all respects (except to the extent of a failure of the condition set forth inSection 8.2(b) to be satisfied on or after the Scheduled Closing Datedue to a willful breach by the Post Parties of an agreement or covenant contained in this Agreement occurring solely on or after the Scheduled Closing Date), and (B) the conditions to the obligations of the Post Parties to effect the Mergers and to consummate the other transactions contemplated by this Agreement set forth inSection 8.1(a),Section 8.1(d),Section 8.3(a),Section 8.3(b),Section 8.3(c),Section 8.3(d),Section 8.3(e) andSection 8.3(f) shall be deemed to be irrevocably satisfied in their entirety for purposes of the Closing with no further bring down of any such conditions and irrevocably waived by the Post Parties in all respects (except to the extent of a failure of the condition set forth inSection 8.3(b) to be satisfied on or after the Scheduled Closing Datedue to a willful breach by the MAA Parties of an agreement or covenant contained in this Agreement occurring solely on or after the Scheduled Closing Date);
(ii) On the Extended Closing Date, the only conditions to the obligations of the MAA Parties and the Post Parties to effect the Mergers and to consummate the other transactions contemplated by this Agreement shall be the satisfaction of the conditions set forth inSection 8.1(b) andSection 8.1(c) and as set forth inSection 2.3(c)(iii) below;
(iii) (A) Post shall, on the Extended Closing Date, as a condition to the obligations of the MAA Parties to effect the Mergers and to consummate the other transactions contemplated by this Agreement, deliver a certificate to the MAA Parties certifying that, on and after the Scheduled Closing Datethrough and including the Extended Closing Date, the Post Parties have not willfully breached any agreement or covenant contained in this Agreement such that the condition set forth inSection 8.2(b) shall not be satisfied as of the Extended Closing Date, and (B) MAA shall, on the Extended Closing Date, as a condition to the obligations of the Post Parties to effect the Mergers and to consummate the other transactions contemplated by this Agreement, deliver a certificate to the Post Parties certifying that, on and after the Scheduled Closing Datethrough and including the Extended Closing Date, the MAA Parties have not willfully breached any agreement or covenant contained in this Agreement such that the condition set forth inSection 8.3(b) shall not be satisfied as of the Extended Closing Date; and
(iv) (A) The MAA Parties’ right to terminate this Agreement pursuant toSection 9.1(c),Section 9.1(d) (except with respect to a willful breach by the Post Parties of an agreement or covenant contained in this Agreement on or after the Scheduled Closing Date with respect to the condition set forth inSection 8.2(b)),Section 9.1(e) orSection 9.1(g) shall be deemed to be irrevocably waived by the MAA Parties in all respects, and (B) the Post Parties’ right to terminate this Agreement pursuant toSection 9.1(c),Section 9.1(d) (except with respect to a willful breach by the MAA Parties of an agreement or covenant contained in this Agreement
on or after the Scheduled Closing Date with respect to the condition set forth inSection 8.3(b)),Section 9.1(e) orSection 9.1(f) shall be deemed to be irrevocably waived by the Post Parties in all respects.
Section 2.4Governing Documents. The MAA Charter and MAA Bylaws as in effect immediately prior to the Parent Merger Effective Time shall be the charter and bylaws of MAA immediately following the Parent Merger Effective Time, until further amended in accordance with applicable Law. The limited partnership agreement of MAA LP, as in effect immediately prior to the Partnership Merger Effective Time shall be the limited partnership agreement of MAA LP immediately following the Partnership Merger Effective Time, until thereafter amended in accordance with the provisions thereof and in accordance with applicable Law. Prior toNothing in thisSection 2.4 shall affect in any way the Partnership Merger Effective Time, MAA shall cause the limited partnership agreement of MAA LP to be amended and restated, effective no later than the Partnership Merger Effective Time, to beindemnification or other obligations provided for in all material respects in the form ofExhibit ESection 7.6 attached hereto, except that any provisions noted on suchExhibit E as being “In The Form” shall be in the form of such provisions (as so amended and restated, the “Amended Partnership Agreement”).
Section 2.5Board of Directors. Immediately following the Parent Merger Effective Time, the MAA Board shall be increased to 12thirteen (13) members and the MAA Board shall fill the fivethree (3) newly created vacancies by immediately appointing to the MAA Board the fivethree (3) members designated by the ColonialPost Board (pursuantpursuant toSection 7.14(b)7.16(b), the (the “ColonialPost Designees”), to serve until the 20142017 annual meeting of MAA’s shareholders (and until their successors have been duly elected and qualified) and who shall be nominated by the MAA Board for reelection at the 2014 and 20152017 annual meetingsmeeting of MAA’s shareholders, in all cases subject to the satisfaction and compliance of such ColonialPost Designees with MAA’s then-current corporate governance guidelines and code of business conduct and ethics.
Section 2.6Tax Consequences. It is intended that, for United StatesU.S. federal income tax purposes, the Parent Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Code, and that this Agreement
be, and is hereby adopted as, a plan of reorganization for purposes of Section 354 and 361 of the Code. It is further intended for United StatesU.S. federal income tax purposes that the Partnership Merger shall qualify as and constitute an “asset- over”“asset-over” form of merger governed by Treasury Regulations Section 1.708-1(c)(3)(i), with MAA LP being a continuation of MAA LPthe continuing partnership pursuant to Treasury Regulations Section 1.708-1(c)(1). whereby Post LP will be treated as contributing its assets to MAA LP in exchange for MAA LP interests, followed by a distribution by Post LP of the MAA LP interests in liquidation of Post LP.
ARTICLE III
EFFECTS OF THE MERGERS
Section 3.1Effects on Shares. At the Parent Merger Effective Time and by virtue of the Parent Merger and without any further action on the part of MAA, Colonial,Post, or the holders of any securities of MAA or Colonial:Post:
(a) Cancellation of ColonialPost Common Shares.Stock. Each Colonialshare of Post Common ShareStock issued and outstanding immediately prior to the Parent Merger Effective Time that is held by MAA, any MAA Subsidiary or any wholly owned ColonialPost Subsidiary shall no longer be outstanding and shall automatically be retired and shall cease to exist, and no payment shall be made with respect thereto.
(b) Conversion of ColonialPost Common Shares.Stock. Subject toSection 3.4(b), each Colonialshare of Post Common ShareStock issued and outstanding immediately prior to the Parent Merger Effective Time (other than shares to be cancelled in accordance withSection 3.1(a) and any Dissenting Shares (to the extent provided inSection 3.7)) shall automatically be converted into the right to receive 0.3600.71 (as the same may be adjusted pursuant toSection 3.3, the “Exchange Ratio”) validly issued, fully paid and non-assessable shares of MAA Common Stock (the “Merger Consideration”), without interest.interest, subject to any applicable withholding Tax. All Colonialshares of Post Common Shares,Stock, when so converted, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate (a “Certificate”) or book-entry share registered in the transfer books of ColonialPost (a “Book-Entry Share”) that immediately prior to the Parent Merger Effective Time represented Colonialshares of Post Common SharesStock shall cease to have any rights with respect to such Colonialshares of Post Common SharesStock other than the right to receive the Merger Consideration in accordance withSection 3.5, including the right, if any, to receive, pursuant toSection 3.93.8, cash in lieu of fractional shares of MAA Common Stock into which such Colonialshares of Post Common SharesStock have been converted pursuant to thisSection 3.1(b) (the “Fractional Share Consideration”), together with the amounts, if any, payable pursuant toSection 3.5(d).
(c) Share Transfer Index to Financial Statements
Books.Books. At the Parent Merger Effective Time, the share transfer books of ColonialPost shall be closed and thereafter there shall be no further registration of transfers of the Colonialshares of Post Common Shares.Stock or the shares of Post Series A Preferred Stock. From and after the Parent Merger Effective Time, persons who held Colonialshares of Post Common SharesStock or Post Series A Preferred Stock immediately prior to the Parent Merger Effective Time shall cease to have rights with respect to such shares, except as otherwise provided for herein. On or after the Parent Merger Effective Time, any Certificates or Book-Entry Shares of ColonialPost presented to the Exchange Agent, MAA or the transfer agent for any reason shall be exchanged as provided in thisArticle III with respect to the Colonialshares of Post Common SharesStock and the shares of Post Series A Preferred Stock formerly represented thereby.
(d) MAA Common Stock. Each share of MAA Common Stock outstanding immediately prior to the Parent Merger Effective Time shall remain outstanding following the Parent Merger Effective Time.
Section 3.2Effects on Partnership Interests.
(a)(e) Conversion of OP Merger Sub Interests. At the Partnership Merger Effective Time, by virtuePost Preferred Stock. Each share of the Partnership Merger and without any further action on the part of MAA LP, OP Merger Sub, Colonial LP, or the holders of Colonial OP Units, MAA OP Units or partnership units of OP Merger Sub, (i) the partnership interests of OP Merger Sub held by MAA LP andPost Series A Preferred Stock issued and outstanding immediately prior to the PartnershipParent Merger Effective Time shall be automatically converted into the right to receive one newly issued share of MAA Series I Preferred Stock (the “Preferred Merger Consideration”), without interest, subject to any applicable withholding Tax. All shares of Post Series A Preferred Stock, when so converted, shall no longer be outstanding and shall automatically be converted into one Colonial OP Unit representingcancelled and retired and shall cease to exist, and each holder of a certificate (a “Preferred Certificate”) or book-entry share registered in the general partner interesttransfer books of the general partner of Colonial LP and MAA LP shall be admitted as the sole general partner of
Colonial LP and (ii) the partnership interests in OP Merger Sub held by the limited partner of OP Merger Sub and issued and outstandingPost (a “Preferred Book-Entry Share”) that immediately prior to the PartnershipParent Merger Effective Time represented shares of Post Series A Preferred Stock shall automatically be converted into 99 Colonial OP Units andcease to have any rights with respect to such shares of Post Series A Preferred Stock other than the limited partner of OPright to receive the Preferred Merger Sub shall be admitted as the sole limited partner of Colonial LP.Consideration in accordance withSection 3.5.
(b)Section 3.2 Effects on Partnership Interests.
(a) Conversion of ColonialPost OP Units. At the Partnership Merger Effective Time, by virtue of the Partnership Merger and without any further action on the part of MAA LP, OP Merger Sub, ColonialPost LP or the holders of ColonialPost OP Units or MAA OP Units, (i) the interests of the general partner in ColonialPost LP (other than the ColonialPost OP Units held by Colonial,Post, which shall be converted pursuant to clause (ii) hereof) shall be cancelled and no payment shall be made with respect thereto, and (ii) each ColonialPost OP Unit issued and outstanding immediately prior to the Partnership Merger Effective Time shall automatically be converted into validly issued Class A Common Units in MAA LP (“New MAA OP Units”) in an amount equal to (x) 1,(A) one (1), multiplied by (y)(B) the Exchange Ratio, and each holder of New MAA OP Units shall be admitted as a limited partner of MAA LP in accordance with the terms of the limited partnership agreement of MAA LP following the Partnership Merger Effective Time.
(b) Conversion of Post Preferred Units. At the Partnership Merger Effective Time, by virtue of the Partnership Merger and without any further action on the part of MAA LP, Post LP, or the holders of Post OP Units, MAA OP Units or Post Preferred Units, each Post Preferred Unit issued and outstanding immediately prior to the Partnership Merger Effective Time shall automatically be converted into one validly issued preferred unit in MAA LP (“MAA Preferred Units”) in accordance with the terms of the limited partnership agreement of MAA LP, having the rights, preferences, privileges and voting powers substantially the same as those of the Post Preferred Units immediately prior to the Partnership Merger.
Section 3.3Adjustments. Without limiting the other provisions of this Agreement and subject toSection 6.1(b)(ii) andSection 6.1(b)(iii), if at any time during the period between the date of this Agreement and the PartnershipParent Merger Effective Time, ColonialPost should split, combine or otherwise reclassify the Colonialshares of Post Common Shares,Stock, or make a dividend or other distribution in Colonialshares of Post Common SharesStock (including any dividend or other distribution of securities convertible into Colonialshares of Post Common Shares)Stock), or engage in a reclassification, reorganization, recapitalization or exchange or other like change, then (without limiting any other rights of the other Parties hereunder), the Exchange Ratio shall be ratably adjusted to reflect fully the effect of any such change. Without limiting the other provisions of this Agreement and subject toSection 6.2(b)(ii) andSection 6.2(b)(iii), if at any time during the period between the date of this Agreement and the PartnershipParent Merger Effective Time, MAA should split, combine or otherwise reclassify the MAA Common Stock, or make a distribution in
shares of MAA Common Stock (including any dividend or other distribution of securities convertible into MAA Common Stock), or engage in a reclassification, reorganization, recapitalization or exchange or other like change (without limiting any other rights of the other Parties hereunder), then the Exchange Ratio shall be ratably adjusted to reflect any such change.
Section 3.4ColonialPost Options and Restricted Stock.
(a) At the Parent Merger Effective Time, each outstanding ColonialPost Option whether or not exercisable at the Parent Merger Effective Time,will vest in full and will be assumed by MAA by virtue of the Parent Merger and without any action on the part of the holder thereof. Subject to, and in accordance with, the terms of the applicable ColonialPost Equity Incentive Plan and award agreement or other agreement or other document evidencing ColonialPost Options, from and after the Parent Merger Effective Time, each ColonialPost Option so assumed by MAA under this Agreement will otherwise continue to have, and be subject to, the same terms and conditions, (includingother than vesting, schedule) as were applicable to the corresponding ColonialPost Option immediately prior to the Parent Merger Effective Time as set forth in the applicable ColonialPost Equity Incentive Plan (including any applicable award agreement, other agreement or other document evidencing such ColonialPost Option) immediately prior to the Parent Merger Effective Time, except that, from and after the Parent Merger Effective Time, (A) each ColonialPost Option when exercisable, will be exercisable for that number of whole shares of MAA Common Stock equal to the product of the number of Colonialshares of Post Common SharesStock that were subject to such ColonialPost Option immediately prior to the Parent Merger Effective Timemultipliedby the Exchange Ratio, rounded down to the nearest whole number of shares of MAA Common Stock and (B) the per share exercise price for the shares of MAA Common Stock issuable upon exercise of such assumed ColonialPost Option will be equal to the quotient determined by dividing the exercise price of each Colonialshare of Post Common ShareStock subject to such assumed ColonialPost Option by the Exchange Ratio, rounded up to the nearest whole cent.
(b) Any and all Colonial Common Shares subject to Colonial Restricted Share Awards that are converted into the right to receive MAA Common Stock pursuant toSection 3.1(b) shall be converted into the
right to receive shares of MAA Common Stock that are subject to the same vesting and forfeiture conditions and other terms and conditions as are applicable to the Colonial Restricted Share Award immediatelyImmediately prior to the Parent Merger Effective Time.Time, any and all outstanding issuance and forfeiture conditions on any shares of Post Common Stock subject to Post Restricted Stock Awards shall be deemed satisfied in full, contingent upon the closing of the Parent Merger, as stated in the Post Equity Incentive Plans, and such shares of Post Common Stock will be entitled to receive the Merger Consideration pursuant toSection 3.1(b).
(c) Prior to the Parent Merger Effective Time, ColonialPost and MAA agree that ColonialPost shall, and shall be permitted under this Agreement to, take all corporate action necessary to effectuate the provisions of thisSection 3.4. From and after the Parent Merger Effective Time, unless the compensation committee of the MAA Board determines otherwise, all references to ColonialPost in the ColonialPost Equity Incentive Plans and in each agreement evidencing any ColonialPost Options or any other ColonialPost equity-based award, shall be deemed (A)(i) for all purposes relating to employment, consultancy or directorship (or words of similar meaning) to refer to MAA and its Subsidiaries and (B)(ii) for all other purposes, to refer to MAA.
Section 3.5Exchange of Certificates.
(a) Not less than five (5) days prior to dissemination of a joint proxy statement in preliminary and definitive form relating to the ColonialPost Shareholder Meeting and the MAA Shareholder Meeting (together with any amendments or supplements thereto, the “Joint Proxy Statement”), MAA shall appoint a bank or trust company reasonably satisfactory to ColonialPost to act as exchange agent (the “ExchangeAgent”) for the payment and delivery of the Merger Consideration, the Preferred Merger Consideration and the Fractional Share Consideration, as provided inSection 3.1(b),Section 3.1(e) andSection 3.93.8. On or before the Partnership Merger Effective Time, MAA shall deposit, or cause to be deposited, with the Exchange Agent (i) evidence of MAA Common Stock in book-entry form issuable pursuant toSection 3.1(b) equal to the aggregate Merger Consideration, (ii) evidence of MAA Series I Preferred Stock in book-entry form issuable pursuant toSection 3.1(e) equal to the aggregate Preferred Merger Consideration, and (ii)(iii) cash in immediately available funds in an amount sufficient to pay the Fractional Share Consideration and any dividends underSection 3.5(d) (such evidence of book-entry shares of MAA Common Stock, evidence of book-entry shares of MAA Series I Preferred Stock, and cash amounts, together with any dividends or other distributions with respect thereto, the “ExchangeFund”), in each case, for
the sole benefit of the holders of Colonialshares of Post Common Shares.Stock and shares of Post Series A Preferred Stock, as applicable. MAA shall cause the Exchange Agent to make, and the Exchange Agent shall make, delivery of the Merger Consideration and Preferred Merger Consideration, payment of the Fractional Share Consideration and any amounts payable in respect of dividends or other distributions on shares of MAA Common Stock or MAA Series I Preferred Stock in accordance withSection 3.5(d) out of the Exchange Fund in accordance with this Agreement. The Exchange Fund shall not be used for any other purpose.
(b) The cash portion of the Exchange Fund shall be invested by the Exchange Agent as directed by MAA. Interest and other income on the Exchange Fund shall be the sole and exclusive property of MAA. No investment of the Exchange Fund shall relieve MAA or the Exchange Agent from making the payments required by thisArticle III III,, and following any losses from any such investment, MAA shall promptly provide additional funds to the Exchange Agent to the extent necessary to satisfy MAA’s obligations hereunder for the benefit of the holders of Colonialshares of Post Common SharesStock and Post Series A Preferred Stock at the Parent Merger Effective Time, which additional funds will be deemed to be part of the Exchange Fund.
(c) Exchange Procedures.
(i) As promptly as practicable following the Parent Merger Effective Time (but in no event later than two (2) Business Days thereafter), MAA shall cause the Exchange Agent to mail (and to make available for collection by hand) to each holder of record of a Certificate or Book-Entry Share, or of a Preferred Certificate or Preferred Book-Entry Share, as applicable, (A) a letter of transmittal (a “LetterofTransmittal”) which shall specify that delivery shall be effected, and risk of loss and title to the Certificates or Book-Entry Shares, or to the Preferred Certificates or Preferred Book-Entry Shares, as applicable, shall pass only upon proper delivery of the Certificates or Book-Entry Shares (or affidavits of loss in lieu thereof) or Book-Entry Shares, or the Preferred Certificates (or affidavits of loss in lieu thereof) or Preferred Book-Entry Shares, as applicable, to the Exchange Agent, which Letter of Transmittal shall be in such form and have such other customary provisions as MAA and ColonialPost may reasonably agree upon, and (B) instructions for use in effecting the surrender of the Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares, or the Preferred Certificates (or affidavits of loss in lieu thereof) or Preferred Book-Entry Shares, as applicable, in exchange for the Merger Consideration or Preferred Merger Consideration, as applicable, into which the number of Colonialshares of Post Common SharesStock previously represented by such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share, or, as applicable, the number of shares of Post Series A Preferred Stock previously represented by such Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share, shall have been converted pursuant to this Agreement, together with any amounts payable in respect of the
Fractional Share Consideration in accordance withSection 3.93.8 and dividends or other distributions on shares of MAA Common Stock or MAA Series I Preferred Stock in accordance withSection 3.5(d).
(ii) Upon surrender of a Certificate or Book-Entry Share (or an affidavit of loss in lieu thereof) or Book-Entry Share, or a Preferred Certificate (or an affidavit of loss in lieu thereof) or Preferred Book-Entry Share, as applicable, to the Exchange Agent, together with a Letter of Transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share, or such Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share, as applicable, shall be entitled to receive in exchange therefor the Merger Consideration for each Colonialshare of Post Common ShareStock formerly represented by such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share, or, as applicable, the Preferred Merger Consideration for each share of Post Series A Preferred Stock formerly represented by such Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share, in each case pursuant to the provisions of thisArticle III III, plus any Fractional Share Consideration that such holder has the right to receive pursuant to the provisions ofSection 3.93.8 and any amounts that such holder has the right to receive in respect of dividends or other distributions on shares of MAA Common Stock or MAA Series I Preferred Stock in accordance withSection 3.5(d) to be mailed or delivered by wire transfer, within two (2) Business Days following the later to occur of (A) the Parent Merger Effective Time or (B) the Exchange Agent’s receipt of such Certificate (or affidavit of loss in lieu thereof), or Book-Entry
Share, or, as applicable, such Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share, and the Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share, or, applicable, the Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share, so surrendered shall be forthwith cancelled. The Exchange Agent shall accept such Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares, or, as applicable, such Preferred Certificates (or affidavits of loss in lieu thereof) or Preferred Book-Entry Shares, upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with customary exchange practices. Until surrendered as contemplated by thisSection 3.5, each Certificate (or affidavit of loss in lieu thereof) and Book-Entry Share, or, as applicable, each Preferred Certificate (or affidavit of loss in lieu thereof) and Preferred Book-Entry Share, shall be deemed, at any time after the Parent Merger Effective Time, to represent only the right to receive, upon such surrender, the Merger Consideration or the Preferred Merger Consideration, as applicable, as contemplated by thisArticle III III.. No interest shall be paid or accrued for the benefit of holders of the Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares, or the holders of the Preferred Certificates (or affidavits of loss in lieu thereof) or Preferred Book-Entry Shares, on the Merger Consideration, the Preferred Merger Consideration or the Fractional Share Consideration, as applicable, payable upon the surrender of the Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares, or, as applicable, the Preferred Certificates (or affidavits of loss in lieu thereof) or Preferred Book-Entry Shares, and, in either case, any distributions to which such holder is entitled pursuant toSection 3.5(d) hereof.
(iii) In the event of a transfer of ownership of Colonialshares of Post Common SharesStock or Post Series A Preferred Stock that is not registered in the transfer records of Colonial,Post, it shall be a condition of payment that any Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share, or, as applicable, any Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share, surrendered in accordance with the procedures set forth in thisSection 3.5(c) shall be properly endorsed or shall be otherwise in proper form for transfer, and that the Person requesting such payment shall have paid any transfer Taxes and other Taxes required by reason of the payment of the Merger Consideration or Preferred Merger Consideration, as applicable, to a Person other than the registered holder of the Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share, or, as applicable, the Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share, surrendered or shall have established to the reasonable satisfaction of MAA that such Tax either has been paid or is not applicable.
(d) Dividends with Respect to MAA Common Stock and MAA Series I Preferred Stock. No dividends or other distributions with respect to MAA Common Stock or MAA Series I Preferred Stock with a record date after the Parent Merger Effective Time shall be paid to the holder of any unsurrendered Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share with respect to the shares of MAA Common Stock issuable hereunder or to the holder of any unsurrendered Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share with respect to the shares of MAA Series I Preferred Stock issuable hereunder, and all such dividends and other distributions shall be paid by MAA to the Exchange Agent and shall be included in the Exchange Fund, in each case until the surrender of such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share with respect to the shares of MAA Common Stock issuable hereunder or the surrender of such Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share with respect to the shares of MAA Series I Preferred Stock issuable hereunder (or, in either case, affidavit of loss in lieu thereof) in accordance with this Agreement. Subject to applicable Laws, following surrender of any such Certificate or Book-Entry Share (or affidavit of loss in lieu thereof) or Book-Entry Share or, as applicable, Preferred Certificate (or affidavit of loss in lieu thereof) or Preferred Book-Entry Share, there shall be paid to the holder thereof, without interest, (i) the amount of dividends or other distributions with a record date after the Parent Merger Effective Time theretofore paid with respect to such shares of MAA Common Stock or MAA Series I Preferred Stock to which such holder is entitled pursuant to this Agreement and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Parent Merger Effective Time but prior to such surrender and with a payment date subsequent to such surrender payable with respect to such shares of MAA Common Stock or MAA Series I Preferred Stock.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund (including any Fractional Share Consideration and any applicable dividends or other distributions with respect to MAA Common Stock or MAA Series I Preferred Stock) which remains undistributed to the holders of Index to Financial Statements
Colonialshares of Post Common SharesStock or Post Series A Preferred Stock, as applicable, for twelve (12) months after the Parent Merger Effective Time shall be delivered to MAA, upon demand, and any former holders of Colonialshares of Post Common SharesStock or Post Series A Preferred Stock prior to the Parent Merger who have not theretofore complied with thisArticle III shall thereafter look only to MAA for payment of the Merger Consideration.
(f) No Liability. None of the MAA Parties, the ColonialPost Parties, the Exchange Agent, or any employee, officer, director, agent or Affiliate thereof, shall be liable to any person in respect of the Merger Consideration or the Preferred Merger Consideration, as applicable, if the Exchange Fund has been delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Any amounts remaining unclaimed by holders of any such shares immediately prior to the time at which such amounts would otherwise escheat to, or become property of, any Governmental Authority shall, to the extent permitted by applicable Law, become the property of MAA, free and clear of any claims or interest of such holders or their successors, assigns or personal representatives previously entitled thereto.
Section 3.6Withholding Rights. The Parties, Colonial LP, MAA LP, OP Merger Sub, thetheir respective Affiliates of the foregoing and the Exchange Agent, as applicable, shall be entitled to deduct and withhold from the Merger Consideration, andthe Fractional Share Consideration and the Preferred Merger Consideration, as applicable (and any other consideration otherwise payable pursuant to this Agreement or deemed paid for Tax purposes), such amounts as it is required to deduct and withhold with respect to such payments under the Code or any other provision of state, local or foreign Law. Any such amounts so deducted and withheld shall be paid over to the applicable Governmental Authority in accordance with applicable Law and shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made.
Section 3.7Dissenting SharesStructure. Notwithstanding anything in this Agreement to the contrary, Colonial Common Shares that are outstanding immediately prior to the Parent Merger Effective Time
(a) Each Party hereto shall reasonably cooperate with and that are held by any Person who is entitled to dissent and properly perfects such Person’s dissenters’ rights of appraisal with respect to such Colonial Common Shares (the “Dissenting Shares”) pursuant to, and who complies in all respects with, Section 10A-2-13.01et seq. of the ABNEC (“ABNEC Article 13”) shall not be converted into shares of MAA Common Stock as provided inSection 3.1(b), but rather the holders of Dissenting Shares shall be entitled to payment by MAA of the “fair value” (as defined in ABNEC Article 13) of such Dissenting Shares plus accrued interest in accordance with ABNEC Article 13;provided,however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to dissent under ABNEC Article 13, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Parent Merger Effective Time into, and shall have become exchangeable solely for the right to receive, shares of MAA Common Stock as provided inSection 3.1(b). Colonial shall serve prompt written notice to MAA of any demand received by Colonial from a holder of Colonial Common Shares pursuant to Section 13.21 of ABNEC Article 13, and MAA shall have the right to participate in all negotiations and proceedings with respect to any such demand. Prior to the Parent Merger Effective Time, Colonial shall not, without the prior written consent of MAA (not to be unreasonably withheld, delayed or conditioned), make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.
Section 3.8Structure. Each party hereto shall cooperate reasonably in the consideration of any reasonable changes requested by the other Parties regarding the structure of the transactions contemplated herein;herein, which cooperation shall include entering into appropriate amendments to this Agreement, to reflect the change;provided,however, that no such change shall (a)(i) alter or change the amount or kind of the consideration to be issued to holders of ColonialPost Common SharesStock or ColonialPost OP Units as currently contemplated in this Agreement, (b)(ii) reasonably be expectedanticipated to impose any material impediment or delay, or condition to, consummation of the Mergers, (c)(iii) adversely affect, including with respect to federal income tax treatment, any of the parties hereto or the holders of ColonialPost Common SharesStock or ColonialPost OP Units in connection with the Mergers, (d)(iv) require submission to or approval by holders of ColonialPost Common SharesStock after the ColonialPost Shareholder Approval (e)or to holders of MAA Common Stock after the MAA Shareholder Approval or (v) require submission to or approval by holders of ColonialPost OP Units (other than to the extent solely from Colonial,Post or a Post Subsidiary (including Post GP and Post LP Holdings, Inc.), as general partner and/or limited partner of ColonialPost LP) or (f) provide for any modifications.
(b) Subject to the provisionslimitations set forth inSection 3.7(a), MAA shall have the right, in its sole discretion, to cause the timing of the Amendedconsummation of the Partnership AgreementMerger and Parent Merger to be re-ordered so that are noted onExhibit E as being “In The Form”;the Partnership Merger shall occur andprovidedfurther that such change also shall be subjectconsummated following the consummation of the Parent Merger (and, therefore, the Partnership Merger Effective Time will occur following the Parent Merger Effective Time).
(c) Subject to the written consentlimitations set forth inSection 3.7(a), MAA shall have the right, in its sole discretion, to cause the structure of the other Parties (such consent notPartnership Merger to be unreasonably withheld, or conditioned or delayed). Inchanged from a direct merger of Post LP with and into MAA LP with MAA LP continuing as the eventsurviving entity, to a merger of a newly-formed wholly-owned subsidiary of MAA LP with and into Post LP with Post LP continuing as the surviving entity and a subsidiary of MAA LP;provided, that the Parties mutually agree to makeany such newly-formed subsidiary of MAA LP shall sign a change, the Parties agree to execute appropriate documents, including entering into appropriate amendmentsjoinder to this Agreement,Agreement.
Section 3.93.8 Fractional Shares. No certificate or scrip representing fractional shares of MAA Common Stock shall be issued upon the surrender for exchange of Certificates or the transfer of Book-Entry Shares, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of MAA. Notwithstanding any other provision of this Agreement, each holder of Colonialshares of Post Common SharesStock converted pursuant to the Parent Merger who would otherwise have been entitled to receive a fraction of a share of MAA Common Stock shall receive, in lieu thereof, cash, without interest, in an amount equal to such fractional part of a share of MAA Common Stock multiplied by the VWAP of MAA Common Stock.
Section 3.103.9 Lost Certificates. If any Certificate or Preferred Certificate shall have been lost, stolen or destroyed, then upon the making of an affidavit of that fact by the Person claiming such Certificate or Preferred Certificate to be lost, stolen or destroyed and, if required by MAA, the posting by such Person of a bond in such reasonable amount as MAA may direct, as indemnity against any claim that may be made against it with respect to such Certificate or Preferred Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate or Preferred Certificate, as applicable, the Merger Consideration, the Fractional Share Consideration, the Preferred Merger Consideration and any distributions to which such holder is entitled pursuant to thisArticle III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COLONIALPOST
Except (a) as set forth in the disclosure letter that has been prepared by the ColonialPost Parties and delivered by the ColonialPost Parties to the MAA Parties in connection with the execution and delivery of this Agreement (the “ColonialPost Disclosure Letter”) (it being agreed that (x)(i) disclosure of any item in any section of the ColonialPost Disclosure Letter with respect to any Section or subsection ofArticle IV of this Agreement shall be deemed disclosed with respect to any other Section or subsection ofArticle IV of this Agreement to the extent such relationship is reasonably apparent;provided, that nothing in the ColonialPost Disclosure Letter is intended to broaden the scope of any representation or warranty of the ColonialPost Parties made herein and (y)(ii) no reference to or disclosure of any item or other matter in the ColonialPost Disclosure Letter shall be construed as an admission or indication that (1)(A) such item or other matter is material, (2)(B) such item or other matter is required to be referred to or disclosed in the ColonialPost Disclosure Letter or (3)(C) any breach or violation of applicable Laws or any contract, agreement, arrangement or understanding to which ColonialPost or any of the ColonialPost Subsidiaries is a party exists or has actually occurred), or (b) other than with respect to representations or warranties set forth inSection 4.12, as disclosed in publicly available ColonialPost SEC Documents filed with, or furnished to, as applicable, the SEC on or after January 1, 20102013 and prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” (but including any description of historic facts or events included therein) and any disclosure of risks or other matters included in any “forward-looking statements” disclaimer (but including any description of historic facts or events included therein) or other statements that are cautionary, predictive or forward-looking in nature), the ColonialPost Parties hereby jointly and severally represent and warrant to the MAA Parties that:
Section 4.1Organization and Qualification; SubsidiariesSubsidiaries..
(a) ColonialPost is a real estate investment trustcorporation duly organized,incorporated, validly existing and in good standing under the laws of the State of AlabamaGeorgia and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as it is now being conducted. ColonialPost is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect.
(b) Each ColonialPost Subsidiary is duly organized, validly existing and in good standing (to the extent applicable) under the Laws of the jurisdiction of its incorporation or organization, as the case may be, and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to
the extent applicable, operate its properties and to carry on its business as it is now being conducted, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect.
(c) Section 4.1(c) of the ColonialPost Disclosure Letter sets forth a true and complete list of the ColonialPost Subsidiaries and their respective jurisdiction of incorporation or organization, as the case may be, and the type of and percentage of interest held, directly or indirectly, by ColonialPost in each ColonialPost Subsidiary.
(d) Except as set forth in Section 4.1(d) of the ColonialPost Disclosure Letter, neither ColonialPost nor any ColonialPost Subsidiary directly or indirectly owns any interest or investment (whether equity or debt) in any Person (other than in the ColonialPost Subsidiaries and investments in short-term investment securities).
Section 4.2Organizational Documents. ColonialThere are no current or pending dissolution, liquidation, forfeiture or revocation proceedings regarding Post or any of the Post Subsidiaries. Post has made available to MAA complete and correct copies of (i) the Colonial DeclarationPost Articles of TrustIncorporation and ColonialPost Bylaws and (ii) the ColonialPost LP Agreement and the certificate of limited partnership of ColonialPost LP, and (iii) the organizational documents of each Colonial Subsidiary, in each case as in effect on the date hereof.hereof, and all such organizational documents are in full force and effect.
Section 4.3Capital Structure.
(a) The authorized capital stock of ColonialPost consists of 125,000,000 Colonial100,000,000 shares of Post Common SharesStock and 20,000,000 shares of preferred stock, par value $0.01$.01 per share.share (“Post Preferred Stock”), of which 1,150,000 shares are designated as 8 1⁄2% Series A Cumulative Redeemable Preferred Shares with a liquidation preference of $50 per share (“Post Series A Preferred Stock”). At the close of business on May 31, 2013, 2013,August 12, 2016, (i) 88,728,449 Colonial53,506,370.0653 shares of Post Common SharesStock were issued and outstanding, (ii) no preferred867,846 shares of beneficial interest in Colonial (“ColonialPost Series A Preferred Shares”)Stock were issued and outstanding and no other shares of Post Preferred Stock were issued or outstanding, (iii) 1,360,094 Colonial159,210 shares of Post Common SharesStock were reserved for issuance pursuant to the terms of outstanding options granted pursuant to the ColonialPost Equity Incentive Plans and (iv) 3,252,618 Colonial113,064 shares of Post Common Shares were available for grant under the Colonial Equity Incentive Plans, (v) 6,177,028 Colonial Common Shares were reserved for issuance under the Colonial ESPP and Colonial’s Dividend Reinvestment Plan (the “Colonial DRIP”) and (vi) 7,151,752 Colonial Common SharesStock were reserved for issuance upon redemption of ColonialPost OP Units. All issued and outstanding shares of the capital stock of ColonialPost are duly authorized, validly issued, fully paid and non-assessable, and no class of capital stock is entitled to preemptive rights. There are no outstanding bonds, debentures, notes or other Indebtedness of ColonialPost having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which holders of Colonialshares of Post Common SharesStock may vote. Section 4.3(a) of the ColonialPost Disclosure Letter sets forth a complete and correct list, as of the date of this Agreement, of the total number of outstanding ColonialPost Options under the ColonialPost Equity Incentive Plans and the number of Colonialshares of Post Common SharesStock subject to each outstanding ColonialPost Option, the name of the holder, the exercise price, and the grant date. There are no other rights to purchase or receive Colonialshares of Post Common SharesStock granted under the ColonialPost Equity Incentive Plans or otherwise other than the ColonialPost Options.
(b) All of the outstanding shares of capital stock of each of the ColonialPost Subsidiaries that is a corporation are duly authorized, validly issued, fully paid and nonassessable. All equity interests in each of the ColonialPost Subsidiaries that is a partnership or limited liability company are duly authorized and validly issued. All shares of capital stock of (or other ownership interests in) each of the ColonialPost Subsidiaries which may be issued upon exercise of outstanding options or exchange rights are duly authorized and, upon issuance will be validly issued, fully paid and nonassessable. Except as set forth in Section 4.3(b) of the ColonialPost Disclosure Letter, ColonialPost owns, directly or indirectly, all of the issued and outstanding capital stock and other ownership interests of each of the ColonialPost Subsidiaries owned by ColonialPost or a ColonialPost Subsidiary, free and clear of all encumbrances otherLiens (other than statutory or other liens for Taxes or assessments which are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained in accordance with GAAP,Post Permitted Liens), and except as set forth in the ColonialPost LP Agreement, there are no existing options, warrants, calls, subscriptions, convertible securities or other securities, agreements, commitments or obligations of any character relating to the
outstanding capital stock or other securities of any ColonialPost Subsidiary owned by ColonialPost or a ColonialPost Subsidiary or which would require any ColonialPost Subsidiary
to issue or sell any shares of such ColonialPost Subsidiary capital stock, ownership interests or securities convertible into or exchangeable for shares of such ColonialPost Subsidiary capital stock or ownership interests.
(c) Except for shares of Post Common Stock subject to Post Restricted Stock Awards, rights under the Post Equity Incentive Plans or as set forth in thisSection 4.3 or in Section 4.3(c) of the ColonialPost Disclosure Letter, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, rights of first refusal, arrangements or undertakings of any kind to which ColonialPost or any ColonialPost Subsidiary is a party or by which any of them is bound, obligating ColonialPost or any ColonialPost Subsidiary to issue, deliver or sell or create, or cause to be issued, delivered or sold or created, additional Colonialshares of Post Common Shares, ColonialStock, shares of Post Preferred SharesStock (including shares of Post Series A Preferred Stock) or other equity securities or phantom stock or other contractual rights the value of which is determined in whole or in part by the value of any equity security of ColonialPost or any of the ColonialPost Subsidiaries or obligating ColonialPost or any ColonialPost Subsidiary to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, right of first refusal, arrangement or undertaking. Except as set forth in Section 4.3(c) of the ColonialPost Disclosure Letter, there are no outstanding contractual obligations of ColonialPost or any ColonialPost Subsidiary to repurchase, redeem or otherwise acquire any Colonialshares of Post Common Shares, ColonialStock, shares of Post Preferred Shares,Stock (including shares of Post Series A Preferred Stock), or other equity securities of ColonialPost or any ColonialPost Subsidiary. Neither ColonialPost nor any ColonialPost Subsidiary is a party to or, to the Knowledge of Colonial,Post, bound by any agreements or understandings concerning the voting (including voting trusts and proxies) of any capital stock of ColonialPost or any of the ColonialPost Subsidiaries. At the close of business on August 12, 2016, (i) 1,010,838.70 shares of Post Common Stock were available for grant under the Post Equity Incentive Plans (excluding any securities reflected inSection 4.3(a)(iii)) and (ii) 1,817,490 shares of Post Common Stock were reserved for issuance under the Post ESPP and Post’s Dividend Reinvestment Stock Purchase Plan (the “PostDRIP”).
(d) ColonialPost does not have a “poison pill” or similar shareholder rights plan.
(e) Except as set forth in Section 4.3(e) of the ColonialPost Disclosure Letter, neither ColonialPost nor any ColonialPost Subsidiary is under any obligation, contingent or otherwise, by reason of any contract to register the offer and sale or resale of any of their securities under the Securities Act.
(f) All dividends or distributions on the ColonialPost Common SharesStock, the Post Series A Preferred Stock and any material dividends or distributions on any securities of any ColonialPost Subsidiary which have been authorized or declared prior to the date hereof have been paid in full (except to the extent such dividends have been publicly announced and are not yet due and payable).
(g) ColonialPost GP is the sole general partner of ColonialPost LP and ColonialPost GP owns, directly or indirectly, all of the general partner interests in ColonialPost LP.
(h) Section 4.3(h)As of the Colonialdate of this Agreement, Post has not released any Third Party from (or waived the provisions of) any standstill agreement in the last two years.
(i) Section 4.3(i) of the Post Disclosure Letter sets forth, as of the date hereof, the name of, and the number and class of limited partnership interests held by, each partner in ColonialPost LP.
Section 4.4Authority.
(a) ColonialPost has the requisite real estate investment trustcorporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to receipt of the ColonialPost Shareholder Approval, to consummate the transactions contemplated by this Agreement to which ColonialPost is a party, including the Parent Merger. The execution and delivery of this Agreement by ColonialPost and the consummation by ColonialPost of the transactions
contemplated by this Agreement have been duly and validly authorized by all necessary real estate investment trustcorporate action, and no other real estate investment trustcorporate proceedings on the part of ColonialPost are necessary to authorize this Agreement or the Parent Merger or to consummate the other transactions contemplated by this Agreement, subject, with respect to the Parent Merger, to receipt of the ColonialPost Shareholder Approval, and to the filing of the articles of merger with the Office of the Secretary of State forof the State of Alabama.Georgia. This Agreement has been duly executed and delivered by ColonialPost and assuming due authorization, execution and delivery by each of ColonialPost GP, Post LP, MAA and MAA LP, and OP Merger Sub, constitutes a legally valid and binding obligation of ColonialPost enforceable against ColonialPost in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
(b) The ColonialPost Board, at a duly held meeting, has, by unanimous vote, (i) duly and validly authorized the execution and delivery of, and adopted, this Agreement and declared advisable the consummation of the Mergers and the other transactions contemplated by this Agreement, (ii) directed that the Parent Merger as contemplated by the Plan of Merger and the other transactions contemplated by this Agreement be submitted for consideration at the ColonialPost Shareholder Meeting, and (iii) as of the date of this Agreement, resolved to recommend that the shareholders of ColonialPost vote in favor of the approval of the Parent Merger as contemplated by the Plan of Merger and the other transactions contemplated by this Agreement (the “ColonialPost Recommendation”) and to include such recommendation in the Joint Proxy Statement, subject toSection 7.4.
(c) ColonialPost LP has the requisite limited partnership power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to the receipt of the Post Partner Approval, to consummate the transactions contemplated by this Agreement, including the Partnership Merger. The execution and delivery of this Agreement by ColonialPost LP and the consummation by it of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary partnership action, and no other partnership proceedings on the part of ColonialPost LP are necessary to authorize this Agreement or the Partnership Merger or to consummate the transactions contemplated by this Agreement, subject, with respect to the Partnership Merger, to the receipt of the Post Partner Approval, and to the filing of the certificate of merger with the Office of the Secretary of State of the State of Delaware.Georgia. This Agreement has been duly executed and delivered by ColonialPost LP, and assuming due authorization, execution and delivery by each of Colonial,Post, Post GP, MAA and MAA LP, and OP Merger Sub, constitutes a legally valid and binding obligation of ColonialPost LP, enforceable against ColonialPost LP in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
(d) Post GP has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to the receipt of the Post Partner Approval, to consummate the transactions contemplated by this Agreement, including the Partnership Merger. The execution and delivery of this Agreement by Post GP and the consummation by it of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Post GP are necessary to authorize this Agreement or the Partnership Merger or to consummate the transactions contemplated by this Agreement, subject, with respect to the Partnership Merger, to the receipt of the Post Partner Approval, and to the filing of the certificate of merger with the Secretary of State of the State of Georgia. This Agreement has been duly executed and delivered by Post GP, and assuming due authorization, execution and delivery by each of Post, Post LP, MAA and MAA LP, constitutes a legally valid and binding obligation of Post GP, enforceable against Post GP in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
Section 4.5No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 4.5(a) of the ColonialPost Disclosure Letter, the execution and delivery of this Agreement by each of ColonialPost, Post GP and ColonialPost LP does not, and the performance of their respective obligations
hereunder will not, (i) assuming receipt of the ColonialPost Shareholder Approval and the Post Partner Approval, conflict with or violate any provision of (A) the Colonial DeclarationPost Articles of TrustIncorporation or ColonialPost Bylaws, (B) the Colonialarticles of incorporation or bylaws of Post GP, (C) the Post LP Agreement or the certificate of limited partnership of ColonialPost LP or (C)(D) any equivalent organizational or governing documents of any other ColonialPost Subsidiary, (ii) assuming that all consents, approvals, authorizations and permits described inSection 4.5(b) have been obtained, all filings and notifications described inSection 4.5(b) have been made and any waiting periods thereunder have terminated or expired, conflict with or violate any Law applicable to ColonialPost or any ColonialPost Subsidiary or by which any property or asset of ColonialPost or any ColonialPost Subsidiary is bound, or (iii) assuming receipt of the ColonialPost Shareholder Approval and the Post Partner Approval, require any consent or approval (except as contemplated bySection 4.5(b)) under, result in any breach of or any loss of any benefit or material increase in any cost or obligation of ColonialPost or any ColonialPost Subsidiary under, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, acceleration or cancellation (with or without notice or the lapse of time or both) of, or give rise to any right of purchase, first offer or forced sale under or result in the creation of a Lien on any property or asset of ColonialPost or any ColonialPost Subsidiary pursuant to, any note, bond, debt instrument, indenture, contract, agreement, ground lease, license, permit or other legally binding obligation to which Colonial or any Colonial Subsidiary is a party,Post Material Contract, except, as to clauses (i)(C)(D), (ii) and (iii), respectively, for any such conflicts, violations, breaches, defaults or other occurrences which, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect. Notwithstanding the foregoing, no representations and warranties shall be deemed to have been made underSection 4.5(a)(iii) with respect to the agreements (other than the Colonial LP Agreement) listed on Section 4.12(g) of the Colonial Disclosure Letter.
(b) The execution and delivery of this Agreement by each of ColonialPost, Post GP and ColonialPost LP does not, and the performance of this Agreement by each of ColonialPost, Post GP and ColonialPost LP will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) the filing with the SEC of (A) the Joint Proxy Statement in preliminary and definitive form and of a registration statement on Form S-4 pursuant to which the offer and sale of shares of MAA Common Stock and the MAA Series I Preferred Stock in the Parent Merger will be registered pursuant to the Securities Act and in which the Joint Proxy Statement will be included (together with any amendments or supplements thereto, the “Form S-4”), and declaration of effectiveness of the Form S-4, and (B) such reports under, and other compliance with, the Exchange Act (and the rules and regulations promulgated thereunder) and the Securities Act (and the rules and regulations promulgated thereunder) as may be required in connection with this Agreement and the transactions contemplated hereby, and (C) any documents in accordance withSection 7.10, (ii) as may be required under the rules and regulations of the NYSE, (iii) the filing of (x)(A) the articles of merger with respect to the Parent Merger with the OfficeSecretary of State of the State of Georgia and the Secretary of State for the State of Alabama and the Office of the Secretary of State for the State of Tennessee and (y)(B) appropriate documents with the relevant authorities of the other jurisdictions in which ColonialPost and MAA and their respective Subsidiaries are qualified to do business, (iv) the filing of the certificate of merger with respect to the Partnership Merger with the Secretary of State of the State of Delaware, (vi)Georgia and the Secretary of State of the State of Tennessee, respectively, (v) such filings and approvals as may be required by any applicable state securities or “blue sky” Laws, (vi) such filings as may be required in connection with Transfer Taxes, and (vii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect.
Section 4.6Permits; Compliance with Law.
(a) Except for the authorizations, licenses, permits, certificates, approvals, variances, exemptions, orders, franchises, certifications and clearances that are the subject ofSection 4.17 orSection 4.18, which are addressed solely in those Sections, ColonialPost and each ColonialPost Subsidiary is in possession of all authorizations, licenses, permits, certificates, approvals, variances, exemptions, orders, franchises, certifications and clearances of any Governmental Authority and accreditation and certification agencies, bodies or other organizations, including building permits and certificates of occupancy, necessary for ColonialPost and each ColonialPost Subsidiary to own, lease and, to the extent applicable, operate its properties or to carry on its respective business substantially as it is being conducted as of the date hereof (the “ColonialPost Permits”), and allexcept in each case as would not, individually or in the aggregate, reasonably be expected to have a Post Material Adverse Effect. All such ColonialPost Permits are valid and in full force and effect, except where the failure to be in possession of, or the failure to be valid or in full force and effect of, any of the ColonialPost Permits, individually or in the aggregate, would not reasonably be expected to have a Colonial
Post Material Adverse Effect. All applications required to have been filed for the renewal of the ColonialPost Permits have been duly filed on a timely basis with the appropriate Governmental Authority, and all other filings required to have been made with respect to such ColonialPost Permits have been duly made on a timely basis with the appropriate Governmental Authority, except in each case for failures to file which, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect. Neither ColonialPost nor any ColonialPost Subsidiary has received any written claim or written notice nor has any Knowledge indicating that ColonialPost or any ColonialPost Subsidiary is currently not in compliance with the terms of any such ColonialPost Permits, except where the failure to be in compliance with the terms of any such ColonialPost Permits, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect.
(b) Neither ColonialSince January 1, 2014, neither Post nor any ColonialPost Subsidiary is or has been in conflict with, or in default or violation of (i) any Law applicable to ColonialPost or any ColonialPost Subsidiary or by which any property or asset of ColonialPost or any ColonialPost Subsidiary is bound (except for Laws addressed inSection 4.16,Section 4.17, orSection 4.18), or (ii) any ColonialPost Permits (except for the ColonialPost Permits addressed inSection 4.17 orSection 4.18), except in each case for any such conflicts, defaults or violations that have been cured, or, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect.
Section 4.7SEC Documents; Financial Statements.
(a) ColonialPost has made available to MAA (by public filing with or furnishing to the SEC or otherwise) a true and complete copy of each report, schedule, registration statement and definitive proxy statement filed or furnished by ColonialPost and ColonialPost LP with the SEC since January 1, 20102014 (the “ColonialPost SEC Documents”).
Except for matters relating to open comment letters with the SEC as set forth in Section 4.7 of the ColonialPost Disclosure Letter, as of their respective dates, the ColonialPost SEC Documents (other than preliminary materials) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such ColonialPost SEC Documents and none of the ColonialPost SEC Documents, at the time of filing or being furnished (or effectiveness in the case of registration statements), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by later ColonialPost SEC Documents filed or furnished and publicly available prior to the date of this Agreement and provided that no representation or warranty is made hereunder as to statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement that were not supplied by or on behalf of ColonialPost or ColonialPost LP. ExceptAs of the date of this Agreement and except as previously made available to MAA, neither ColonialPost nor ColonialPost LP have any outstanding and unresolved comments from the SEC with respect to the ColonialPost SEC Documents. Other than ColonialPost LP, no ColonialPost Subsidiary is required to file any form or report with the SEC.
(b) ColonialPost has made available to MAA complete and correct copies of all written correspondence between the SEC on one hand, and ColonialPost or ColonialPost LP, on the other hand, since January 1, 2010.2014. At all applicable times, ColonialPost and ColonialPost LP have both complied in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 and theany applicable rules and regulations thereunder, as amended from time to time.time, and the applicable listing and corporate governance rules of the NYSE.
(c) The consolidated financial statements of ColonialPost and the ColonialPost Subsidiaries included or incorporated by reference in the ColonialPost SEC Documents, including the related notes and schedules, complied as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the Exchange Act) and fairly presented, in all material respects, in accordance with applicable requirements of GAAP and the applicable rules and regulations of the SEC (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which are material), the consolidated financial position of ColonialPost and the ColonialPost Subsidiaries, taken as a whole, as of their
respective dates and the consolidated statements of income and the consolidated cash flows of ColonialPost and the ColonialPost Subsidiaries for the periods presented therein, in each case, except to the extent such financial statements have been modified or superseded by later ColonialPost SEC Documents filed and publicly available prior to the date of this Agreement.
Section 4.8Absence of Certain Changes or Events. Except as contemplated by this Agreement or as set forth in Section 4.8 of the ColonialPost Disclosure Letter, since March 31, 2013, ColonialJune 30, 2016, Post and each ColonialPost Subsidiary has conducted its business in all material respects in the ordinary course. Since March 31, 2013,June 30, 2016, there has not been any ColonialPost Material Adverse Effect or any effect, event, change or circumstance that, individually or in the aggregate with all other effects, events, changes and circumstances, would reasonably be expected to have a ColonialPost Material Adverse Effect.
Section 4.9No Undisclosed Material Liabilities. Except as disclosed in the ColonialPost SEC Documents, as set forth in Section 4.9 of the ColonialPost Disclosure Letter or as otherwise would not reasonably be expected to have a ColonialPost Material Adverse Effect, there are no liabilities of ColonialPost or any of the ColonialPost Subsidiaries of a nature that would be required under GAAP to be set forth on the financial statements of ColonialPost or the notes thereto, other than: (i)(a) liabilities adequately provided for on the balance sheet of ColonialPost dated as of March 31, 2013June 30, 2016 (including the notes thereto) as required by GAAP, (ii)(b) liabilities incurred in connection with the transactions contemplated by this Agreement, or (iii)(c) liabilities incurred in the ordinary course of business, consistent with past practice, subsequent to March 31, 2013.June 30, 2016.
Section 4.10No Default. Except as set forth on Section 4.10 of the ColonialPost Disclosure Letter, none of ColonialPost or any of the ColonialPost Subsidiaries is in default or violation (and to the Knowledge of Colonial,Post, no
event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (a) (i) (A) the Colonial DeclarationPost Articles of TrustIncorporation or the ColonialPost Bylaws, (B),(ii) the Colonialarticles of incorporation or bylaws of Post GP, (iii) the Post LP Agreement or the certificate of limited partnership of ColonialPost LP or (C)(iv) the comparable charter or organizational documents of any of the other ColonialPost Subsidiaries, (ii)(b) any loan or credit agreement, note, or any bond, mortgage or indenture, to which ColonialPost or any of the ColonialPost Subsidiaries is a party or by which Colonial,Post, any of the ColonialPost Subsidiaries or any of their respective properties or assets is bound, or (iii)(c) any Order, statute, rule or regulation applicable to ColonialPost or any of the ColonialPost Subsidiaries, except in the case of (ii)(b) and (iii)(c) for defaults or violations which have been cured or, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect.
Section 4.11Litigation. Except as individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect, or as set forth in Section 4.11 of the ColonialPost Disclosure Letter, as of the date of this Agreement, (a) there is no Action pending or, to the Knowledge of Colonial,Post, threatened in writing by or before any Governmental Authority against ColonialPost or any ColonialPost Subsidiary or any director or officer of ColonialPost or any ColonialPost Subsidiary, and (b) neither ColonialPost nor any ColonialPost Subsidiary, nor any of Colonial’sPost’s or any ColonialPost Subsidiary’s respective property, is subject to any outstanding Order of any Governmental Authority.
Section 4.12Taxes.
(a) ColonialPost and each ColonialPost Subsidiary has timely filed with the appropriate Governmental Authority all material Tax Returns required to be filed, taking into account any extensions of time within which to file such Tax Returns, and all such Tax Returns were complete and correct in all material respects. ColonialPost and each ColonialPost Subsidiary has duly paid (or there has been paid on their behalf), or made adequate provisions for, all material Taxes required to be paid by them, whether or not shown on any Tax return. Neither Post nor any of its Subsidiaries has received a written claim, or to the Knowledge of Post, an unwritten claim, by any authority in a jurisdiction where any of them does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(b) ColonialPost and each Post REIT Subsidiary: (i) for all taxable years commencing with Colonial’s formationthe taxable year ending December 31, 1993 (and the relevant Post REIT Subsidiary’s formation) and through December 31, 2012, 2015,
has been subject to taxation as a real estate investment trust within the meaning of Sections 856 and 857 of the Code (a “REIT”) and has satisfied all requirements for qualification and taxation as a REIT for such years; (ii) has operated since January 1, 20132016 and will operate to the Parent Merger Effective Time in a manner consistent with the requirements for qualification and taxation as a REIT (without taking into account the effects of the Partnership Merger);REIT; (iii) intends to continue to operate in such a manner as to qualify as a REIT for its taxable year ending with the Parent Merger;Merger (or in the case of each Post REIT Subsidiary, intends to continue to operate up to the Parent Merger in such a manner as to qualify as a REIT for its taxable year that will include the Parent Merger); and (iv) has not taken or omitted to take any action that could reasonably be expected to result in a challenge by the IRS to its status as a REIT, (without taking into account the effects of the Partnership Merger), and to the Knowledge of Colonial,Post, no such challenge is pending or threatened. No entity in which ColonialPost owns an interest is a corporation for United StatesU.S. federal income tax purposes, other than a Post REIT Subsidiary, a corporation that qualifies as a REIT, a “qualified REIT subsidiary” within the meaning of Section 856(i)(2) of the Code (“Qualified REITSubsidiary”) or a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code (“Taxable REIT Subsidiary”). Section 4.12(b) of the ColonialPost Disclosure Letter sets forth a list of each Post REIT Subsidiary, Qualified REIT Subsidiary and Taxable REIT Subsidiary of Colonial,owned directly or indirectly by Post, and each ColonialPost Subsidiary not set forth in Section 4.12(b) of the ColonialPost Disclosure Letter is and has been since its formation classified as a partnership or entity disregarded as separate from ColonialPost or a ColonialPost Subsidiary for United StatesU.S. federal income tax purposes. Each Post Subsidiary that is a partnership, joint venture or limited liability company and has not elected to be a Taxable REIT Subsidiary has been since its formation treated for U.S. federal income tax purposes as a partnership or disregarded entity, as the case may be, and not as a corporation or an association taxable as a corporation. Taking into account all distributions to be made by ColonialPost prior to the Parent Merger Effective Time, ColonialPost will have distributed cash to its shareholders in its taxable year ending with the Parent Merger in an amount equal to or in excess of the amount required to be distributed pursuant to Section 857(a) of the Code in respect of its taxable year ending with the Parent Merger, and ColonialPost will not be subject to Tax under Sections 857(b) or 4981 of the Code in respect of its taxable year ending with the Parent Merger.
(c) (i) There are no audits, investigations by any Governmental Authority or other proceedings ongoing or, to the Knowledge of Colonial,Post, threatened with regard to any Taxes or Tax Returns of ColonialPost or any ColonialPost Subsidiary; (ii) no deficiency for Taxes of ColonialPost or any ColonialPost Subsidiary has been claimed, proposed or assessed in writing or, to the Knowledge of Colonial,Post, threatened, by any Governmental Authority,
which deficiency has not yet been settled, except for such deficiencies which are being contested in good faith or with respect to which the failure to pay, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect; (iii) except as set forth in Section 4.12(c)(iii) of the ColonialPost Disclosure Letter, neither ColonialPost nor any ColonialPost Subsidiary has waived any statute of limitations with respect to the assessment of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency for any open tax year or is the beneficiary of an extension of time to file any Tax Return except for any such waivers or extensions relating to an extension of time to file any non-income Tax Return in respect of a taxable year or period ending in 20122015 or 2013;2016; and (iv) except as set forth in Section 4.12(c)(iv) of the ColonialPost Disclosure Letter, neither ColonialPost nor any of the ColonialPost Subsidiaries has entered into any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law).
(d) Neither ColonialPost nor any ColonialPost Subsidiary holds any asset the disposition of which would be subject to (or to rules similar to) Section 1374 of the Code.
(e) Beginning with its taxable year ended December 31, 2009,2012, (i) ColonialPost and the ColonialPost Subsidiaries have not incurred any liability for material Taxes under Sections 856(g)(5)(C), 857(b)(1), 857(b)(4), 857(b)(5), 857(b)(6)(A), 857(b)(7), 860(c) or 4981 of the Code which have not been previously paid and shall not incur any such liability for such Taxes in the taxable year ending on the Closing Date, and (ii) neither ColonialPost nor any ColonialPost Subsidiary has incurred any material liability for Taxes other than (x)(A) in the ordinary course of business or consistent with past practice, or (y)(B) transfer or similar Taxes arising in connection with a sale, exchange, or other transfer of property. No event has occurred, and no condition or circumstance exists, which presents a material risk that any material Tax described in the preceding sentence will be imposed upon ColonialPost or the ColonialPost Subsidiaries.
(f) ColonialPost and the ColonialPost Subsidiaries have complied, in all material respects, with all applicable Laws, rules and regulations relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 1471 and 3402 of the Code or similar provisions under any state and foreign Laws) and have duly and timely withheld and, in each case, have paid over to the appropriate Governmental Authority all material amounts required to be so withheld and paid over on or prior to the due date thereof under all applicable Laws.
(g) Except as set forth on Section 4.12(g) of the ColonialPost Disclosure Letter, there are no ColonialPost Tax Protection Agreements in force at the date of this Agreement, and, as of the date of this Agreement, no person has raised in writing, or to the Knowledge of Colonial,Post, threatened to raise a material claim against ColonialPost or any ColonialPost Subsidiary for any breach of any ColonialPost Tax Protection Agreements. As used herein, “ColonialPost Tax Protection Agreements” means any written agreement to which ColonialPost or any ColonialPost Subsidiary is a party (i) pursuant to which any liability to holders of interests in a ColonialPost Subsidiary Partnership relating to Taxes may arise, whether or not as a result of the consummation of the transactions contemplated by this Agreement; and/or (ii) that was entered into in connection with or related to the deferral of income Taxes of a holder of interests in a ColonialPost Subsidiary Partnership, and that requires ColonialPost or any ColonialPost Subsidiary (A) to maintain a minimum level of debt, continue a particular debt, or provide rights to guarantee or otherwise assume economic risk of loss with respect to debt, (B) to retain or not to dispose of assets, or engage in transactions of comparable tax effect, (C) to make or refrain from making a Tax election, and/or (D) only dispose of assets in a particular manner. As used herein, “ColonialPost Subsidiary Partnership” means a ColonialPost Subsidiary that is a partnership for United StatesU.S. federal income tax purposes.
(h) There are no Tax Liens upon any property or assets of ColonialPost or any ColonialPost Subsidiary except Liens for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP.
(i) Neither ColonialPost nor any ColonialPost Subsidiary has requested or has received any written ruling of a Governmental Authority, or has entered into any written agreement with a Governmental Authority with respect to any Taxes.
(j) There are no Tax allocation or sharing agreements or similar arrangements with respect to which ColonialPost or any ColonialPost Subsidiary is a party (other than customary arrangements under commercial contracts or borrowings entered into in the ordinary course of business and ColonialPost Tax Protection Agreements).
(k) Neither ColonialPost nor any ColonialPost Subsidiary (A)(i) has been a member of an affiliated group filing a consolidated United StatesU.S. federal income Tax Return or (B)(ii) has any liability for the Taxes of any Person (other than ColonialPost or any ColonialPost Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.
(l) Neither ColonialPost nor any ColonialPost Subsidiary has participated in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(m) Neither ColonialPost nor any of the ColonialPost Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (A)(i) in the two (2) years prior to the date of this Agreement or (B)(ii) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with transactions contemplated by this Agreement.
(n) Except as set forth in Section 4.12(n) of the ColonialPost Disclosure Letter, no written power of attorney that has been granted by ColonialPost or any of the ColonialPost Subsidiaries (other than to ColonialPost or a ColonialPost Subsidiary) currently is in force with respect to any matter relating to Taxes.
(o) Neither Post nor any of the Post Subsidiaries (other than Taxable REIT Subsidiaries) has or has had any earnings and profits attributable to such entity or any other corporation in any non-REIT year within the meaning of Section 857 of the Code. (p) As of the date of this Agreement, Post is not aware of any fact or circumstance that could reasonably be expected to prevent the Parent Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code. (q) Except as set forth in Section 4.12(q) of the Post Disclosure Letter, to the Knowledge of Post, neither it nor any of its Subsidiaries has engaged at any time in any “prohibited transactions” within the meaning of Section 857(b)(6) of the Code or engaged in any transaction that would give rise to “redetermined rents, redetermined deductions, excess interest, and redetermined TRS service income” described in Section 857(b)(7) of the Code. (r) ThisSection 4.12 contains the sole and exclusive representations and warranties of the Index to Financial Statements
ColonialPost Parties with respect to Taxes and Tax matters (other than those matters described inSection 4.7(c),Section 4.13,Section 4.14(c),Section 4.18(b) andSection 4.18(i)4.18(g)).
Section 4.13Pension and Benefit Plans; Employees.
(a) Section 4.13(a) of the ColonialPost Disclosure Letter sets forth a list, as of the date hereof, of every material Employee Benefit Plan currently maintained or contributed to (or with respect to which any obligation to contribute has been undertaken) by ColonialPost or any of its ERISA Affiliates (such Employee Benefit Plans, the “ColonialPost Employee Benefit Plans”. Each such Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS regarding its qualification thereunder that has not been revoked and, to Colonial’sthe Knowledge of Post, no event has occurred and no condition exists that is reasonably expected to result in the revocation of any such determination or opinion letter.
(b) With respect to each such ColonialPost Employee Benefit Plan, ColonialPost has provided, or made available, to MAA (if applicable to such ColonialPost Employee Benefit Plan): (i) all documents embodying or governing such ColonialPost Employee Benefit Plan, and any funding medium for the ColonialPost Employee Benefit Plan (including, without limitation, trust agreements); (ii) the most recent IRS determination or opinion letter with respect to such ColonialPost Employee Benefit Plan under Section 401(a) of the Code; (iii) the most recently filed IRS Form 5500 Annual Report and accompanying schedules and audited financial statements; (iv) the most recent actuarial report; (v) the current summary plan description for such ColonialPost Employee Benefit Plan (or other descriptions of such ColonialPost Employee Benefit Plan provided to employees) and all summaries of material modifications thereto; (vi) any insurance policy related to such ColonialPost Employee Benefit PlanPlan; and (vii) all material written correspondence received from the IRS, Pension Benefit Guaranty Corporation or the U.S. Department of Labor during the past three (3) years.years relating to any government investigation or audit or any submissions under any voluntary compliance or correction policy.
(c) Each ColonialPost Employee Benefit Plan has been administered in accordance with the requirements of applicable law, including, without limitation, ERISA and the Code, except as would not, individually or in the aggregate, reasonably be expected to have a ColonialPost Material Adverse Effect, and is being administered and
operated in all material respects in accordance with its terms. No ColonialPost Employee Benefit Plan is subject to Title IV of ERISA, is a multiemployer plan, within the meaning of ERISA Section 3(37), is a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA) or is a “multiple employer plan” (as defined in Section 413 of the Code). Neither Post nor any ERISA Affiliate has ever maintained or contributed to, or had any obligation to contribute to (or borne any liability with respect to) any such multiemployer plan or multiple employer plan.
(d) Full payment has been made, or otherwise properly accrued on the books and records of ColonialPost and any ERISA Affiliate, of all amounts that ColonialPost and any ERISA Affiliate are required under the terms of the Colonial Post
Employee Benefit Plans to have paid as contributions to such ColonialPost Employee Benefit Plans on or prior to the date hereof (excluding any amounts not yet due) and the contribution requirements, on a prorated basis, for the current year have been made or otherwise properly accrued on the books and records of ColonialPost through the Closing Date.
(e) Neither Colonial,Post, an ERISA Affiliate or any person appointed or otherwise designated to act on behalf of Colonial,Post, or an ERISA Affiliate, nor, to the Knowledge of Colonial,Post, any other “disqualified person” or “party in interest” (as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has engaged in any transactions in connection with any ColonialPost Employee Benefit Plan that is reasonably expected to result in the imposition of a material penalty or pursuant to Section 502(i) of ERISA, material damages pursuant to Section 409 of ERISA or a material tax pursuant to Section 4975(a) of the Code.
(f) No material liability, claim, action, audit, investigation, governmental proceeding or litigation has been made, commenced or, to the Knowledge of Colonial,Post, threatened with respect to any ColonialPost Employee Benefit Plan (other than for benefits payable in the ordinary course of business).
(g) Except as set forth in Section 4.13(g) of the ColonialPost Disclosure Letter, no ColonialPost Employee Benefit Plan provides for medical, life insurance or other health or welfare benefits (other than under Section 4980B of the Code, Part 6 of Title I of ERISA or other similar applicable Law, or a plan qualified under Section 401(a) of the Code) to any current or future retiree or former employee.
(h) Except as set forth in Section 4.13(h) of the ColonialPost Disclosure Letter, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will (individually or together with the occurrence of any other event): (A)(i) entitle any employee, trustee, director or consultant of ColonialPost or the ColonialPost Subsidiaries to severance pay or any increase in severance pay under any ColonialPost Employee Benefit Plan or ColonialPost employment agreement upon any termination of employment on or after the date of this Agreement, (B)Agreement; (ii) accelerate the time of payment, vesting or funding or result in any payment of compensation or benefits under, or increase the amount or value of any payment to any employee, officer, trustee or director of ColonialPost or any ColonialPost Subsidiary, or could limit the right to amend, merge or terminate any ColonialPost Employee Benefit Plan or related trust, (C)trust; (iii) result in payments or benefits under any ColonialPost Employee Benefit Plan or ColonialPost employment agreement which would not be deductible under Section 280G of the Code,Code; or (D)(iv) result in a requirement to pay any tax “gross up” or similar “make whole” payment to any employee, director, consultant or other service provider of ColonialPost or any of its ERISA Affiliates.
(i) The per share exercise price of each ColonialPost Option is no less than the fair market value of a Colonialshare of Post Common ShareStock on the date of grant of such ColonialPost Option (and as of each later modification thereof within the meaning of Section 409A of the Code) determined in a manner consistent with Section 409A of the Code. Each ColonialPost Employee Benefit Plan that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been operated and maintained in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder. No payment to be made under any ColonialPost Employee Benefit Plan is, or to the Knowledge of Colonial,Post, will be, subject to the penalties of Section 409A(a)(1) of the Code.
Section 4.14Labor and Employment Matters.
(a) Neither ColonialPost nor any ColonialPost Subsidiary is a party to, or bound by, any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor union organization, nor are there any negotiations or discussions currently pending or occurring between Colonial,Post, or any of the ColonialPost Subsidiaries, and any union or employee association regarding any collective bargaining agreement or any other work rules or polices. There is no unfair labor practice or labor arbitration proceeding pending or, to the Knowledge of Colonial,Post, threatened against ColonialPost or any of the ColonialPost Subsidiaries relating to their business and neither ColonialPost nor any ColonialPost Subsidiary has experienced any strike, work stoppage, lockout, shutdown, labor dispute or other concerted interference with normal operations during the past five (5) years. To Colonial’sthe Knowledge (i) of Post,
there are no organizational efforts with respect to the formation of a collective bargaining unit presently being made or threatened involving employees of ColonialPost or any of the ColonialPost Subsidiaries (ii) nor have there been any such organizational efforts over the past five (5) years.
(b) Except as set forth in Section 4.14(b) of the ColonialPost Disclosure Letter, there are no proceedings pending or, to the Knowledge of Colonial,Post, threatened against ColonialPost or any of the ColonialPost Subsidiaries in any forum by or on behalf of any present or former employee of ColonialPost or any of the ColonialPost Subsidiaries, any applicant for employment or classes of the foregoing alleging unpaid or overdue wages or compensation due, breach of any express or implied employment contract, violation of any law or regulation governing employment or the termination thereof, or any other discriminatory, wrongful or tortious conduct on the part of ColonialPost of any of the ColonialPost Subsidiaries in connection with the employment relationship that, individually or in the aggregate, would reasonably be expected to have a ColonialPost Material Adverse Effect.
(c) Each individual who renders service to ColonialPost or any ColonialPost Subsidiary who is classified by ColonialPost or such ColonialPost Subsidiary, as applicable, as having the status of an independent contractor or other non-employee status for any purpose (including for purposes of taxation and tax reporting and under any ColonialPost Employee Benefit Plans) is properly so classified and treated in accordance with applicable Laws and for purposes of all ColonialPost Employee Benefit Plans and perquisites.perquisites, except as would not, individually or in the aggregate, reasonably be expected to have a Post Material Adverse Effect.
(d) Each of ColonialPost and the ColonialPost Subsidiaries is in compliance in all material respects with all applicable Laws and all applicable contracts and policies relating to labor and labor practices, employment and employment practices, wages, hours, and terms and conditions of employment, including the obligations of the WARN Act, and all other notification and bargaining obligations arising under any collective bargaining agreement, by applicable Law or otherwise.otherwise, except as would not, individually or in the aggregate, reasonably be expected to have a Post Material Adverse Effect. Except as set forth in Section 4.14(d) of the ColonialPost Disclosure Letter, neither ColonialPost nor any ColonialPost Subsidiary has implemented, conducted or experienced a “plant closing” or “mass layoff” as defined in the WARN Act (or any similar group personnel action requiring advance notice under the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of ColonialPost or any ColonialPost Subsidiary.
Section 4.15Information Supplied. None of the information supplied or to be supplied by or on behalf of ColonialPost, Post GP and ColonialPost LP in writing for inclusion or incorporation by reference in the Form S-4 or the Joint Proxy Statement will (a) in the case of the Form S-4, at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, or (b) in the case of the Joint Proxy Statement, at the time such Joint Proxy Statement is first mailed to Colonial’sPost’s shareholders or at the time of the ColonialPost Shareholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Form S-4 and the Joint Proxy Statement will (with respect to Colonial,Post, its officers and directors and the ColonialPost Subsidiaries) comply as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder. No representation or warranty is made hereunder as to statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement that were not
supplied by or on behalf of ColonialPost, Post GP or ColonialPost LP. None of the information supplied or to be supplied by or on behalf of Colonial or Colonial LP in writing for inclusion in the MAA Consent Solicitation will, at the time of the mailing thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading;provided, that no representation or warranty is made hereunder as to statements made in the MAA Consent Solicitation that were not supplied by or on behalf of Colonial or Colonial LP.
Section 4.16Intellectual Property.
(a) Except as set forth in Section 4.16(a) of the Post Disclosure Letter or as, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect, (i) ColonialPost and the ColonialPost Subsidiaries own or are licensed or otherwise possess valid rights to use all Intellectual Property necessary to conduct the business of ColonialPost and the ColonialPost Subsidiaries as it is currently conducted, provided, however, that the
foregoing representation and warranty in thisSection 4.16(a)(i) shall not constitute or be deemed or construed as any representation or warranty with respect to infringement, misappropriation, or violation of any Intellectual Property rights (which is addressed in the following clause (ii)), (ii) to the Knowledge of Colonial,Post, the conduct of the business of ColonialPost and the ColonialPost Subsidiaries as it is currently conducted does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any third party, (iii) there are no pending or, to the Knowledge of Colonial,Post, threatened claims with respect tothat challenge the use or ownership of any of the Intellectual Property rights owned by ColonialPost or any ColonialPost Subsidiary, and (iv) to the Knowledge of Colonial,Post, no third party is currently infringing or misappropriating Intellectual Property owned by ColonialPost or any ColonialPost Subsidiary. ColonialPost and the ColonialPost Subsidiaries are taking all actions that they reasonably believe are necessary to maintain and protect each material item of Intellectual Property that they own.
(b) ThisSection 4.16 4.16 contains the exclusive representations and warranties of the ColonialPost Parties with respect to intellectual property matters.
Section 4.17Environmental Matters.
(a) Except as individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect, or as set forth in Section 4.17(a) of Colonialthe Post Disclosure Letter, or in any Phase I or Phase II report made available to MAA prior to the date hereof:
(i) ColonialTo the Knowledge of Post (after due inquiry), Post and each ColonialPost Subsidiary are in compliance with and, except for matters that have been fully and finally resolved, have complied with all Environmental Laws.
(ii) ColonialTo the Knowledge of Post (after due inquiry), Post and each ColonialPost Subsidiary have all Environmental Permits necessary to conduct their current operations and are in compliance in all material respects with their respective Environmental Permits, and all such Environmental Permits are in good standing.
(iii) Neither ColonialSince January 1, 2014, neither Post nor any ColonialPost Subsidiary has received any written notice, demand, letter or claim alleging that ColonialPost or any such ColonialPost Subsidiary is in violation of, or liable under, any Environmental Law or that any judicial, administrative or compliance order has been issued against ColonialPost or any ColonialPost Subsidiary which remains unresolved. There is no litigation, investigation, governmental request for information or other proceeding pending, or, to the Knowledge of Colonial,Post, threatened against ColonialPost and any ColonialPost Subsidiary under any Environmental Law or with respect to Hazardous Substances.
(iv) Neither ColonialSince January 1, 2014, neither Post nor any ColonialPost Subsidiary has entered into or agreed to any consent decree or order or is subject to any judgment, decree or judicial, administrative or compliance order relating to compliance with Environmental Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Substances and no investigation, litigation or other proceeding is pending or, to the Knowledge of Colonial,Post, threatened against ColonialPost or any ColonialPost Subsidiary under any Environmental Law or with respect to Hazardous Substances.
(v) Neither ColonialSince January 1, 2014, neither Post nor any ColonialPost Subsidiary has assumed, by contract or, to the Knowledge of Colonial,Post, by operation of Law, any liability under any Environmental Law or relating to any Hazardous Substances, or is an indemnitor in connection with any threatened or asserted claim by any
third-party indemnitee for any liability under any Environmental Law or relating to any Hazardous Substances.
(vi) Neither ColonialSince January 1, 2014, neither Post nor any ColonialPost Subsidiary has caused, and to the Knowledge of Colonial,Post, no Third Party has caused any release of a Hazardous Substance that would be required to be investigated or remediated by ColonialPost or any ColonialPost Subsidiary under any Environmental Law.
(vii) There is no site to which Colonial or any Colonial Subsidiary has transported or arranged for the transport of Hazardous Substances which, to the Knowledge of Colonial, is or may become the subject of any Action under Environmental Law.
(b) Notwithstanding any other provision of this Agreement, other thanSection 4.5(b),Section 4.7,Section 4.8,Section 4.9,Section 4.18(b),Section 4.18(h) andSection 4.20, thisSection 4.17 contains the exclusive representations and warranties of the ColonialPost Parties with respect to Environmental Laws, Hazardous Substances or other environmental matters.
Section 4.18Properties.Index to Financial Statements
(a) Section 4.18(a) of the ColonialPost Disclosure Letter sets forth a list of the common name and address of each facility and real property owned or ground leased (as lessee or sublessee), including ground leased, by ColonialPost or any ColonialPost Subsidiary as of the date of this Agreement (all such real property interests, together with all buildings, structures and other improvements and fixtures located on or under such real property and all easements, rights and other appurtenances to such real property, are individually referred to herein as a “Colonial PostProperty” and collectively referred to herein as the “ColonialPost Properties”). Section 4.18(a) of the ColonialPost Disclosure Letter sets forth a list of the common name and address of each facility and real property which, as of the date of this Agreement, is under contract by ColonialPost or a ColonialPost Subsidiary for purchase or which is required under a binding contract to be ground leased or subleased by ColonialPost or a ColonialPost Subsidiary after the date of this Agreement.Agreement, and Post has provided to MAA as of the date hereof true, correct and complete copies of such contracts. Except as set forth in Section 4.18(a) of the ColonialPost Disclosure Letter, there are no real properties that ColonialPost or any ColonialPost Subsidiary is obligated to buy lease or subleaseground lease at some future date. Section 4.18(a) of the Post Disclosure Letter sets forth a list of the common name, city and state of each for-rent multi-family apartment project which (i) Post or any Post Subsidiary developed or constructed on or after January 1, 2009, and (ii) which Post or any Post Subsidiary sold, disposed or transferred, directly or indirectly, in whole or in part, on or after January 1, 2009.
(b) ColonialPost or a ColonialPost Subsidiary owns good valid and marketablevalid fee simple title or leasehold titlea good and valid ground lease interest (as applicable) to each of the ColonialPost Properties, in each case, free and clear of Liens, except for ColonialPost Permitted Liens. For the purposes of this Agreement, “ColonialPost Permitted Liens” shall mean any (i) Liens relating to any Indebtedness incurred in the ordinary course of business consistent with past practice, (ii) Liens that result from any statutory or other Liens for Taxes or assessments that are not yet subject to penalty or the validity of which is being contested in good faith by appropriate proceedings and for which there are adequate reserves on the financial statements of ColonialPost (if such reserves are required pursuant to GAAP), (iii)(ii) Liens imposed or promulgated by Law, including zoning regulations, permits and licenses (but not including Liens imposed pursuant to CERCLA and similar state laws), (iv)(iii) Liens that are disclosed on the existing ColonialPost Title Insurance Policies made available by or on behalf of ColonialPost or any ColonialPost Subsidiary to MAA prior to the date hereof and, with respect to ground leasehold interests, Liens on the underlying fee or leasehold interest of the applicable ground lessor, lessor or sublessor, (v)or relate to Indebtedness otherwise disclosed in the Post Disclosure Letter, (iv) any inchoate cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar Liens imposed by Law and incurred in the ordinary course of business consistent with past practice that are not yet subject to penalty or the validity of which is being contested in good faith by appropriate proceedings, and (vi)(v) such imperfections in title, easements, restrictions, covenants and similar Liens that do not or will not interfere in any material manner with the current use of the ColonialPost Properties (assuming its continued use in the manner it is currently used), or otherwise impair in any material manner the current operations of such ColonialPost Properties (assuming its continued use in the manner it is currently operated).
(c) Neither ColonialExcept as set forth in Section 4.18(c) of the Post Disclosure Letter, neither Post nor any ColonialPost Subsidiary has received (i) written notice that any certificate, permit or license from any Governmental Authority having jurisdiction over any of the ColonialPost Properties or any agreement, easement or other right of an unlimited duration that is necessary to permit the lawful use and
operation of the buildings and improvements on any of the ColonialPost Properties (assuming their continued use in the manner they are currently used) or that is necessary to permit the lawful use and operation of all utilities, parking areas, retention ponds, driveways, roads and other means of egress and ingress to and from any of the ColonialPost Properties (assuming their continued use in the manner they are currently used)is not in full force and effect as of the date of this Agreement, except for such failures to be in full force and effect that, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect, or of any pending written threat of modification or cancellation of any of same, that would reasonably be expected to have a ColonialPost Material Adverse Effect, or (ii) written notice of any uncured violation of any Laws affecting any of the ColonialPost Properties which, individually or in the aggregate, would reasonably be expected to have a ColonialPost Material Adverse Effect.
(d) NoExcept as set forth in Section 4.18(d) of the Post Disclosure Letter, no certificate, variance, permit or license from any Governmental Authority having jurisdiction over any of the ColonialPost Properties or any
agreement, easement or other right that is necessary to permit the current use of the buildings and improvements on any of the ColonialPost Properties (assuming their continued use in the manner they are currently used) or that is necessary to permit the current use of all parking areas, driveways, roads and other means of egress and ingress to and from any of the ColonialPost Properties (assuming their continued use in the manner they are currently used) has failed to be obtained or is not in full force and effect, and neither ColonialPost nor any ColonialPost Subsidiary has received written notice of any outstanding threat of modification, suspension or cancellation of any such certificate, variance, permit or license, except for any of the foregoing as, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect.
(e) Except as set forth in Section 4.18(e) of the ColonialPost Disclosure Letter, no condemnation, eminent domain or similar proceeding has occurred or is pending with respect to any owned ColonialPost Property or, to the Knowledge of Colonial,Post, any ColonialPost Property ground leased by ColonialPost or any ColonialPost Subsidiary, that would interfere in any material manner with the current use of the ColonialPost Properties (assuming its continued use in the manner it is currently used), or otherwise impair in any material manner the current operations of such ColonialPost Properties (assuming its continued use in the manner it is currently operated), and neither ColonialPost nor any ColonialPost Subsidiary has received any written notice to the effect that (i) any condemnation or rezoning proceedings (other than those initiated by or on behalf of Post or with Post’s consent) are threatened for any ColonialPost Property, that would interfere in any material manner with the current use of the ColonialPost Properties (assuming its continued use in the manner it is currently used), or otherwise impair in any material manner the current operations of such ColonialPost Properties (assuming its continued use in the manner it is currently operated), or (ii) any zoning regulation or ordinance (including with respect to parking), building, fire, health or other Law has been violated (and remains in violation) for any ColonialPost Property.
(f) Section 4.18(f) of the ColonialPost Disclosure Letter lists all ground leases (whether as lessor or lessee) affecting the interest of ColonialPost or any ColonialPost Subsidiary in the ColonialPost Properties in effect as of the date hereof. True and complete in all material respects copies of all such ground leases in effect as of the date hereof, together with all amendments, modifications, supplements, renewals and extensions related thereto, have been made available to MAA on or prior to the date hereof.
(g) Except for discrepancies, errors or omissions that, individually or in the aggregate, would not reasonably be expected to have a Colonial Material Adverse Effect, the rent roll summaries for each of the Colonial Properties as previously provided to MAA, and the schedules with respect to the Colonial Properties subject to triple-net leases, which schedules have previously been made available to MAA, correctly reference each lease or sublease that was in effect as of the dates shown therein and to which Colonial or any Colonial Subsidiary is a party as lessor or sublessor with respect to each of the applicable Colonial Properties (all leases or subleases (including any triple-net leases), together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto, the “Colonial Leases”). Section 4.18(g) of the Colonial Disclosure Letter sets forth, as of April 30, 2013, the aggregate current annualized rent and security deposit amounts currently held for each Colonial Property (which security deposits are in the amounts required by the applicable Colonial Lease).
(h) Except as set forth on Section 4.18(h)4.18(g) of the Colonial Disclosure Letter or as individually or in the aggregate, would not reasonably be expected to have a Colonial Material Adverse Effect, neither Colonial nor any Colonial Subsidiary, on the one hand, nor, to the Knowledge of Colonial, any other party, on the other hand, is in monetary default under any Colonial Lease relating to property used for commercial or retail purposes as of the date of the delinquency report made available to MAA on or prior to the date hereof by or on behalf of Colonial.
(i) Except as set forth on Section 4.18(i) of the ColonialPost Disclosure Letter, there are no material Tax abatements or exemptions specifically affecting the Colonial Properties, and Colonial and the Colonial Subsidiaries have not received any written notice of (and Colonial and the Colonial Subsidiaries do not have any Knowledge of) any proposed increase in the assessed valuation of any of the Colonial Properties or of any proposed public improvement assessments that will result in the Taxes or assessments payable in the next tax period increasing by an amount material to Colonial and the Colonial Subsidiaries, considered as a whole.Post Properties.
(j) Except as set forth in Section 4.18(j) of the Colonial Disclosure Letter, as of the date of this Agreement, no purchase option has been exercised under any Colonial Lease for which the purchase has not closed prior to the date of this Agreement.
(k)(h) Except for ColonialPost Permitted Liens or as set forth in Section 4.18(k)4.18(h) of the ColonialPost Disclosure Letter and as set forth in contracts provided to MAA prior to the date hereof, (i) there are no unexpired option to purchase agreements, rights of first refusal or first offer or any other rights to purchase or otherwise acquire any ColonialPost Property or any portion thereof that would materially adversely affect Colonial’s,Post’s, or any ColonialPost Subsidiary’s, ownership, ground lease or right to use a ColonialPost Property, and (ii) there are no other outstanding rights or agreements to enter into any contract for sale, ground lease or letter of intent to sell or ground lease any ColonialPost Property or any portion thereof that is owned by any ColonialPost Subsidiary, which, in each case, is in favor of any party other than ColonialPost or a ColonialPost Subsidiary (a “ColonialPost Third Party”).
(l)(i) Except as set forth in Section 4.18(l)4.18(i) of the ColonialPost Disclosure Letter or pursuant to a ColonialPost Lease or any ground lease affecting any ColonialPost Property, neither ColonialPost nor any ColonialPost Subsidiary is a party to any agreement pursuant to which ColonialPost or any ColonialPost Subsidiary manages or manages the development of any real property for any ColonialPost Third Party.
(m) Colonial(j) Except as set forth in Section 4.18(j) of the Post Disclosure Letter, Post and each ColonialPost Subsidiary, as applicable, is in possession of title insurance policies or valid marked-up title commitments evidencing title insurance with respect to each ColonialPost Property (each, a “ColonialPost Title Insurance Policy” and, collectively, the “ColonialPost Title Insurance Policies”). A copy of each Colonialsuch Post Title Insurance Policy in the possession of ColonialPost as of the date hereof has been made available to MAA. NoExcept as set forth in Section 4.18(j) of the Post Disclosure Letter, no written claim has been made against any ColonialPost Title Insurance Policy, which remains pending and, which, individually or in the aggregate, would be material to any ColonialPost Property.
(n) To the Knowledge of Colonial,
(k) Section 4.18(n)4.18(k) of the ColonialPost Disclosure Letter lists the common name and address of each ColonialPost Property which is (i) under ground-up development as of the date hereof (each, a “Post Development Property”, and, describescollectively, the status“Post Development Properties”). Post has provided to MAA true, correct and complete copies of suchany contracts for the design, development asand construction of the date hereof, and (ii) which is subject to aPost Development Properties, including any binding agreement for ground-up development or commencement of construction by ColonialPost or a ColonialPost Subsidiary in each case other than those pertaining(collectively referred to minor capital repairs, replacements and other similar correctionherein as the “Post Development Contracts”). To the Knowledge of deferred maintenance items in the ordinary course of business.
(o) Colonial and the Colonial Subsidiaries have good and valid title to, or a valid and enforceable leasehold interest in, or other right to use, all personal property owned, used or held for use by them asPost, there are no defaults under any of the date of this Agreement (other than property owned by tenants and used or held in connection with the applicable tenancy), except as,Post Development Contracts which, individually or in the aggregate, would not reasonably be expected tocould have a ColonialPost Material Adverse Effect. NonePost has provided to MAA true, correct and complete copies of Colonial’sall material plans and specifications for the development, redevelopment or anyconstruction projects contemplated at the Post Development Properties (the “Plans and Specifications”). Except as set forth in Section 4.18(k) of the Colonial Subsidiaries’ ownership ofPost Disclosure Letter, neither Post nor any Post Subsidiary has entered into any development or leasehold interestconstruction management services agreement with an unaffiliated person or entity in anywhich such personal propertyparty is subject to any Liens, except for Colonial Permitted Liens and Liens that
would not reasonably be expected to havedue a Colonial Material Adverse Effect. Section 4.18(o)payment upon completion or stabilization of the Colonialproject contemplated at any Post Development Property. Post or Post Subsidiaries have obtained any and all material approvals, consents and authorizations to initiate and complete the contemplated development, redevelopment or constructions of the Post Development Properties as contemplated in the applicable Plans and Specifications. Section 4.18(k) of the Post Disclosure Letter sets forth all leased personal propertylists the common name and address of Colonial or any Colonial Subsidiary with monthly lease obligations in excess of $100,000 and that are not terminable upon thirty (30) days’ notice.each Post Property which is vacant land.
(p)(l) Section 4.18(p)4.18(l) of the ColonialPost Disclosure Letter lists the parties currently providing third-party property management services to ColonialPost or a ColonialPost Subsidiary and the numbernames of facilities currently managed by each such party.
(q) Except (A) for capital expenditures made or to be made in the ordinary course of business, (B) as set forth in Section 4.18(q) of the Colonial Disclosure Letter or (C) as, individually or in the aggregate, would cost Colonial and the Colonial Subsidiaries less than $1,000,000 to repair or otherwise remediate for any Colonial Property, Colonial has no Knowledge of (i) any structural defects relating to any Colonial Property, (ii) Colonial Properties whose building systems are not in working order, or (iii) physical damage to any Colonial Property for which there is not insurance in effect covering the cost of the restoration and the loss of revenue (subject to a reasonable deduction or retention limit).
Section 4.19Material Contracts.
(a) Except for contracts listed in Section 4.19(a) of the ColonialPost Disclosure Letter or filed as exhibits to the ColonialPost SEC Documents, as of the date of this Agreement, neither ColonialPost nor any ColonialPost Subsidiary is a party to or bound by any contract that, as of the date hereof:
(i) is required to be filed as an exhibit to Colonial’sPost’s Annual Report on Form 10-K on or after January 1, 2014 pursuant to Item 601(b)(2), (4), (9) or (10) of Regulation S-K promulgated under the Securities Act;
(ii) obligates ColonialPost or any ColonialPost Subsidiary to make non-contingent aggregate annual expenditures (other than principal and/or interest payments or the deposit of other reserves with respect to debt obligations) in excess of $1,000,000$1,500,000 and is not cancelable within ninety (90)one hundred eighty (180) days without material penalty to ColonialPost or any ColonialPost Subsidiary, except for any ColonialPost Lease or any ground lease affecting any ColonialPost Property;
(iii) contains any non-compete or exclusivity provisions with respect to any line of business or geographic area that restricts the business of ColonialPost or any ColonialPost Subsidiary, or that otherwise restricts the lines of business conducted by ColonialPost or any ColonialPost Subsidiary or the geographic area in which ColonialPost or any ColonialPost Subsidiary may conduct business;
(iv) is an agreement which obligates ColonialPost or any ColonialPost Subsidiary to indemnify any past or present directors, officers, trustees, employees and agents of ColonialPost or any ColonialPost Subsidiary pursuant to which ColonialPost or a ColonialPost Subsidiary is the indemnitor;indemnitor (other than the organizational documents of Post and the Post Subsidiaries);
(v) constitutes an Indebtedness obligation of ColonialPost or any ColonialPost Subsidiary with a principal amount as of the date hereof greater than $5,000,000;$1,500,000;
(vi) would prohibit or materially delay the consummation of the Mergers as contemplated by this Agreement;
(vii) requires ColonialPost or any ColonialPost Subsidiary to dispose of or acquire assets or properties (other than in connection with the expiration of a ColonialPost Lease or a ground lease affecting a ColonialPost Property) with a fair market value in excess of $5,000,000,$1,500,000, or involves any pending or contemplated merger, consolidation or similar business combination transaction, except for any ColonialPost Lease or any ground lease affecting any ColonialPost Property;
(viii)
(vii) constitutes an interest rate cap, interest rate collar, interest rate swap or other contract or agreement relating to a hedging transaction which has a notional amount in excess of $1,000,000;$1,500,000;
(ix)(viii) sets forth the operational terms of a joint venture, partnership, limited liability company with a Third Party member or strategic alliance of ColonialPost or any ColonialPost Subsidiary;
(ix) is a Post Development Contract with a total contract amount in excess of $1,500,000;
(x) constitutes a loan to any Person (other than a wholly owned ColonialPost Subsidiary) by ColonialPost or any ColonialPost Subsidiary (other than advances made pursuant to and expressly disclosed in the ColonialPost Leases or pursuant to any disbursement agreement, development agreement, or development addendum entered into in connection with a ColonialPost Lease with respect to the development, construction, or equipping of ColonialPost Properties or the funding of improvements to ColonialPost Properties) in an amount in excess of $5,000,000;$1,500,000; or
(xi) constitutes a regulatory agreement or similar agreement that requires that any portion of a Propertyproperty be leased to persons meeting criteria set forth in such agreement; oragreement.
(xii) with respect to any non-residential Colonial Property, requires payment of material commissions (including leasing commissions or brokerage fees) or material tenant improvement costs, allowances or other concessions.
(b) Each such contract described in clauses(i)-((xii)xi) ofSection 4.19(4.19(a)a) above is referred to herein as a “ColonialPost Material Contract”.
(c) Except as, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect, each ColonialPost Material Contract is legal, valid, binding and enforceable on ColonialPost and each ColonialPost Subsidiary that is a party thereto and, to the Knowledge of Colonial,Post, each other party thereto, and is in full force and effect, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). Except as, individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect, ColonialPost and each ColonialPost Subsidiary has performed all obligations required to be performed by it prior to the date hereof under each ColonialPost Material Contract and, to the Knowledge of Colonial,Post, each other party thereto has performed all obligations required to be performed by it under such ColonialPost Material Contract prior to the date hereof. None of ColonialPost or any ColonialPost Subsidiary, nor, to the Knowledge of Colonial,Post, any other party thereto, is in material breach or violation of, or default under, any ColonialPost Material Contract, and no event has occurred that with notice or lapse of time or both would constitute a violation of, breach of or default under any ColonialPost Material Contract, except where in each case such breach, violation or default is not reasonably likely to have, individually or in the aggregate, a ColonialPost Material Adverse Effect. Neither ColonialPost nor any ColonialPost Subsidiary has received written notice of any violation of or default under any ColonialPost Material Contract, except as set forth in Section 4.19(c) of the ColonialPost Disclosure Letter, and except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to have a ColonialPost Material Adverse Effect.
Section 4.20Insurance. ColonialPost has made available to MAA copiesa schedule of all material insurance policies and all material fidelity bonds or other material insurance service contracts in Colonial’sPost’s possession providing coverage for all ColonialPost Properties (the “ColonialPost Insurance Policies”)., which is set forth in Section 4.20 of the Post Disclosure Letter. Except as individually or in the aggregate, would not reasonable be expected to have a ColonialPost Material Adverse Effect, there is no claim for coverage by ColonialPost or any ColonialPost Subsidiary pending under any of the ColonialPost Insurance Policies that has been denied or disputed by the issuer. Except as individually or in the aggregate, would not reasonably be expected to have a ColonialPost Material Adverse Effect, all premiums payable under all ColonialPost Insurance Policies have been paid, and ColonialPost and the ColonialPost Subsidiaries have otherwise complied in all material respects with the terms and conditions of all the ColonialPost Insurance Policies. To the Knowledge of Colonial,Post, such ColonialPost Insurance Policies are valid and enforceable in accordance with their terms and are in full force and effect. NoExcept for notice of annual or other periodic expiration, termination or non-renewal received in the ordinary course of business, no written notice of cancellation or termination has been received by ColonialPost or any ColonialPost Subsidiary with respect to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation.
Section 4.21Opinion of Post Financial Advisor. The Index to Financial Statements
ColonialPost Board has received the oral opinion of Merrill Lynch, Pierce, Fenner & Smith IncorporatedJ.P. Morgan Securities Inc. (“BofA Merrill LynchJP Morgan”) (to be confirmed in writing) to the effect that, as of the date of such opinion, and subject to the assumptions and limitations set forth in BofA Merrill
Lynch’sJP Morgan’s written opinion, the Exchange Ratio in the Parent Merger is fair, from a financial point of view, to the holders (other than MAA and its Affiliates) of Colonialshares of Post Common Shares. ColonialStock. After the date hereof, Post will make available to MAA, solely for informational purposes, a complete and correct copy of the written opinion promptly after receipt thereof by the ColonialPost Board.
Section 4.22Vote Required. The affirmative vote of the holders of a majority of the outstanding Colonialshares of Post Common SharesStock (the “Colonial PostShareholderApproval”) is the only vote of holders of securities of ColonialPost required to adopt this Agreement and approve and consummate the Parent Merger and the other transactions contemplated by this Agreement. The affirmative vote of a majority of the Post OP Units (the “Post Partner Approval”) is the only vote or consent required of the holders of any class or series of Post OP Units or other securities of, or equity interests in, Post LP, other than the approval of Post GP, the general partner of Post LP (of which Post is the sole shareholder), required to approve this Agreement and to approve and consummate the Partnership Merger and the other transactions contemplated by this Agreement.
Section 4.23Brokers. Except for the fees and expenses payable to BofA Merrill Lynch,JP Morgan, no broker, investment banker or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the Mergers or any transactions contemplated by this Agreement based upon arrangements made by or on behalf of ColonialPost or any ColonialPost Subsidiary.
Section 4.24Investment Company Act. Neither ColonialPost nor any ColonialPost Subsidiary is required to be registered as an investment company under the Investment Company Act.
Section 4.25Takeover Statutes. NoThe Post Board has taken all appropriate and necessary actions such that Post will not be prohibited from entering into a “business combination,”combination” with MAA as an “interested shareholder” (in each case as such term is used in Sections 14-2-1131, 14-2-1132 and 14-2-1133 of the GBCC) as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, and no other state “fair price”, “moratorium”, “control share acquisition,” “fair price,” “moratorium”acquisition” or other takeover orsimilar anti-takeover statute or similar federal or state Lawregulation (collectively, “Takeover Statutes”) is, or as in effect on the date of the Parent Merger Effective Time will be,this Agreement is applicable to this Agreement, the Colonial Voting Agreement, the Parent Merger or the other transactions contemplated by this Agreement. None of Post or Post LP or any of their respective controlled Affiliates beneficially owns (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, or is the record holder of, or is a party to any contract (other than this Agreement) for the purpose of acquiring, holding, voting or disposing of, in each case, any shares of capital stock of MAA.
Section 4.26Related Party Transactions. Except as set forth in Section 4.26 of the ColonialPost Disclosure Letter or in the ColonialPost SEC Documents filed and publicly available through and including the date of this Agreement or as permitted by this Agreement, from January 1, 20102014 through the date of this Agreement there have been no transactions, agreements, arrangements or understandings between ColonialPost or any ColonialPost Subsidiary, on the one hand, and any Affiliates (other than ColonialPost Subsidiaries) of ColonialPost or other Persons, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC.
Section 4.27No Dissenter’s Rights. No dissenters’ or appraisal rights shall be available to the holders of Post Common Stock, Post OP Units, Post Series A Preferred Stock or any other security of Post or its Subsidiaries as a result of, or in connection with, the Mergers and the other transactions contemplated by this Agreement.
Section 4.28 No Other Representations and Warranties. Except for the representations or warranties expressly set forth in thisArticle IV IV,, no ColonialPost Party nor any of their Affiliates nor any other person on behalf of any ColonialPost Party has made any representation or warranty, expressed or implied, with respect to ColonialPost or any of the ColonialPost Subsidiaries, their respective businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including
the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or with respect to the accuracy or completeness of any information regarding ColonialPost or the Colonial Subsidiaries.Post Subsidiaries, and no MAA Party nor any of their Affiliates nor any other person on behalf of any MAA Party has relied on any representation or warranty except for those expressly set forth in thisArticle IV.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MAA
Except (a) as set forth in the disclosure letter that has been prepared by the MAA Parties and delivered by the MAA Parties to the ColonialPost Parties in connection with the execution and delivery of this Agreement (the “MAA Disclosure Letter”) (it being agreed that (x)(i) disclosure of any item in any section of the MAA Disclosure Letter with respect to any Section or subsection ofArticle V of this Agreement shall be deemed disclosed with respect to any other Section or subsection ofArticle V of this Agreement to the extent such relationship is reasonably apparent;provided, that nothing in the MAA Disclosure Letter is intended to broaden the scope of any representation or warranty of the MAA Parties made herein and (y)(ii) no reference to or disclosure of any item
or other matter in the MAA Disclosure Letter shall be construed as an admission or indication that (1)(A) such item or other matter is material, (2)(B) such item or other matter is required to be referred to or disclosed in the MAA Disclosure Letter or (3)(C) any breach or violation of applicable Laws or any contract, agreement, arrangement or understanding to which MAA or any of the MAA Subsidiaries is a party exists or has actually occurred), or (b) other than with respect to representations or warranties set forth inSection 5.12, as disclosed in publicly available MAA SEC Documents, filed with, or furnished to, as applicable, the SEC on or after January 1, 20102013 and prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” (but including any description of historic facts or events included therein) and any disclosure of risks or other matters included in any “forward-looking statements” disclaimer (but including any description of historic facts or events included therein) or other statements that are cautionary, predictive or forward-looking in nature), the MAA Parties hereby jointly and severally represent and warrant to the ColonialPost Parties that:
Section 5.1Organization and Qualification; Subsidiaries.
(a) MAA is a corporation duly organized,incorporated, validly existing and in good standing under the laws of the State of Tennessee and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as it is now being conducted. MAA is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect.
(b) Each MAA Subsidiary is duly organized, validly existing and in good standing (to the extent applicable) under the Laws of the jurisdiction of its incorporation or organization, as the case may be, and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as it is now being conducted, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect.
(c) Section 5.1(c) of the MAA Disclosure Letter sets forth a true and complete list of the MAA Subsidiaries and their respective jurisdiction of incorporation or organization, as the case may be, and the type of and percentage of interest held, directly or indirectly.indirectly, by MAA in each MAA Subsidiary.
(d) Except as set forth in Section 5.1(d) of the MAA Disclosure Letter, neither MAA nor any MAA Subsidiary directly or indirectly owns any interest or investment (whether equity or debt) in any Person (other than in the MAA Subsidiaries and investments in short-term investment securities).
Section 5.2Organizational Documents. There are no current or pending dissolution, liquidation, forfeiture or revocation proceedings regarding MAA or any of the MAA Subsidiaries. MAA has made available to Index to Financial Statements
ColonialPost complete and correct copies of (i) the MAA Charter and MAA Bylaws and (ii) the MAA LP Agreement and the certificate of limited partnership of MAA LP, and (iii) the organizational documents of each MAA Subsidiary, in each case as in effect on the date hereof.
Section 5.3Capital Structure.
(a) The authorized capital stock of MAA consists of 100,000,000 shares of MAA Common Stock and 20,000,000 shares of preferred stock, par value $0.01 per share. At the close of business on May 28, 2013,onAugust 12, 2016, (i) 42,732,80675,541,464 shares of MAA Common Stock were issued and outstanding, (ii) no shares of MAA preferred stock (“MAA Preferred Stock”) were issued and outstanding, (iii) 700,00039,084 shares of MAA Common Stock were reserved for issuance pursuant to the terms of the MAA Equity Incentive Plans and (iv) 304,996 shares of MAA Common Stock were available for grant under the MAA Equity Incentive Plans, (v) 2,000,0004,143,203 shares of MAA Common Stock were reserved for issuance under the MAA Dividend and Distribution Reinvestment and Share Purchase Plan, (vi) 150,000 shares of MAA Common Stock were reserved for issuance under the MAA Employee Stock Purchase Plan and (vii) 1,707,661 shares of MAA Common Stock were reserved for issuance
upon redemption of MAA OP Units. All issued and outstanding shares of the capital stock of MAA are duly authorized, validly issued, fully paid and non-assessable, and no class of capital stock is entitled to preemptive rights. There are no outstanding bonds, debentures, notes or other Indebtedness of MAA having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which holders of shares of MAA Common Stock may vote. AsSection 5.3(a) of the MAA Disclosure Letter sets forth a complete and correct list, as of the date of this Agreement, there are noof the total number of outstanding MAA Options under the MAA Equity Incentive Plans.Plans and the number of shares of MAA Common Stock subject to each outstanding MAA Option, the exercise price, and the grant date. There are no other rights to purchase or receive shares of MAA Common Stock granted under the MAA Equity Incentive Plans or otherwise other than the MAA Options.
(b) All of the outstanding shares of capital stock of each of the MAA Subsidiaries that is a corporation are duly authorized, validly issued, fully paid and nonassessable. All equity interests in each of the MAA Subsidiaries that is a partnership or limited liability company are duly authorized and validly issued. All shares of capital stock of (or other ownership interests in) each of the MAA Subsidiaries which may be issued upon exercise of outstanding options or exchange rights are duly authorized and, upon issuance will be validly issued, fully paid and nonassessable. Except as set forth in Section 5.3(b) of the MAA Disclosure Letter, MAA owns, directly or indirectly, all of the issued and outstanding capital stock and other ownership interests of each of the MAA Subsidiaries owned by MAA or a MAA Subsidiary, free and clear of all encumbrances otherLiens (other than statutory or other liens for Taxes or assessments which are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained in accordance with GAAP,MAA Permitted Liens), and except as set forth in the MAA LP Agreement, there are no existing options, warrants, calls, subscriptions, convertible securities or other securities, agreements, commitments or obligations of any character relating to the outstanding capital stock or other securities of any MAA Subsidiary owned by MAA or a MAA Subsidiary or which would require any MAA Subsidiary to issue or sell any shares of such MAA Subsidiary capital stock, ownership interests or securities convertible into or exchangeable for shares of such MAA Subsidiary capital stock or ownership interests.
(c) Except as set forth in thisSection 5.3 or in Section 5.3(c) of the MAA Disclosure Letter, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, rights of first refusal, arrangements or undertakings of any kind to which MAA or any MAA Subsidiary is a party or by which any of them is bound, obligating MAA or any MAA Subsidiary to issue, deliver or sell or create, or cause to be issued, delivered or sold or created, additional shares of MAA Common Stock, shares of MAA Preferred Stock or other equity securities or phantom stock or other contractual rights the value of which is determined in whole or in part by the value of any equity security of MAA or any of the MAA Subsidiaries or obligating MAA or any MAA Subsidiary to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, right of first refusal, arrangement or undertaking. Except as set forth in Section 5.3(c) of the MAA Disclosure Letter, there are no outstanding contractual obligations of MAA or any MAA Subsidiary to repurchase, redeem or otherwise acquire any shares of MAA Common Stock, shares of MAA Preferred Stock, or other equity securities of MAA or any MAA Subsidiary. Neither MAA nor any MAA Subsidiary is a party to or, to the Knowledge of MAA, bound by any agreements or understandings concerning the voting (including
voting trusts and proxies) of any capital stock of MAA or any of the MAA Subsidiaries. At the close of business onAugust 12, 2016, (i) 298,982 shares of MAA Common Stock were available for grant under the MAA Equity Incentive Plans (excluding any securities reflected in Section 5.3(a)(iii)), (ii) 1,955,626 shares of MAA Common Stock were reserved for issuance under the MAA Dividend and Distribution Reinvestment and Share Purchase Plan and (iii) 35,429 shares of MAA Common Stock were reserved for issuance under the MAA Employee Stock Purchase Plan.
(d) MAA does not have a “poison pill” or similar shareholder rights plan.
(e) Except as set forth in Section 5.3(e) of the MAA Disclosure Letter, neither MAA nor any MAA Subsidiary is under any obligation, contingent or otherwise, by reason of any contract to register the offer and sale or resale of any of their securities under the Securities Act.
(f) All dividends or distributions on the shares of MAA Common Stock and any material dividends or distributions on any securities of any MAA Subsidiary which have been authorized or declared prior to the date hereof have been paid in full (except to the extent such dividends have been publicly announced and are not yet due and payable).
(g) MAA is the sole general partner of MAA LP and MAA owns, directly or indirectly, all of the general partner interests in MAA LP.
(h) Section 5.3(h) of the MAA Disclosure Letter sets forth, as of the date hereof, the name of, and the number and class of limited partnership interests held by, each partner in MAA LP.
Section 5.4Authority.
(a) MAA has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to receipt of the MAA Shareholder Approval, to consummate the transactions contemplated by this Agreement to which MAA is a party, including the Parent Merger. The execution and delivery of this Agreement by MAA and the consummation by MAA of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of MAA are necessary to authorize this Agreement or the Parent Merger or to consummate the other transactions contemplated by this Agreement, subject, with respect to the Parent Merger, to receipt of the MAA Shareholder Approval, and to the filing of the articles of merger with the OfficesSecretary of State of the SecretariesState of Georgia and the Secretary of State forof the StatesState of Alabama and Tennessee. This Agreement has been duly executed and delivered by MAA and assuming due authorization, execution and delivery by each of MAA LP, OP Merger Sub, ColonialPost, Post GP and ColonialPost LP, constitutes a legally valid and binding obligation of MAA enforceable against MAA in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
(b) The MAA Board, at a duly held meeting, has, by unanimous vote, (i) duly and validly authorized the execution and delivery of, and adopted, this Agreement and declared advisable the consummation of the Mergers and the other transactions contemplated by this Agreement, (ii) directed that the Parent Merger and the other transactions contemplated by this Agreement be submitted for consideration at the MAA Shareholder Meeting, and (iii) as of the date of this Agreement, resolved to recommend that the shareholders of MAA vote in favor of the approval of the Parent Merger and the other transactions contemplated by this Agreement (the “MAA Recommendation”) and to include such recommendation in the Joint Proxy Statement, subject toSection 7.4.
(c) Each of MAA LP and OP Merger Sub has the requisite limited partnership power and authority to execute and deliver this Agreement, to perform its obligations hereunder and subject to the receipt of the MAA Partner Approval, to consummate the transactions contemplated by this
Agreement to which either of themit is a party, including the Partnership Merger. The execution and delivery of this Agreement by MAA LP and OP Merger Sub and the consummation by each of themit of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary partnership action, and no other partnership proceedings on the part of either MAA LP or OP Merger Sub are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement, subject with respect to the Partnership Merger, to the receipt of the MAA Partner Approval, and to the filing of a certificate of merger with the Office of the Secretary of State of the State of Delaware.Tennessee. This Agreement has been duly executed and delivered by MAA LP, and OP Merger Sub, and assuming due authorization, execution and delivery by each of MAA, ColonialPost, Post GP and ColonialPost LP, constitutes a legally valid and binding obligation of each of MAA LP, and OP Merger Sub, enforceable against each of themit in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
Section 5.5No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 5.5(a) of the MAA Disclosure Letter, the execution and delivery of this Agreement by each of MAA and MAA LP and OP Merger Sub does not, and the performance of their respective obligations hereunder will not, (i) assuming receipt of the MAA Shareholder Approval and the MAA Partner Approval, conflict with or violate any provision of (A) the MAA Charter or MAA Bylaws (B) the MAA LP Agreement or the certificate of limited partnership of MAA LP or (C) any equivalent organizational or governing
documents of any other MAA Subsidiary, (ii) assuming that all consents, approvals, authorizations and permits described inSection 5.5(5.5(b)b) have been obtained, all filings and notifications described inSection 5.5(5.5(b)b) have been made and any waiting periods thereunder have terminated or expired, conflict with or violate any Law applicable to MAA or any MAA Subsidiary or by which any property or asset of MAA or any MAA Subsidiary is bound, or (iii) assuming receipt of the MAA Shareholder Approval the MAA Partner Approval and the MAA ExecutiveEmployee Waivers, require any consent or approval (except as contemplated bySection 5.5(5.5(b)b)) under, result in any breach of or any loss of any benefit or material increase in any cost or obligation of MAA or any MAA Subsidiary under, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, acceleration or cancellation (with or without notice or the lapse of time or both) of, or give rise to any right of purchase, first offer or forced sale under or result in the creation of a Lien on any property or asset of MAA or any MAA Subsidiary pursuant to, any note, bond, debt instrument, indenture, contract, agreement, ground lease, license, permit or other legally binding obligation to which MAA or any MAA Subsidiary is a party,Material Contract, except, as to clauses (i)(C), (ii) and (iii), respectively, for any such conflicts, violations, breaches, defaults or other occurrences which, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of MAA and MAA LP and OP Merger Sub does not, and the performance of this Agreement by each of MAA and MAA LP and OP Merger Sub will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) the filing with the SEC of (A) the Joint Proxy Statement in preliminary and definitive form and the Form S-4, and declaration of effectiveness of the Form S-4, and (B) such reports under, and other compliance with, the Exchange Act (and the rules and regulations promulgated thereunder) and the Securities Act (and the rules and regulations promulgated thereunder) as may be required in connection with this Agreement and the transactions contemplated hereby, (ii) as may be required under the rules and regulations of the NYSE, (iii) the filing of (x)(A) the articles of merger with respect to the Parent Merger with the Office of the Secretary of State forof the State of Tennessee and the Office of the Secretary of State forof the State of AlabamaGeorgia and (y)(B) appropriate documents with the relevant authorities of the other jurisdictions in which MAA and ColonialPost and their respective Subsidiaries are qualified to do business, (iv) the filing of the certificate of merger with respect to the Partnership Merger with the Secretary of State of the State of Delaware, (vi)Georgia and the Secretary of State of the State of Tennessee, (v) such filings and approvals as may be required by any applicable state securities or “blue sky” Laws, (vi) such filings as may be required in connection with Transfer Taxes, and (vii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect.
Section 5.6Permits; Compliance with Law.Index to Financial Statements
(a) Except for the authorizations, licenses, permits, certificates, approvals, variances, exemptions, orders, franchises, certifications and clearances that are the subject ofSection 5.17 orSection 5.18, which are addressed solely in those Sections, MAA and each MAA Subsidiary is in possession of all authorizations, licenses, permits, certificates, approvals, variances, exemptions, orders, franchises, certifications and clearances of any Governmental Authority and accreditation and certification agencies, bodies or other organizations, including building permits and certificates of occupancy, necessary for MAA and each MAA Subsidiary to own, lease and, to the extent applicable, operate its properties or to carry on its respective business substantially as it is being conducted as of the date hereof (the “MAA Permits”), and allexcept in each case as would not, individually or in the aggregate, reasonably be expected to have a MAA Material Adverse Effect. All such MAA Permits are valid and in full force and effect, except where the failure to be in possession of, or the failure to be valid or in full force and effect of, any of the MAA Permits, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect. All applications required to have been filed for the renewal of the MAA Permits have been duly filed on a timely basis with the appropriate Governmental Authority, and all other filings required to have been made with respect to such MAA Permits have been duly made on a timely basis with the appropriate Governmental Authority, except in each case for failures to file which, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect. Neither MAA nor any MAA Subsidiary has received any written claim or written notice nor has any Knowledge indicating that MAA or any MAA
Subsidiary is currently not in compliance with the terms of any such MAA Permits, except where the failure to be in compliance with the terms of any such MAA Permits, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect.
(b) NeitherSince January 1, 2014, neither MAA nor any MAA Subsidiary is or has been in conflict with, or in default or violation of (i) any Law applicable to MAA or any MAA Subsidiary or by which any property or asset of MAA or any MAA Subsidiary is bound (except for Laws addressed inSection 5.16,Section 5.17, orSection 5.18), or (ii) any MAA Permits (except for the MAA Permits addressed inSection 5.17 orSection 5.18), except in each case for any such conflicts, defaults or violations that have been cured or, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect.
Section 5.7SEC Documents; Financial Statements.
(a) MAA has made available to ColonialPost (by public filing with or furnishing to the SEC or otherwise) a true and complete copy of each report, schedule, registration statement and definitive proxy statement filed or furnished by MAA with the SEC since January 1, 20102014 (the “MAA SEC Documents”). Except for matters relating to open comment letters with the SEC as set forth in Section 5.7 of the MAA Disclosure Letter, as of their respective dates, the MAA SEC Documents (other than preliminary materials) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such MAA SEC Documents and none of the MAA SEC Documents, at the time of filing or being furnished (or effectiveness in the case of registration statements), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by later MAA SEC Documents filed or furnished and publicly available prior to the date of this Agreement and provided that no representation or warranty is made hereunder as to statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement that were not supplied by or on behalf of MAA or MAA LP. ExceptAs of the date of this Agreement and except as previously made available to Colonial,Post, MAA does not have any outstanding and unresolved comments from the SEC with respect to the MAA SEC Documents. NoOther than MAA LP, no MAA Subsidiary is required to file any form or report with the SEC.
(b) MAA has made available to ColonialPost complete and correct copies of all written correspondence between the SEC on one hand, and MAA, on the other hand, since January 1, 2010.2014. At all applicable times, MAA has
and MAA LP have both complied in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 and theany applicable rules and regulations thereunder, as amended from time to time.time, and the applicable listing and corporate governance rules of the NYSE.
(c) The consolidated financial statements of MAA and the MAA Subsidiaries included or incorporated by reference in the MAA SEC Documents, including the related notes and schedules, complied as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the Exchange Act) and fairly presented, in all material respects, in accordance with applicable requirements of GAAP and the applicable rules and regulations of the SEC (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which are material), the consolidated financial position of MAA and the MAA Subsidiaries, taken as a whole, as of their respective dates and the consolidated statements of income and the consolidated cash flows of MAA and the MAA Subsidiaries for the periods presented therein, in each case, except to the extent such financial statements have been modified or superseded by later MAA SEC Documents filed and publicly available prior to the date of this Agreement.
Section 5.8Absence of Certain Changes or Events. Except as contemplated by this Agreement or as set forth in Section 5.8 of the MAA Disclosure Letter, since March 31, 2013,June 30, 2016, MAA and each MAA Subsidiary has conducted its business in all material respects in the ordinary course. Since March 31, 2013,June 30, 2016, there has not been any MAA Material Adverse Effect or any effect, event, change or circumstance that, individually or in the
aggregate with all other effects, events, changes and circumstances, would reasonably be expected to have a MAA Material Adverse Effect.
Section 5.9No Undisclosed Material Liabilities. Except as disclosed in the MAA SEC Documents, as set forth in Section 5.9 of the MAA Disclosure Letter or as otherwise would not reasonably be expected to have a MAA Material Adverse Effect, there are no liabilities of MAA or any of the MAA Subsidiaries of a nature that would be required under GAAP to be set forth on the financial statements of MAA or the notes thereto, other than: (i)(a) liabilities adequately provided for on the balance sheet of MAA dated as of March 31, 2013June 30, 2016 (including the notes thereto) as required by GAAP, (ii)(b) liabilities incurred in connection with the transactions contemplated by this Agreement, or (iii)(c) liabilities incurred in the ordinary course of business consistent with past practice subsequent to March 31, 2013.since June 30, 2016.
Section 5.10No Default. Except as set forth on Section 5.10 of the MAA Disclosure Letter, none of MAA or any of the MAA Subsidiaries is in default or violation (and to the Knowledge of MAA, no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (a) (i) (A) the MAA Charter or the MAA Bylaws (B)(ii), the MAA LP Agreement or the certificate of limited partnership of MAA LP or (C)(iii) the comparable charter or organizational documents of any of the other MAA Subsidiaries, (ii)(B) any loan or credit agreement, note, or any bond, mortgage or indenture, to which MAA or any of the MAA Subsidiaries is a party or by which MAA, any of the MAA Subsidiaries or any of their respective properties or assets is bound, or (iii)(C) any Order, statute, rule or regulation applicable to MAA or any of the MAA Subsidiaries, except in the case of (ii)(B) and (iii)(C) for defaults or violations which have been cured or, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect.
Section 5.11Litigation. Except as individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect, or as set forth in Section 5.11 of the MAA Disclosure Letter, as of the date of this Agreement, (a) there is no Action pending or, to the Knowledge of MAA, threatened in writing by of before any Governmental Authority against MAA or any MAA Subsidiary or any director or officer of MAA or any MAA Subsidiary, and (b) neither MAA nor any MAA Subsidiary, nor any of MAA’s or any MAA Subsidiary’s respective property, is subject to any outstanding Order of any Governmental Authority.
Section 5.12Taxes.Index to Financial Statements
(a) MAA and each MAA Subsidiary has timely filed with the appropriate Governmental Authority all material Tax Returns required to be filed, taking into account any extensions of time within which to file such Tax Returns, and all such Tax Returns were complete and correct in all material respects. MAA and each MAA Subsidiary has duly paid (or there has been paid on their behalf), or made adequate provisions for, all material Taxes required to be paid by them, whether or not shown on any Tax Return. Neither MAA nor any of its Subsidiaries has received a written claim, or to the Knowledge of MAA, an unwritten claim, by any authority in a jurisdiction where any of them does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(b) MAAMAA: (i) for all taxable years commencing with MAA’s formationthe taxable year ending December 31, 1994 and through December 31, 2012,2015, has been subject to taxation as REIT and has satisfied all requirements for qualification and taxation as a REIT for such years; (ii) has operated since January 1, 20132016 and will operate to the Parent Merger Effective Time in a manner consistent with the requirements for qualification and taxation as a REIT (without taking into account the effects of the Partnership Merger);REIT; (iii) intends to continue to operate in such a manner as to qualify as a REIT for its taxable year that will include the date of Parent Merger (and currently intends to operate in such manner thereafter); and (iv) has not taken or omitted to take any action that could reasonably be expected to result in a challenge by the IRS to its status as a REIT, (without taking into account the effects of the Partnership Merger), and to the Knowledge of MAA, no such challenge is pending or threatened. No entity in which MAA owns an interest is a corporation for United StatesU.S. federal income tax purposes, other than a corporation that qualifies as a REIT, a Qualified REIT Subsidiary or as a Taxable REIT Subsidiary. Section 5.12(b) of the MAA Disclosure Letter sets forth a list of each Qualified REIT Subsidiary and Taxable REIT Subsidiary of MAA, and each MAA Subsidiary not set forth in Section 5.12(b) of the MAA Disclosure Letter is and has been since its formation classified as a partnership or entity disregarded as separate from MAA or an entity in which MAA owns an interest for United StatesU.S. federal income tax purposes. Each MAA Subsidiary that is a partnership, joint venture or limited liability company and has not elected to be a Taxable REIT Subsidiary has been since its formation treated for U.S. federal income tax purposes as a partnership or disregarded entity, as the case may be, and not as a corporation or an association taxable as a corporation.
(c) (i) There are no audits, investigations by any Governmental Authority or other proceedings ongoing or, to the Knowledge of MAA, threatened with regard to any Taxes or Tax Returns of MAA or any MAA Subsidiary; (ii) no deficiency for Taxes of MAA or any MAA Subsidiary has been claimed, proposed or assessed in writing or, to the Knowledge of MAA, threatened, by any Governmental Authority, which deficiency has not yet been settled, except for such deficiencies which are being contested in good faith or with respect to which the failure to pay, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect; (iii) except as set forth in Section 5.12(c)(iii) of the MAA Disclosure Letter, neither MAA nor any MAA Subsidiary has waived any statute of limitations with respect to the assessment of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency for any open tax year or is the beneficiary of an extension of time to file any Tax Return except for any such waivers or extensions relating to an extension of time to file any non-income Tax Return in respect of a taxable year or period ending in 20122015 or 2013;2016; and (iv) except as set forth in Section 5.12(c)(iv) of the MAA Disclosure Letter, neither MAA nor any of the MAA Subsidiaries has entered into any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law).
(d) Neither MAA nor any MAA Subsidiary holds any asset the disposition of which would be subject to (or to rules similar to) Section 1374 of the Code.
(e) Beginning with its taxable year ended December 31, 2009,2012, (i) MAA and the MAA Subsidiaries have not incurred any liability for material Taxes under Sections 856(g)(5)(C), 857(b)(1), 857(b)(4), 857(b)(5), 857(b)(6)(A), 857(b)(7), 860(c) or 4981 of the Code which have not been previously paid, and shall not incur any such liability for such Taxes in the taxable year that will include the Closing Date, and (ii) neither MAA nor any MAA Subsidiary has incurred any material liability for Taxes other than (x)(A) in the ordinary course of business or
consistent with past practice, or (y)(B) transfer or similar Taxes arising in connection with a sale, exchange, or other transfer of property. No event has occurred, and no condition or circumstance exists, which presents a material risk that any material Tax described in the preceding sentence will be imposed upon MAA or the MAA Subsidiaries.
(f) MAA and the MAA Subsidiaries have complied, in all material respects, with all applicable Laws, rules and regulations relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 1471 and 3402 of the Code or similar provisions under any state and foreign Laws) and have duly and timely withheld and, in each case, have paid over to the appropriate Governmental Authority all material amounts required to be so withheld and paid over on or prior to the due date thereof under all applicable Laws.
(g) Except as set forth on Section 5.12(g) of the MAA Disclosure Letter, there are no MAA Tax Protection Agreements in force at the date of this Agreement, and, as of the date of this Agreement, no person has raised in writing, or to the Knowledge of MAA threatened to raise a material claim against MAA or any MAA Subsidiary for any breach of any MAA Tax Protection Agreements. As used herein, “MAA Tax Protection Agreements” means any written agreement to which MAA or any MAA Subsidiary is a party (i) pursuant to which any liability to holders of interests in a MAA Subsidiary Partnership relating to Taxes may arise, whether or not as a result of the consummation of the transactions contemplated by this Agreement; and/or (ii) that was entered into in connection with or related to the deferral of income Taxes of a holder of interests in a MAA Subsidiary Partnership, and that requires MAA or any MAA Subsidiary (A) to maintain a minimum level of debt, continue a particular debt, or provide rights to guarantee or otherwise assume economic risk of loss with respect to debt, (B) to retain or not to dispose of assets, or engage in transactions of comparable tax effect, (C) to make or refrain from making a Tax election, and/or (D) only dispose of assets in a particular manner. As used herein, “MAA Subsidiary Partnership” means a MAA Subsidiary that is a partnership for United StatesU.S. federal income tax purposes.
(h) There are no Tax Liens upon any property or assets of MAA or any MAA Subsidiary except Liens for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP.
(i) Neither MAA nor any MAA Subsidiary has requested or has received any written ruling of a Governmental Authority, or has entered into any written agreement with a Governmental Authority with respect to any Taxes.
(j) There are no Tax allocation or sharing agreements or similar arrangements with respect to which MAA or any MAA Subsidiary is a party (other than customary arrangements under commercial contracts or borrowings entered into in the ordinary course of business and MAA Tax Protection Agreements).
(k) Neither MAA nor any MAA Subsidiary (A)(i) has been a member of an affiliated group filing a consolidated United StatesU.S. federal income Tax Return or (B)(ii) has any liability for the Taxes of any Person (other than MAA or any MAA Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.
(l) Neither MAA nor any MAA Subsidiary has participated in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(m) Neither MAA nor any of the MAA Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (A)(i) in the two (2) years prior to the date of this Agreement or (B)(ii) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with transactions contemplated by this Agreement.
(n) Except as set forth in Section 5.12(n) of the MAA Disclosure Letter, no written power of attorney that has been granted by MAA or any of the MAA Subsidiaries (other than to MAA or a MAA Subsidiary) currently is in force with respect to any matter relating to Taxes.
(o) Neither MAA nor any of its Subsidiaries (other than Taxable REIT Subsidiaries) has or has had any earnings and profits attributable to such entity or any other corporation in any non-REIT year within the meaning of Section 857 of the Code.
(p) As of the date of this Agreement, MAA is not aware of any fact or circumstance that could reasonably be expected to prevent the Parent Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
(q) Except as set forth in Section 5.12(q) of the MAA Disclosure Letter, to the Knowledge of MAA, neither it nor any of its Subsidiaries has engaged at any time in any “prohibited transactions” within the meaning of Section 857(b)(6) of the Code or engaged in any transaction that would give rise to “redetermined rents, redetermined deductions, excess interest, and redetermined TRS service income” described in Section 857(b)(7) of the Code.
(r) ThisSection 5.12 contains the sole and exclusive representations and warranties of the MAA Parties with respect to Taxes and Tax matters (other than those matters described inSection 5.7(c),Section 5.13,Section 5.14(c),Section 5.18(b) andSection 5.18(i)5.18(g)).
Section 5.13Pension and Benefit Plans; Employees.
(a) Section 5.13(a) of the MAA Disclosure Letter sets forth a list, as of the date hereof, of every material Employee Benefit Plan currently maintained or contributed to (or with respect to which any obligation to contribute has been undertaken) by MAA or any of its ERISA Affiliates (such Employee Benefit Plans, the “MAA Employee Benefit Plans”). Each such MAA Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS regarding its qualification thereunder that has not been revoked and, to MAA’sthe Knowledge of MAA, no event has occurred and no condition exists that is reasonably expected to result in the revocation of any such determination or opinion letter.
(b) With respect to each MAA Employee Benefit Plan, MAA has provided, or made available, to ColonialPost (if applicable to such MAA Employee Benefit Plan): (i) all documents embodying or governing such MAA Employee Benefit Plan, and any funding medium for the MAA Employee Benefit Plan (including, without limitation, trust agreements); (ii) the most recent IRS determination or opinion letter with respect to such MAA Employee Benefit Plan under Section 401(a) of the Code; (iii) the most recently filed IRS Form 5500 Annual Report and accompanying schedules and audited financial statements; (iv) the most recent actuarial report; (v) the current summary plan description for such MAA Employee Benefit Plan (or other descriptions of such MAA Employee Benefit Plan provided to employees) and all summaries of material modifications thereto; (vi) any insurance policy related to such MAA Employee Benefit Plan; and (vii) all material written correspondence received from the IRS, Pension Benefit Guaranty Corporation or the U.S. Department of Labor during the past three (3) years.years relating to any government investigation or audit or any submissions under any voluntary compliance or correction policy.
(c) Each MAA Employee Benefit Plan has been administered in accordance with the requirements of applicable law, including, without limitation, ERISA and the Code, except as would not, individually or in the aggregate, reasonably be expected to have a MAA Material Adverse Effect and is being administered and operated in all material respects in accordance with its terms. No MAA Employee Benefit Plan is subject to Title IV of ERISA, is a multiemployer plan, within the meaning of ERISA Section 3(37), is a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA) or is a “multiple employer plan” (as defined in Section 413 of the Code). Neither MAA nor any ERISA Affiliate has ever maintained or contributed to, or had any obligation to contribute to (or borne any liability with respect to) any such multiemployer plan or multiple employer plan.
(d) Full payment has been made, or otherwise properly accrued on the books and records of MAA and any ERISA Affiliate, of all amounts that MAA and any ERISA Affiliate are required under the terms of the MAA Employee Benefit Plans to have paid as contributions to such MAA Employee Benefit Plans on or prior to the date hereof (excluding any amounts not yet due) and the contribution requirements, on a prorated basis, for the current year have been made or otherwise properly accrued on the books and records of MAA through the Closing Date.
(e) Neither MAA, an ERISA Affiliate or any person appointed or otherwise designated to act on behalf of MAA, or an ERISA Affiliate, nor, to the Knowledge of MAA, any other “disqualified person” or “party in interest” (as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has engaged in any transactions in connection with any MAA Employee Benefit Plan that is reasonably expected to result in the imposition of a material penalty or pursuant to Section 502(i) of ERISA, material damages pursuant to Section 409 of ERISA or a material tax pursuant to Section 4975(a) of the Code.
(f) No material liability, claim, action, audit, investigation, governmental proceeding or litigation has been made, commenced or, to the Knowledge of MAA, threatened with respect to any MAA Employee Benefit Plan (other than for benefits payable in the ordinary course of business).
(g) Except as set forth in Section 5.13(g) of the MAA Disclosure Letter, no MAA Employee Benefit Plan provides for medical, life insurance or other health or welfare benefits (other than under Section 4980B of the Code, Part 6 of Title I of ERISA or other similar applicable Law, or a plan qualified under Section 401(a) of the Code) to any current or future retiree or former employee.
(h) Except as set forth in Section 5.13(h) of the MAA Disclosure Letter, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will (after giving effect to any waivers executed in connection with this Agreement) individually or together with the occurrence of any other event: (A)(i) entitle any employee, trustee, director or consultant of MAA or the MAA Subsidiaries to severance pay or any increase in severance pay under any MAA Employee Benefit Plan or MAA employment agreement upon any termination of employment on or after the date of this Agreement, (B)Agreement; (ii) accelerate the time of payment, vesting or funding or result in any payment of compensation or benefits under, or increase the amount or value of any payment to any employee, officer, trustee or director of MAA or any MAA Subsidiary, or could limit the right to amend, merge or terminate any MAA Employee Benefit Plan or related trust, (C)trust; (iii) result in payments or benefits under any MAA Employee Benefit Plan or MAA employment agreement which would not be deductible under Section 280G of the Code,Code; or (D)(iv) result in a requirement to pay any tax “gross up” or similar “make whole” payment to any employee, director, consultant or other service provider of MAA or any of its ERISA Affiliates.
(i) The per share exercise price of each MAA Option is no less than the fair market value of a share of MAA Common Stock on the date of grant of such MAA Option (and as of each later modification thereof within the meaning of Section 409A of the Code) determined in a manner consistent with Section 409A of the Code. Each MAA Employee Benefit Plan that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been operated and maintained in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder. No payment to be made under any MAA Employee Benefit Plan is, or to the Knowledge of MAA, will be, subject to the penalties of Section 409A(a)(1) of the Code.
Section 5.14Labor and Employment Matters.
(a) Neither MAA nor any MAA Subsidiary is a party to, or bound by, any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor union organization, nor are there any negotiations or discussions currently pending or occurring between MAA, or any of the MAA Subsidiaries, and any union or employee association regarding any collective bargaining agreement or any other work rules or polices. There is no unfair labor practice or labor arbitration proceeding pending or, to the
Knowledge of MAA, threatened against MAA or any of the MAA Subsidiaries relating to their business and neither MAA nor any MAA Subsidiary has experienced any strike, work stoppage, lockout, shutdown, dispute or other concerted interference with normal operations during the past five (5) years. To MAA’sthe Knowledge (i)of MAA, there are no organizational efforts with respect to the formation of a collective bargaining unit presently being made or threatened involving employees of MAA or any of the MAA Subsidiaries (ii) nor have there been any such organizational efforts over the past five (5) years.
(b) Except as set forth in Section 5.14(b) of the MAA Disclosure Letter, there are no proceedings pending or, to the Knowledge of MAA, threatened against MAA or any of the MAA Subsidiaries in any forum by or on behalf of any present or former employee of MAA or any of the MAA Subsidiaries, any applicant for employment or classes of the foregoing alleging unpaid or overdue wages or compensation due, breach of any express or implied employment contract, violation of any law or regulation governing employment or the termination thereof, or any other discriminatory, wrongful or tortious conduct on the part of MAA of any of the MAA Subsidiaries in connection with the employment relationship that, individually or in the aggregate, would reasonably be expected to have a MAA Material Adverse Effect.
(c) Each individual who renders service to MAA or any MAA Subsidiary who is classified by MAA or such MAA Subsidiary, as applicable, as having the status of an independent contractor or other non-employee status for any purpose (including for purposes of taxation and tax reporting and under any MAA Employee Benefit Plans) is properly so classified and treated in accordance with applicable Laws and for purposes of all MAA Employee Benefit Plans and perquisites.perquisites, except as would not, individually or in the aggregate, reasonably be expected to have a MAA Material Adverse Effect.
(d) Each of MAA and the MAA Subsidiaries is in compliance in all material respects with all applicable Laws and all applicable contracts and policies relating to labor and labor practices, employment and employment practices, wages, hours, and terms and conditions of employment, including the obligations of the WARN Act, and all other notification and bargaining obligations arising under any collective bargaining agreement, by applicable Law or otherwise.otherwise, except as would not, individually or in the aggregate, reasonably be expected to have a MAA Material Adverse Effect. Neither MAA nor any MAA Subsidiary has implemented, conducted or experienced a “plant closing” or “mass layoff” as defined in the WARN Act (or any similar group personnel action requiring advance notice under the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of MAA or any MAA Subsidiary.
Section 5.15Information Supplied. None of the information supplied or to be supplied by or on behalf of MAA and MAA LP in writing for inclusion or incorporation by reference in the Form S-4, the Joint Proxy Statement will (a) in the case of the Form S-4, at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, or (b) in the case of the Joint Proxy Statement, at the time such Joint Proxy Statement is first mailed to MAA’s shareholders or at the time of the MAA Shareholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Form S-4 and the Joint Proxy Statement will (with respect to MAA, its officers and directors and the MAA Subsidiaries) comply as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder. No representation or warranty is made hereunder as to statements made or incorporated by reference by in the Form S-4 or the Joint Proxy Statement that were not supplied by or on behalf of MAA or MAA LP. None of the information supplied or to be supplied by or on behalf of MAA or MAA LP in
writing for inclusion in the MAA Consent Solicitation will, at the time of the mailing thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading;provided, that no representation or warranty is made hereunder as to statements made in the MAA Consent Solicitation that were not supplied by or on behalf of MAA or MAA LP.
Section 5.16Intellectual Property.
(a) Except as set forth in Section 5.16(a) of the MAA Disclosure Letter or as, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect, (i) MAA and the MAA
Subsidiaries own or are licensed or otherwise possess valid rights to use all Intellectual Property necessary to conduct the business of MAA and the MAA Subsidiaries as it is currently conducted,provided,however, that the foregoing representation and warranty in thisSection 5.16(a)(i) shall not constitute or be deemed or construed as any representation or warranty with respect to infringement, misappropriation, or violation of any Intellectual Property rights (which is addressed in the following clause (ii)), (ii) to the Knowledge of MAA, the conduct of the business of MAA and the MAA Subsidiaries as it is currently conducted does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any third party, (iii) there are no pending or, to the Knowledge of MAA, threatened claims with respect tothat challenge the use or ownership of any of the Intellectual Property rights owned by MAA or any MAA Subsidiary, and (iv) to the Knowledge of MAA, no third party is currently infringing or misappropriating Intellectual Property owned by MAA or any MAA Subsidiary. MAA and the MAA Subsidiaries are taking all actions that they reasonably believe are necessary to maintain and protect each material item of Intellectual Property that they own.
(b) ThisSection 5.16 5.16 contains the exclusive representations and warranties of the MAA Parties with respect to intellectual property matters.
Section 5.17Environmental Matters.
(a) Except as individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect, or as set forth in Section 5.17(a) of the MAA Disclosure Letter, or in any Phase I or Phase II report made available to ColonialPost prior to the date hereof:
(i) To the Knowledge of MAA (after due inquiry), MAA and each MAA Subsidiary are in compliance with and, except for matters that have been fully and finally resolved, have complied with all Environmental Laws.
(ii) To the Knowledge of MAA (after due inquiry), MAA and each MAA Subsidiary have all Environmental Permits necessary to conduct their current operations and are in compliance in all material respects with their respective Environmental Permits, and all such Environmental Permits are in good standing.
(iii) NeitherSince January 1, 2014, neither MAA nor any MAA Subsidiary has received any written notice, demand, letter or claim alleging that MAA or any such MAA Subsidiary is in violation of, or liable under, any Environmental Law or that any judicial, administrative or compliance order has been issued against MAA or any MAA Subsidiary which remains unresolved. There is no litigation, investigation, governmental request for information or other proceeding pending, or, to the Knowledge of MAA, threatened against MAA and any MAA Subsidiary under any Environmental Law or with respect to Hazardous Substances.
(iv) NeitherSince January 1, 2014, neither MAA nor any MAA Subsidiary has entered into or agreed to any consent decree or order or is subject to any judgment, decree or judicial, administrative or compliance order relating to compliance with Environmental Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Substances and no investigation, litigation or other proceeding is pending or, to the Knowledge of MAA, threatened against MAA or any MAA Subsidiary under any Environmental Law or with respect to Hazardous Substances.
(v) NeitherSince January 1, 2014, neither MAA nor any MAA Subsidiary has assumed, by contract or, to the Knowledge of MAA, by operation of Law, any liability under any Environmental Law or relating to any Hazardous Substances, or is an indemnitor in connection with any threatened or asserted claim by any third-party indemnitee for any liability under any Environmental Law or relating to any Hazardous Substances.
(vi) NeitherSince January 1, 2014, neither MAA nor any MAA Subsidiary has caused, and to the Knowledge of MAA, no Third Party has caused any release of a Hazardous Substance that would be required to be investigated or remediated by MAA or any MAA Subsidiary under any Environmental Law.
(vii) There is no site to which MAA or any MAA Subsidiary has transported or arranged for the transport of Hazardous Substances which, to the Knowledge of MAA, is or may become the subject of any Action under Environmental Law.
(b) Notwithstanding any other provision of this Agreement, other thanSection 5.5(b),Section 5.7,Section 5.8,Section 5.9Section 5.18(b),Section 5.18(h)5.18(b) andSection 5.20, thisSection 5.17 contains the exclusive representations and warranties of the MAA Parties with respect to Environmental Laws, Hazardous Substances or other environmental matters.
Section 5.18Properties.Index to Financial Statements
(a) Section 5.18(a) of the MAA Disclosure Letter sets forth a list of the common name and address of each facility and real property owned or ground leased (as lessee or sublessee), including ground leased, by MAA or any MAA Subsidiary as of the date of this Agreement (all such real property interests, together with all buildings, structures and other improvements and fixtures located on or under such real property and all easements, rights and other appurtenances to such real property, are individually referred to herein as a “MAA Property” and collectively referred to herein as the “MAA Properties”). Section 5.18(a) of the MAA Disclosure Letter sets forth a list of the common name and address of each facility and real property which, as of the date of this Agreement, is under contract by MAA or a MAA Subsidiary for purchase or which is required under a binding contract to be ground leased or subleased by MAA or a MAA Subsidiary after the date of this Agreement.Agreement, and MAA has provided to Post as of the date hereof true, correct and complete copies of such contracts. Except as set forth in Section 5.18(a) of the MAA Disclosure Letter, there are no real properties that MAA or any MAA Subsidiary is obligated to buy lease or subleaseground lease at some future date. Section 5.18(a) of the MAA Disclosure Letter sets forth a list of the common name, city and state of each for-rent multi-family apartment project which (i) MAA or any MAA Subsidiary developed or constructed on or after January 1, 2009, and (ii) which MAA or any MAA Subsidiary sold, disposed or transferred, directly or indirectly, in whole or in part, on or after January 1, 2009.
(b) MAA or a MAA Subsidiary owns good valid and marketablevalid fee simple title or leasehold titlea good and valid ground lease interest (as applicable) to each of the MAA Properties, in each case, free and clear of Liens, except for MAA Permitted Liens. For the purposes of this Agreement, “MAA Permitted Liens” shall mean any (i) Liens relating to any Indebtedness incurred in the ordinary course of business consistent with past practice, (ii) Liens that result from any statutory or other Liens for Taxes or assessments that are not yet subject to penalty or the validity of which is being contested in good faith by appropriate proceedings and for which there are adequate reserves on the financial statements of MAA (if such reserves are required pursuant to GAAP), (iii)(ii) Liens imposed or promulgated by Law, including zoning regulations, permits and licenses (but not including Liens imposed pursuant to CERCLA and similar state laws), (iv)(iii) Liens that are disclosed on the existing MAA Title Insurance Policies made available by or on behalf of MAA or any MAA Subsidiary to ColonialPost prior to the date hereof and, with respect to ground leasehold interests, Liens on the underlying fee or leasehold interest of the applicable ground lessor, lessor or sublessor, (v)or relate to Indebtedness otherwise disclosed in the MAA Disclosure Letter, (iv) any inchoate cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar Liens imposed by Law and incurred in the ordinary course of business consistent with past practice that are not yet subject to penalty or the validity of which is being contested in good faith by appropriate proceedings, and (vi)(v) such imperfections in title, easements, restrictions, covenants and similar Liens that do not or will not interfere in any material manner with the current use of the MAA Properties (assuming its continued use in the manner it is currently used), or otherwise impair in any material manner the current operations of such MAA Properties (assuming its continued use in the manner it is currently operated).
(c) NeitherExcept as set forth in Section 5.18(c) of the MAA Disclosure Letter, neither MAA nor any MAA Subsidiary has received (i) written notice that any certificate, permit or license from any Governmental Authority having jurisdiction over any of the MAA Properties or any agreement, easement or other right of an unlimited duration that is necessary to permit the lawful use and operation of the buildings and improvements on any of the MAA Properties (assuming their continued use in the manner they are currently used) or that is necessary to permit the lawful use and operation of all utilities, parking areas, retention ponds, driveways, roads and other means of egress and ingress to and from any of the MAA Properties (assuming their continued use in the manner they are currently used) is not in full force and effect as of the date of this Agreement, except for such failures to be in full force and effect that, individually or in the aggregate, would not reasonably be expected
to have a MAA Material Adverse Effect, or of any pending written threat of modification or cancellation of any of same, that would reasonably be expected to have a MAA Material Adverse Effect, or (ii) written notice of any uncured violation of any Laws affecting any of the MAA Properties which, individually or in the aggregate, would reasonably be expected to have a MAA Material Adverse Effect.
(d) NoExcept as set forth in Section 5.18(d) of the MAA Disclosure Letter, no certificate, variance, permit or license from any Governmental Authority having jurisdiction over any of the MAA Properties or any
agreement, easement or other right that is necessary to permit the current use of the buildings and improvements on any of the MAA Properties (assuming their continued use in the manner they are currently used) or that is necessary to permit the current use of all parking areas, driveways, roads and other means of egress and ingress to and from any of the MAA Properties (assuming their continued use in the manner they are currently used) has failed to be obtained or is not in full force and effect, and neither MAA nor any MAA Subsidiary has received written notice of any outstanding threat of modification, suspension or cancellation of any such certificate, variance, permit or license, except for any of the foregoing as, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect.
(e) Except as set forth in Section 5.18(e) of the MAA Disclosure Letter, no condemnation, eminent domain or similar proceeding has occurred or is pending with respect to any owned MAA Property or, to the Knowledge of MAA, any MAA Property ground leased by MAA or any MAA Subsidiary, that would interfere in any material manner with the current use of the MAA Properties (assuming its continued use in the manner it is currently used), or otherwise impair in any material manner the current operations of such MAA Properties (assuming its continued use in the manner it is currently operated), and neither MAA nor any MAA Subsidiary has received any written notice to the effect that (i) any condemnation or rezoning proceedings (other than those initiated by or on behalf of MAA or with MAA’s consent) are threatened for any MAA Property that would interfere in any material manner with the current use of the MAA Properties (assuming its continued use in the manner it is currently used), or otherwise impair in any material manner the current operations of such MAA Properties (assuming its continued use in the manner it is currently operated), or (ii) any zoning regulation or ordinance (including with respect to parking), building, fire, health or other Law has been violated (and remains in violation) for any MAA Property.
(f) Section 5.18(f) of the MAA Disclosure Letter lists all ground leases (whether as lessor or lessee) affecting the interest of MAA or any MAA Subsidiary in the MAA Properties in effect as of the date hereof. True and complete in all material respects copies of all such ground leases in effect as of the date hereof, together with all amendments, modifications, supplements, renewals and extensions related thereto, have been made available to ColonialPost on or prior to the date hereof.
(g) Except for discrepancies, errors or omissions that, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect, the rent roll summaries for each of the MAA Properties as previously provided to Colonial, and the schedules with respect to the MAA Properties subject to triple-net leases, which schedules have previously been made available to Colonial, correctly reference each lease or sublease that was in effect as of the dates shown therein and to which MAA or any MAA Subsidiary is a party as lessor or sublessor with respect to each of the applicable MAA Properties (all leases or subleases (including any triple-net leases), together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto, the “MAA Leases”). Section 5.18(g) of the MAA Disclosure Letter sets forth, as of April 30, 2013, the aggregate current annualized rent and security deposit amounts currently held for each MAA Property (which security deposits are in the amounts required by the applicable MAA Lease).
(h) Except as set forth on Section 5.18(h) of the MAA Disclosure Letter or as individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect, neither MAA nor any MAA Subsidiary, on the one hand, nor, to the Knowledge of MAA, any other party, on the other hand, is in monetary default under any MAA Lease relating to property used for commercial or retail purposes as of the date of the delinquency report made available to Colonial on or prior to the date hereof by or on behalf of MAA.
(i) Except as set forth on Section 5.18(i)5.18(g) of the MAA Disclosure Letter, there are no material Tax abatements or exemptions specifically affecting the MAA Properties, and MAA and the MAA Subsidiaries have not received any written notice of (and MAA and the MAA Subsidiaries do not have any Knowledge of) any
proposed increase in the assessed valuation of any of the MAA Properties or of any proposed public improvement assessments that will result in the Taxes or assessments payable in the next tax period increasing by an amount material to MAA and the MAA Subsidiaries, considered as a whole.
(j) Except as set forth in Section 5.18(j) of the MAA Disclosure Letter, as of the date of this Agreement, no purchase option has been exercised under any MAA Lease for which the purchase has not closed prior to the date of this Agreement.
(k)(h) Except for MAA Permitted Liens or as set forth in Section 5.18(k)5.18(h) of the MAA Disclosure Letter and as set forth in contracts provided to ColonialPost prior to the date hereof, (i) there are no unexpired option to purchase agreements, rights of first refusal or first offer or any other rights to purchase or otherwise acquire any MAA Property or any portion thereof that would materially adversely affect MAA’s, or any MAA Subsidiary’s, ownership, ground lease or right to use a MAA Property, and (ii) there are no other outstanding rights or agreements to enter into any contract for sale, ground lease or letter of intent to sell or ground lease any MAA Property or any portion thereof that is owned by any MAA Subsidiary, which, in each case, is in favor of any party other than MAA or a MAA Subsidiary (a “MAA Third Party”).
(l)(i) Except as set forth in Section 5.18(l)5.18(i) of the MAA Disclosure Letter or pursuant to a MAA Lease or any ground lease affecting any MAA Property, neither MAA nor any MAA Subsidiary is a party to any agreement pursuant to which MAA or any MAA Subsidiary manages or manages the development of any real property for any MAA Third Party.
(m)(j) Except as set forth in Section 5.18(j) of the MAA Disclosure Letter, MAA and each MAA Subsidiary, as applicable, is in possession of title insurance policies or valid marked-up title commitments evidencing title insurance with respect to each MAA Property (each, a “MAA Title Insurance Policy” and, collectively, the “MAA Title Insurance Policies”). A copy of each such MAA Title Insurance Policy in the possession of MAA as of the date hereof has been made available to Colonial. NoPost. Except as set forth in Section 5.18(j) of the MAA Disclosure Letter, no written claim has been made against any MAA Title Insurance Policy, which remains pending and, which, individually or in the aggregate, would be material to any MAA Property.
(n) To the Knowledge of MAA,
(k) Section 5.18(n)5.18(k) of the MAA Disclosure Letter lists the common name and address of each MAA Property which is (i) under ground-up development as of the date hereof, and describes in general the status of such development as of the date hereof, and (ii) subject to a binding agreement for ground-up development or commencement of construction by MAA or a MAA Subsidiary, in each case other than those pertaining to minor capital repairs, replacements and other similar correction of deferred maintenance items in the ordinary course of business.Subsidiary.
(o) MAA and the MAA Subsidiaries have good and valid title to, or a valid and enforceable leasehold interest in, or other right to use, all personal property owned, used or held for use by them as of the date of this Agreement (other than property owned by tenants and used or held in connection with the applicable tenancy), except as, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect. None of MAA’s or any of the MAA Subsidiaries’ ownership of or leasehold interest in any such personal property is subject to any Liens, except for MAA Permitted Liens and Liens that would not reasonably be expected to have a MAA Material Adverse Effect.(l) Section 5.18(o) of the MAA Disclosure Letter sets forth all leased personal property of MAA or any MAA Subsidiary with monthly lease obligations in excess of $100,000 and that are not terminable upon thirty (30) days’ notice.
(p) Section 5.18(p)5.18(l) of the MAA Disclosure Letter lists the parties currently providing third-party property management services to MAA or a MAA Subsidiary and the numbernames of facilities currently managed by each such party.
(q) Except (A) for capital expenditures made or to be made in the ordinary course of business, (B) as set forth in Section 5.18(q) of the MAA Disclosure Letter or (C) as, individually or in the aggregate, would cost MAA and the MAA Subsidiaries less than $1,000,000 to repair or otherwise remediate for any MAA Property, MAA has no Knowledge of (i) any structural defects relating to any MAA Property, (ii) MAA Properties whose
building systems are not in working order, or (iii) physical damage to any MAA Property for which there is not insurance in effect covering the cost of the restoration and the loss of revenue (subject to a reasonable deduction or retention limit).
Section 5.19Material Contracts.
(a) Except for contracts listed in Section 5.19(a) of the MAA Disclosure Letter or filed as exhibits to the MAA SEC Documents, as of the date of this Agreement, neither MAA nor any MAA Subsidiary is a party to or bound by any contract that, as of the date hereof:
(i) is required to be filed as an exhibit to MAA’s Annual Report on Form 10-K on or after January 1, 2014 pursuant to Item 601(b)(2), (4), (9) or (10) of Regulation S-K promulgated under the Securities Act;
(ii) obligates MAA or any MAA Subsidiary to make non-contingent aggregate annual expenditures (other than principal and/or interest payments or the deposit of other reserves with respect to debt obligations) in excess of $1,000,000$4,500,000 and is not cancelable within ninety (90)one-hundred eighty (180) days without material penalty to MAA or any MAA Subsidiary, except for any MAA Lease or any ground lease affecting any MAA Property;
(iii) contains any non-compete or exclusivity provisions with respect to any line of business or geographic area that restricts the business of MAA or any MAA Subsidiary, or that otherwise restricts the lines of business conducted by MAA or any MAA Subsidiary or the geographic area in which MAA or any MAA Subsidiary may conduct business;
(iv) is an agreement which obligates MAA or any MAA Subsidiary to indemnify any past or present directors, officers, trustees, employees and agents of MAA or any MAA Subsidiary pursuant to which MAA or a MAA Subsidiary is the indemnitor;indemnitor (other than the organizational documents of MAA and the MAA Subsidiaries);
(v) constitutes an Indebtedness obligation of MAA or any MAA Subsidiary with a principal amount as of the date hereof greater than $5,000,000;$4,500,000;
(vi) would prohibit or materially delay the consummation of the Mergers as contemplated by this Agreement;
(vii) requires MAA or any MAA Subsidiary to dispose of or acquire assets or properties (other than in connection with the expiration of a MAA Lease or a ground lease affecting a MAA Property) with a fair market value in excess of $5,000,000,$4,500,000, or involves any pending or contemplated merger, consolidation or similar business combination transaction, except for any MAA Lease or any ground lease affecting any MAA Property;
(viii)(vii) constitutes an interest rate cap, interest rate collar, interest rate swap or other contract or agreement relating to a hedging transaction which has a notional amount in excess of $1,000,000;$4,500,000;
(ix)(viii) sets forth the operational terms of a joint venture, partnership, limited liability company with a Third Party member or strategic alliance of MAA or any MAA Subsidiary;
(x)(ix) constitutes a loan to any Person (other than a wholly owned MAA Subsidiary) by MAA or any MAA Subsidiary (other than advances made pursuant to and expressly disclosed in the MAA Leases or pursuant to any disbursement agreement, development agreement, or development addendum entered into in connection with a MAA Lease with respect to the development, construction, or equipping of MAA Properties or the funding of improvements to MAA Properties) in an amount in excess of $5,000,000;
(xi)$4,500,000; or constitutes a regulatory agreement or similar agreement that requires that any portion of a Propertyproperty be leased to persons meeting criteria set forth in such agreement; or
(xii) with respect
(x) constitutes a regulatory agreement or similar agreement that requires that any non-residential MAA Property, requires paymentportion of material commissions (including leasing commissions or brokerage fees) or material tenant improvement costs, allowances or other.
(b) Each such contract described in clauses(i)-(xii)(x) ofSection 5.19(a) above is referred to herein as a “MAA Material Contract”.
(c) Except as, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect, each MAA Material Contract is legal, valid, binding and enforceable on MAA and each MAA Subsidiary that is a party thereto and, to the Knowledge of MAA, each other party thereto, and is in full force and effect, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). Except as, individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect, MAA and each MAA Subsidiary has performed all obligations required to be performed by it prior to the date hereof under each MAA Material Contract and, to the Knowledge of MAA, each other party thereto has performed all obligations required to be performed by it under such MAA Material Contract prior to the date hereof. None of MAA or any MAA Subsidiary, nor, to the Knowledge of MAA, any other party thereto, is in material breach or violation of, or default under, any MAA Material Contract, and no event has occurred that with notice or lapse of time or both would constitute a violation of, breach of or default under any MAA Material Contract, except where in each case such breach, violation or default is not reasonably likely to have, individually or in the aggregate, a MAA Material Adverse Effect. Neither MAA nor any MAA Subsidiary has received written notice of any violation of or default under any MAA Material Contract, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to have a MAA Material Adverse Effect.
Section 5.20Insurance. MAA has made available to Colonial copiesPost a schedule of all material insurance policies and all material fidelity bonds or other material insurance service contracts in MAA’s possession providing coverage for all MAA Properties (the “MAA Insurance Policies”)., which is set forth in Section 5.20 of the MAA Disclosure Letter. Except as individually or in the aggregate, would not reasonable be expected to have a MAA Material Adverse Effect, there is no claim for coverage by MAA or any MAA Subsidiary pending under any of the MAA Insurance Policies that has been denied or disputed by the issuer. Except as individually or in the aggregate, would not reasonably be expected to have a MAA Material Adverse Effect, all premiums payable under all MAA Insurance Policies have been paid, and MAA and the MAA Subsidiaries have otherwise complied in all material respects with the terms and conditions of all the MAA Insurance Policies. To the Knowledge of MAA, such MAA Insurance Policies are valid and enforceable in accordance with their terms and are in full force and effect. NoExcept for notice of annual or other periodic expiration, termination or non-renewal received in the ordinary course of business, no written notice of cancellation or termination has been received by MAA or any MAA Subsidiary with respect to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation.
Section 5.21Opinion of MAA Financial Advisor. The MAA Board has received the oral opinion of J.P. Morgan SecuritiesCitigroup Global Markets Inc. (“JP MorganCitigroup”) (to be confirmed in writing) to the effect that, as of the date of this Agreement,such opinion, and subject to the assumptions and limitations set forth in JP Morgan’sCitigroup’s written opinion, the Exchange RatioMerger Consideration to be paid by MAA in the Parent Merger is fair, from a financial point of view, to MAA. After the holders (other than Colonial and its Affiliates) of shares of MAA Common Stock.date hereof, MAA will make available to Colonial,Post, solely for informational purposes, a complete and correct copy of the written opinion promptly after receipt thereof by the MAA Board.
Section 5.22Vote Required. (i) The affirmative vote of the holders of a majority of the outstanding shares of MAA Common Stock (theto approve this Agreement and the transactions contemplated hereby, including the issuance of the MAA Common Stock to be issued in the Parent Merger, and (ii) the affirmative vote of a majority of the shares present at the MAA Shareholder Meeting in person or by proxy and entitled to vote to approve an amendment to the MAA Charter that increases the number of authorized shares of MAA Common Stock to 145,000,000 (collectively, the “MAA Shareholder Approval”) is, are the only votevotes of holders of securities of
MAA required to adopt this Agreement, approve and consummate the Parent Merger and the other transactions contemplated by this Agreement, and to authorize and approve the issuance of the MAA Common Stock to be issued in the Parent Merger. The affirmative vote of 66 2/3% of the Class A MAA OP Units (the “MAA Partner Approval”) is the only vote or consent required of the holders of any class or series of MAA OP Units or other securities of, or equity interests in, MAA LP, other than the approval of MAA as the general partner of MAA LP and the holder of all Class B MAA OP Units, required to approve this Agreement, to approve and consummate the Partnership Merger, including the amendment and restatement of the MAA LP Agreement pursuant toSection 2.4, and to waive the provisions of Section 12 of the MAA LP Agreement.
Section 5.23Brokers. Except for the fees and expenses payable to JP Morgan,Citigroup, no broker, investment banker or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the Mergers or any transactions contemplated by this Agreement based upon arrangements made by or on behalf of MAA or any MAA Subsidiary.
Section 5.24Investment Company Act. Neither MAA nor any MAA Subsidiary is required to be registered as an investment company under the Investment Company Act.
Section 5.25Takeover Statutes. The MAA Board has taken all action necessary, if any, to render inapplicable to the Parent Merger and the other transactions contemplated by this Agreement, the restrictions on business combinations contained in the Tennessee Business Combination Act. No Takeover Statutes, as in effect on the date of this Agreement, are applicable to this Agreement, the Parent Merger or the other transactions contemplated by this Agreement. None of MAA or MAA LP, nor any of their respective Affiliates, alone or together with any other Person (a) is, nor at any time during the last five (5) years has it been, an “interested shareholder” of Post under the GBCC or (b) has taken any action that would cause, alone or in conjunction with any other actions, events or circumstances, any anti-takeover statute under the GBCC or otherwise to be applicable to this Agreement. None of MAA or MAA LP or any of their respective Affiliates beneficially owns (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, or is the record holder of, or is a party to any contract (other than this Agreement) for the purpose of acquiring, holding, voting or disposing of, in each case, any shares of capital stock of Post.
Section 5.26Related Party Transactions. Except as set forth in Section 5.26 of the MAA Disclosure Letter or in the MAA SEC Documents filed and publicly available through and including the date of this Agreement or as permitted by this Agreement, from January 1, 20102014 through the date of this Agreement there have been no transactions, agreements, arrangements or understandings between MAA or any MAA Subsidiary, on the one hand, and any Affiliates (other than MAA Subsidiaries) of MAA or other Persons, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC.
Section 5.27No Other Representations and Warranties. Except for the representations or warranties expressly set forth in thisArticle V, no MAA Party nor any of their Affiliates nor any other person on behalf of any MAA Party has made any representation or warranty, expressed or implied, with respect to MAA or any of the MAA Subsidiaries, their respective businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or with respect to the accuracy or completeness of any information regarding MAA or the MAA Subsidiaries.Subsidiaries, and no Post Party nor any of their Affiliates nor any other person on behalf of any Post Party has relied on any representation or warranty except for those expressly set forth in thisArticle V.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1Conduct of Business by ColonialPost.
(a) Each ColonialPost Party covenants and agrees that, between the date of this Agreement and the earlier to occur of the PartnershipParent Merger Effective Time and the date, if any, on which this Agreement is terminated pursuant toSection 9.1 (the “Interim Period”), except to the extent required by Law, as may be consented to in writing by
MAA (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly required or permitted pursuant to this Agreement, or as set forth in Section 6.1(a) or Section 6.1(b) of the ColonialPost Disclosure Letter, the ColonialPost Parties shall, and shall cause each of the other ColonialPost Subsidiaries to, (i) conduct its business in all material respects in the ordinary course and in a manner consistent with past practice, and (ii) use its commercially reasonable efforts to (A) maintain its material assets and properties in their current condition (normal wear and tear excepted), (B) preserve intact in all material respects its current business organization, goodwill, ongoing businesses and significant business relationships, with third parties, (C) provided it does not require additional compensation, keep available the services of its present officers, (D) maintain all ColonialPost Insurance Policies and (E) maintain the status of ColonialPost as a REIT.
(b) Without limiting the foregoing, each ColonialPost Party covenants and agrees that, during the Interim Period, except to the extent required by Law, as may be consented to in writing by MAA (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly contemplated, required or permitted (including as otherwise permitted by thisSection 6.1(b)) pursuant to this Agreement, or as set forth in Section 6.1(a) or Section 6.1(b) of the ColonialPost Disclosure Letter,
the ColonialPost Parties shall not, and shall not cause or permit any other ColonialPost Subsidiary to, do any of the following:
(i) amend or propose to amend (A) the Colonial DeclarationPost Articles of TrustIncorporation or ColonialPost Bylaws, (B) the Colonialarticles of incorporation or bylaws of Post GP, (C) the Post LP Agreement (other than any amendment necessary to effect the Partnership Merger, the Parent Merger or the other transactions contemplated hereby) or certificate of limited partnership of ColonialPost LP or (C)(D) such equivalent organizational or governing documents of any ColonialPost Subsidiary material to ColonialPost and the ColonialPost Subsidiaries, considered as a whole, if such amendment would be materially adverse to ColonialPost or MAA, or (D)(E) grant any additional waivers to the stock ownership limit under the Colonial DeclarationPost Articles of Trust;Incorporation;
(ii) split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of ColonialPost or any ColonialPost Subsidiary (other than any wholly owned ColonialPost Subsidiary);
(iii) declare, set aside or pay any dividend on or make any other distributions (whether in cash, stock, property or otherwise) with respect to shares of capital stock of ColonialPost or any ColonialPost Subsidiary or other equity securities or ownership interests in ColonialPost or any ColonialPost Subsidiary, except for (A) the declaration and payment by ColonialPost of dividends in accordance withSection 7.19, (B) the declaration and payment by Post of regular quarterly dividends, aggregated and paid quarterly in accordance with past practice at a rate not to exceed $0.21$1.0625 per quarter (it being agreed that the timingper share of any such quarterly dividends will be coordinated so that, if either the holders of MAA CommonPost Series A Preferred Stock, or the holders of Colonial Common Shares receive a dividend for a particular quarter prior to the Closing Date, then the holders of Colonial Common Shares and the holders of MAA Common Stock, respectively, shall receive a dividend for such quarter prior to the Closing Date;provided,however, that the record and payment dates for Colonial’s dividends pursuant to thisSection 6.1(b)(iii) shall be the same as MAA’s record and payment dates, to the extent that such dates were not declared prior to the date of this Agreement), (B)(C) the regular distributions that are required to be made in respect of the ColonialPost OP Units or the 8 1/2% Series A Cumulative Redeemable Preferred Units of Post LP in connection with any dividends paid on the ColonialPost Common Shares, (C)Stock or Post Series A Preferred Stock, respectively, (D) the declaration, andset-aside or payment of dividends or other distributions to Colonial by any directly or indirectly wholly owned ColonialPost Subsidiary to Post or any other Post Subsidiary, and (D)(E) distributions by any ColonialPost Subsidiary that is not wholly owned, directly or indirectly, by Colonial,Post, in accordance with the requirements of the organizational documents of such ColonialPost Subsidiary;provided,however, that, notwithstanding anything herein to the contrary, Colonial and any Colonial Subsidiary shall be permitted to make (or increase) distributions, including under Sections 858 or 860 of the Code, reasonably necessary for Colonial to maintain its status as a REIT under the Code and/or avoid or reduce the imposition of any entity-level income or excise Tax under the Code;
(iv) redeem, repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock or other equity interests of ColonialPost or a ColonialPost Subsidiary, other than (A) the acquisition by ColonialPost of ColonialPost Common SharesStock in connection with the surrender of ColonialPost Common SharesStock by holders of ColonialPost Options in order to pay the exercise price of the ColonialPost Option in connection with the exercise of ColonialPost Options, (B) the repurchase of ColonialPost “excess shares” pursuant to the Colonial DeclarationPost Articles of Trust,Incorporation, (C) the withholding of ColonialPost Common SharesStock to satisfy withholding Tax obligations with respect to outstanding awards granted pursuant to the ColonialPost Equity Incentive Plans, and (D) of ColonialPost OP Units under the ColonialPost LP Agreement;Agreement, (E) in connection with the vesting of, or lapse of restrictions on, Post Restricted Stock Awards in order to satisfy withholding or exercise price obligations or (F) in connection with the redemption or repurchase by a wholly owned Post Subsidiary of its own securities (but solely to the extent such securities or equity equivalents are owned by Post or a Post Subsidiary);
(v) except for (A) transactions among ColonialPost and one or more wholly owned ColonialPost Subsidiaries or among one or more wholly owned ColonialPost Subsidiaries, (B) issuances of Colonialshares of Post Common SharesStock upon the
exercise or settlement of any ColonialPost Option outstanding as of the date of this Agreement and issuances of equity or equity based awards pursuant to the ColonialPost Equity Incentive Plans to the extent required under the terms of such ColonialPost Equity Incentive Plans, the ColonialPost ESPP or the ColonialPost DRIP (subject toSection 7.137.15) as in effect as of the date of this Agreement, (C) exchanges of ColonialPost OP Units for Colonialshares of Post Common Shares,Stock, in accordance with the ColonialPost LP Agreement, (D) as contemplated inSection 6.1(b)(vi) or (E) as set forth on
Section 6.1(b)(v) of the ColonialPost Disclosure Letter, issue, sell, pledge, dispose, encumber or grant any shares of Colonial’sPost’s or any of the ColonialPost Subsidiaries’ capital stock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of Colonial’sPost’s or any of the ColonialPost Subsidiaries’ capital stock or other equity interests;
(vi) except to the extent required under any ColonialPost Equity Incentive Plan, grant, confer, award, or modify the terms of any ColonialPost Option or any ColonialPost Restricted ShareStock Award or take any action not required under the ColonialPost Equity Incentive Plans or not contemplated by this Agreement;
(vii) acquire or agree to acquire (including by merger, consolidation or acquisition of stock or assets) any real property, personal property (other than personal property at a total cost of less than $1,000,000 in the aggregate), corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof, except (A) acquisitions by ColonialPost or any wholly owned ColonialPost Subsidiary of or from an existing wholly owned ColonialPost Subsidiary, (B) the pending acquisitions set forth on Section 6.1(b)(vii) of the ColonialPost Disclosure Letter (the “ColonialPost Pending Acquisitions”), (C) transactions conducted in accordance with Section 1031 of the Code in connection with acquisitions or dispositions otherwise permitted pursuant to this Agreement, including purchases of property with funds held by a qualified intermediary or other agent serving in a similar capacity, provided notice is provided to MAA prior to consummation of such transactions, or (D) acquisitions of undeveloped land that do not exceed $15,000,000 in the ordinary courseaggregate;provided that Post and the Post Subsidiaries shall be permitted to take any action it is obligated to take under any joint venture agreement to which Post or such Post Subsidiaries is a party as of business consistent with past practice not to exceed the amount of remaining acquisition activity (after taking into account all other transactions permitted under this Section 6.1(b)(vii)) included in the assumptions accompanying Colonial’s 2013 guidance as publicly disclosed prior to the date of this Agreement;
(viii) sell, mortgage, pledge, lease, assign, transfer, dispose of or encumber, or effect a deed in lieu of foreclosure with respect to, any property or assets, except (A) as set forth on Section 4.18(h) or Section 6.1(b)(viii) of the ColonialPost Disclosure Letter, (provided, that no such sale, pledge, transfer or other distribution would result in Colonial or any Colonial Subsidiary making (or increasing) distributions in excess of Colonial’s regular quarterly dividend in order for Colonial to maintain its status as a REIT under the Code and/or avoid or reduce the imposition of any entity-level income or excise Tax under the Code for any taxable year ending on or before the Parent Merger), (B) by Colonial,Post, or any wholly-owned ColonialPost Subsidiary, with, to or from any existing wholly-owned ColonialPost Subsidiary, (C) subject to Section 6.1(b)(viii)(C) of the Colonial Disclosure Letter, in the ordinary course of business consistent with past practice not to exceed the amount of remaining disposition activity (after taking into account all other transactions permitted under this Section 6.1(b)(viii)) included in the assumptions accompanying Colonial’s 2013 guidance as publicly disclosed prior to the date of this Agreement, and (D) pledges or encumbrances of direct or indirect equity interests in entities from time to time under Colonial’sPost’s existing revolving credit facility that (1) acquire properties that are the subject of ColonialPost Pending Acquisitions, or (2) are not currently included in Colonial’sPost’s borrowing base under Colonial’sPost’s existing revolving credit facility and are set forth on Section 6.1(b)(viii) of the ColonialPost Disclosure Letter;Letter, or (D) for sales, transfers or dispositions of property or assets that do not exceed $10,000,000 in the aggregate;
(ix) for any Post Development Properties, (A) expend or incur any amount, or (B) enter into, amend, modify, exercise rights under or terminate any Post Development Contracts which are Post Material Contracts, except (1) as contemplated by any existing Post Development Contract, (2) in connection with investment proposals that have been made available to MAA on or prior to the date hereof and which are set forth on Section 6.1(b)(ix) of the Post Disclosure Letter or (3) up to $6,000,000 in the aggregate in excess of the amounts set forth in clauses (1) and (2);
(x) incur, create, assume, refinance, replace or prepay any Indebtedness for borrowed money or issue or amend the terms of any debt securities of ColonialPost or any of the ColonialPost Subsidiaries, or assume, guarantee or endorse, or otherwise become responsible (whether directly, contingently or otherwise) for the Indebtedness of any other Person (other than a wholly owned ColonialPost Subsidiary), except (A) Indebtedness incurred under Colonial’sPost’s existing revolving credit facility or other existing similar lines of credit in the ordinary course of business (including the existing cash management line)line and letters of credit) for working capital purposes in the ordinary course of business consistent with past practice (including to the extent necessary to pay dividends permitted bySection 6.1(b)(iii)), (B) Indebtedness incurred under existing construction loan facilities with respect to ongoing construction projects, (C) Indebtedness incurred in connection with the funding of any transactions
permitted by thisSection 6.1(b), (D) refinancing of any existing Indebtedness, including the replacement or renewal of any letters of credit or surety bonds (provided, that the terms of such new Indebtedness shall not in the aggregate, for each separate instrument of Indebtedness, be materially more onerous on ColonialPost compared to the existing Indebtedness and the principal amount of such replacement Indebtedness shall not be
materially greater than the Indebtedness it is replacing);, (E) any additional Indebtedness in an amount that, in the aggregate, does not exceed $7,500,000; and$10,000,000, (F) as set forth on Section 6.1(b)(ix)(x) of the ColonialPost Disclosure Letter;Letter, (G) inter-company Indebtedness among Post and the Post Subsidiaries, and (H) any surety bonds not exceeding $100,000 individually or $500,000 in the aggregate;
(x)(xi) make any loans, advances or capital contributions to, or investments in, any other Person (including to any of its officers, trustees, Affiliates, agents or consultants), make any change in its existing borrowing or lending arrangements for or on behalf of such Persons, or enter into any “keep well” or similar agreement to maintain the financial condition of another entity, other than (A) by ColonialPost or a wholly owned ColonialPost Subsidiary to ColonialPost or a wholly owned ColonialPost Subsidiary, and (B) loans or advances required to be made under any of the ColonialPost Leases, ground leases pursuant to which any third party is a lessee or sublessee on any ColonialPost Property or any existing joint venture arrangements to which a ColonialPost Subsidiary is a party as of the date hereof;hereof, (C) as contractually required to be made pursuant to an existing joint venture arrangements to which Post or a Post Subsidiary is a party as of the date hereof or (D) as contractually required by any Post Material Contract in effect on the date hereof that has been made available to MAA;
(xi)(xii) enter into, renew, modify, amend or terminate, or waive, release, compromise or assign any rights or claims under, any ColonialPost Material Contract (or any contract that, if existing as of the date hereof, would be a ColonialPost Material Contract), other than (A) any termination or renewal in accordance with the terms of any existing ColonialPost Material Contract, (B) the entry into any modification or amendment of, or waiver or consent under, any mortgage or related agreement to which ColonialPost or any ColonialPost Subsidiary is a party as required or necessitated by this Agreement or the transactions contemplated hereby;provided, that any such modification, amendment, waiver or consent does not materially increase the principal amount thereunder or otherwise materially adversely affect Colonial,Post, any ColonialPost Subsidiary or MAA, (C) the entry into any commercial leases in the ordinary course of business, (D) any renewal of any of the ColonialPost Insurance Policies upon its scheduled termination on substantially the same terms in the aggregate for each separate Post Insurance Policy as currently in effect, except as set forth on Section 6.1(b)(xi)(xii) of the ColonialPost Disclosure Letter, (D)(E) as may be reasonably necessary to comply with the terms of this Agreement, or (E)(F) as otherwise expressly permitted by thisSection 6.1(6.1(b)b); or (G) in connection with change orders related to any construction, development, redevelopment or capital expenditure projects that either (x) do not materially increase the cost of any such project, or (y) are otherwise permitted pursuant toSection 6.1(b)(ix) above;
(xii)(xiii) waive, release, assign any material rights or claims or make any payment, direct or indirect, of any material liability of ColonialPost or any ColonialPost Subsidiary before the same comes due in accordance with its terms, other than in the ordinary course of business consistent with past practice or as otherwise expressly permitted by thisSection 6.1(b);
(xiii)(xiv) subject toSection 7.8, except with respect to the matters set forth on ScheduleSection 6.1(b)(xiii)(xiv) of the ColonialPost Disclosure Letter, waive, release, assign, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that (A) with respect to the payment of monetary damages, involve only the payment of monetary damages (excluding any portion of such payment payable under an existing property-level insurance policy) that do not exceed $500,000 individually or $1,000,000$3,000,000 in the aggregate, (B) do not involve the imposition of any material injunctive relief against ColonialPost or any ColonialPost Subsidiary, (C) do not provide for any admission of material liability by ColonialPost or any of the ColonialPost Subsidiaries, and (D) with respect to any legal Action involving any present, former or purported holder or group of holders of Colonialshares of Post Common SharesStock or ColonialPost OP Units, in accordance withSection 7.8;
(xiv)(xv) except as required by applicable Law or as set forth on Section 6.1(b)(xiv)(xv) of the ColonialPost Disclosure Letter, (A) hire any officer (with a title of senior vice president or higher) of ColonialPost or promote or appoint any Person to a position of officer (with a title of senior vice president or higher) of ColonialPost (other than to replace
any officer that departs after the date of this Agreement), in each case without consultation with the MAA Board, (B) increase in any manner the amount, rate or terms of compensation or benefits of any of Colonial’s trusteesPost’s directors or officers not required by any plan or arrangement as in effect on the date hereof, (C) enter into, adopt, amend or terminate any employment, bonus, severance or retirement contract or other compensation or ColonialPost Employee Benefit Plan or any Employee Benefit Plan that if entered into or adopted would be a ColonialPost Employee Benefit Plan, (D) accelerate the vesting or payment of any award under the ColonialPost Equity Incentive Plans or of any other compensation or benefits, or (E) grant any awards under the ColonialPost Equity Incentive Plans or any bonus, incentive, performance or other compensation plan or arrangement, other than, with respect
to clauses (C) and (E) (as to non-equity awards only), increases in salary in the ordinary course of business and consistent with past practice in the case of non-officer employees, or in connection with any non-officer employee hires or the promotion of any non-officer employees, consistent with past practice;
(xv)(xvi) fail to maintain all financial books and records in all material respects in accordance with GAAP (or any interpretation thereof) or make any material change to its methods of accounting in effect at December 31, 2012,2015, except as required by a change in GAAP (or any interpretation thereof) or in applicable Law, or make any change, other than in the ordinary course of business consistent with past practice, with respect to accounting policies, principles or practices unless required by GAAP or the SEC;
(xvi)(xvii) enter into any new line of business;
(xvii)(xviii) fail to duly and timely file all material reports and other material documents required to be filed with any Governmental Authority, subject to extensions permitted by Law or applicable rules and regulations;
(xviii)(xix) except as set forth in Section 6.1(b)(xviii)(xix) of the ColonialPost Disclosure Letter, enter into or modify in a manner adverse to ColonialPost or MAA any ColonialPost Tax Protection Agreement, make, change or rescind any material election relating to Taxes, change a material method of Tax accounting, amend any material income Tax Return, settle or compromise any material federal, state, local or foreign Tax liability, audit, claim or assessment, enter into any material closing agreement related to Taxes, or knowingly surrender any right to claim any material Tax refund, except, in each case, (A) to the extent required by Law or (B) to the extent necessary (x) to preserve Colonial’sPost’s qualification as a REIT under the Code or (y) to qualify or preserve the status of any ColonialPost Subsidiary as a disregarded entity or partnership for United StatesU.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be;
(xix)(xx) adopt a plan of merger, complete or partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization, except in connection with any ColonialPost Pending Acquisitions permitted pursuant toSection 6.1(b)((vii)vii) and in a manner that would not reasonably be expected (A) to be materially adverse to ColonialPost or (B) to prevent or impair the ability of ColonialPost to consummate the Mergers;
(xx)(xxi) form any new funds or joint ventures;ventures, except for wholly-owned subsidiaries;
(xxi)(xxii) except (A) pursuant to Colonial’sPost’s budget previously provided to MAA, (B) capital expenditures necessary to repair any casualty losses in an amount up to $2,000,000$5,000,000 in the aggregate or to the extent such losses are covered by existing insurance, and (C) capital expenditures in the ordinary course of business consistent with past practice necessary to comply with applicable Law or to repair and/or prevent damage to any of the ColonialPost Properties or as is necessary in the event of an emergency situation, after prior notice to MAA (provided, that if the nature of such emergency renders prior notice to MAA impracticable, ColonialPost shall provide notice to MAA as promptly as reasonably practicable after making such capital expenditure), make or commit to make any capital expenditures in excess of $500,000 individually or $1,000,000$3,000,000 in the aggregate;
(xxii)(xxiii) (A) amend or modify the compensation terms or any other obligations of Colonial contained in the engagement letter with the financial advisor referred to inSection 4.234.21 in a manner materially adverse to Colonial,Post, any ColonialPost Subsidiary or MAA, or (B) engage other financial advisors in connection with the transactions contemplated by this Agreement;Agreement unless the directors of Post have concluded in good faith (after consultation with outside legal
counsel) that failure to engage another financial advisor would be inconsistent with their fiduciary duties under applicable Law; (xxiv) take any action, or fail to take any action, which action or failure would reasonably be expected to cause Post or any Post REIT Subsidiary to fail to qualify as a REIT; (xxv) except to the extent permitted bySection 7.4, take any action that would reasonably be expected to prevent or delay the consummation of transactions contemplated by this Agreement; or(xxiii)Index to Financial Statements
(xxiv)(xxvi) authorize, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
(c) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit (i) ColonialPost from taking any action, at any time or from time to time, that in the reasonable judgment of the ColonialPost Board, upon advice of counsel to Colonial,Post, is necessary for ColonialPost to avoid or to continue to avoid incurring entity-level income or excise Taxes under the Code or to maintain its qualification as a REIT under the Code for any period or portion thereof ending on or prior to the PartnershipParent Merger Effective Time, including making dividend or other distribution payments in accordance withSection 7.19to shareholders of ColonialPost in accordance with this Agreement or otherwise, or to qualify or preserve the status of any ColonialPost Subsidiary as a disregarded entity or partnership for United StatesU.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be; and (ii) ColonialPost LP from taking any action, at any time or from time to time, as ColonialPost LP determines to be necessary to: (A) be in compliance at all times with all of its obligations under any ColonialPost Tax Protection Agreement, and (B) avoid liability for any indemnification or other payment under any ColonialPost Tax Protection Agreement.
Section 6.2Conduct of Business by MAA.
(a) Each MAA Party covenants and agrees that, during the Interim Period, except to the extent required by Law, as may be consented to in writing by ColonialPost (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly required or permitted pursuant to this Agreement, or as set forth in Section 6.2(a) or Section 6.2(b) of the MAA Disclosure Letter, the MAA Parties shall, and shall cause each of the other MAA Subsidiaries to, (i) conduct its business in all material respects in the ordinary course and in a manner consistent with past practice, and (ii) use its commercially reasonable efforts to (A) maintain its material assets and properties in their current condition (normal wear and tear)tear excepted), (B) preserve intact in all material respects its current business organization, goodwill, ongoing businesses and significant business relationships, with third parties, (C) provided it does not require additional compensation, keep available the services of its present officers, (D) maintain all MAA Insurance Policies, and (E) maintain the status of MAA as a REIT.
(b) Without limiting the foregoing, each MAA Party covenants and agrees that, during the Interim Period, except to the extent required by Law, as may be consented to in writing by ColonialPost (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly contemplated, required or permitted (including as otherwise permitted by thisSection 6.2(b)) pursuant to this Agreement, or as set forth in Section 6.2(a) or Section 6.2(b) of the MAA Disclosure Letter, the MAA Parties shall not, and shall not cause or permit any other MAA Subsidiary to, do any of the following:
(i) amend or propose to amend (A) the MAA Charter (other than amendments to the MAA Charter that increase the number of authorized shares of MAA Common Stock to 145,000,000 and provide for the MAA Series I Preferred Stock) or MAA Bylaws, (B) the MAA LP Agreement (other than any amendment necessary to effect the Partnership Merger, the Parent Merger or the other transactions contemplated hereby) or certificate of limited partnership of MAA LP or (C) such equivalent organizational or governing documents of any MAA Subsidiary material to MAA and the MAA Subsidiaries, considered as a whole, if such amendment would be materially adverse to MAA or Colonial or (D) grant any additional waivers to the stock ownership limit under the MAA Charter;Post; except as set forth on Section 6.2(b)(i) of the MAA Disclosure Letter;
(ii) split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of MAA or any MAA Subsidiary (other than any wholly-ownedwholly owned MAA Subsidiary);
(iii) declare, set aside or pay any dividend on or make any other distributions (whether in cash, stock, property or otherwise) with respect to shares of capital stock of MAA or any MAA Subsidiary or other equity securities or ownership interests in MAA or any MAA Subsidiary, except for (A) the declaration and payment by MAA of regular quarterly dividends aggregated and paid quarterly in accordance with past practice at a rate not to exceed $0.695 per quarter (it being agreed that the timing of any such quarterly dividends will be coordinated so that, if either the holders of MAA Common Stock or the holders of Colonial Common Shares receive a dividend for a particular quarter prior to the Closing Date, then the holders of Colonial Common Shares and the holders of MAA Common Stock, respectively, shall receive a dividend for such quarter prior to the Closing Date;provided,however,
that the record and payment dates for MAA’s dividends pursuant to thisSection 6.2(b)(7.19iii) shall be the same as Colonial’s record and payment dates, to the extent that such dates were not declared prior to the date of this Agreement), (B) the regular distributions that are required to be made in respect of the MAA OP Units in connection with any dividends paid on the MAA Common Stock, (C) the declaration, andset-aside or payment of dividends or other distributions to MAA by any directly or indirectly wholly owned MAA Subsidiary to MAA or any other MAA Subsidiary, and (D) distributions by any MAA Subsidiary that is not wholly owned, directly or indirectly, by MAA, in accordance with the requirements of the organizational documents of such MAA Subsidiary;provided,however, that, notwithstanding anything herein to the contrary, MAA and any MAA Subsidiary shall be permitted to make (or increase) distributions, including under Sections 858 or 860 of the Code, reasonably necessary for MAA to maintain its status as a REIT under the Code and/or avoid or reduce the imposition of any entity-level income or excise Tax under the Code;
(iv) redeem, repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock or other equity interests of MAA or a MAA Subsidiary, other than (A) the acquisition by MAA of shares of MAA Common Stock in connection with the surrender of shares of MAA Common Stock by holders of MAA Options in order to pay the exercise price of the MAA Option in connection with the exercise of MAA Options, (B) the repurchase of MAA “excess shares” pursuant to the MAA Charter, (C) the withholding of shares of MAA Common Stock to satisfy withholding Tax obligations with respect to outstanding awards granted pursuant to the MAA Equity Incentive Plans, and (D) of MAA OP Units under the MAA LP Agreement;
(v) except for (A) transactions among MAA and one or more wholly owned MAA Subsidiaries or among one or more wholly owned MAA Subsidiaries, (B) issuances of MAA Common Stock upon the exercise or settlement of any MAA Option outstanding as of the date of this Agreement and issuances of equity or equity based awards under the MAA Equity Incentive Plans, MAA’s Employee Stock Purchase Plan or MAA’s Dividend Reinvestment and Stock Purchase Plan in the ordinary course of business consistent with past practice, (C) exchanges of MAA OP Units for shares of MAA Common Stock, in accordance with the MAA LP Agreement, (D) the issuance of MAA OP Units contemplated bySection 7.18, (E) as otherwise contemplated inSection 6.2(b)(vi), or (F) in an underwritten public offering for cash, issue, sell, pledge, dispose, encumber or grant any shares of MAA’s or any of the MAA Subsidiaries’ capital stock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of MAA’s or any of the MAA Subsidiaries’ capital stock or other equity interests;
(vi) except to the extent required under any MAA Equity Incentive Plan, grant, confer, award, or modify the terms of any MAA Option or take any action not required under the MAA Equity Incentive Plans or not contemplated by this Agreement;
(vii) acquire or agree to acquire or make any loans to, advances or capital contributions to, or investments in (including by merger, consolidation or acquisition of stock or assets) any joint venture, real property, personal property (other than personal property at a total cost of less than $1,000,000 in the aggregate), corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof except (A) acquisitionsthat would, or would reasonably be expected to, prevent or materially impair the ability of the MAA Parties to consummate the Mergers before the Outside Date or (B) having, in the aggregate, a fair market value at the time of acquisition in excess of $1,000,000,000;
(vi) waive, release, assign, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that (A) do not involve the imposition of injunctive relief against MAA or any MAA Subsidiary, (B) do not provide for any admission of material liability by MAA or any wholly owned MAA Subsidiary of or from an existing wholly owned MAA Subsidiary, (B) the pending acquisitions set forth on Section 6.2(b)(vii) of the MAA Disclosure Letter (the “Subsidiaries, and (C) with respect to any legal Action involving any present, former or purported holder or group of holders of the MAA Pending Acquisitions”), (C) transactions conductedCommon Stock or MAA OP Units, are in accordance withSection 1031 of the Code in connection with acquisitions or dispositions otherwise permitted pursuant to this Agreement, including purchases of property with funds held by a qualified intermediary or other agent serving in a similar capacity, provided notice is provided to MAA prior to consummation of such transactions, or (D) in the ordinary course of business consistent with past practice not to exceed the amount of remaining acquisition activity (after taking into account all other transactions permitted under this Section 6.2(b)(vii)) included in the assumptions accompanying MAA’s 2013 guidance as publicly disclosed prior to the date of this Agreement;
(viii)(vii) sell, mortgage, pledge, lease, assign, transfer, dispose of or encumber, or effect a deed in lieu of foreclosure with respect to, any property or assets, except (A) as set forth on Section 6.2(b)(viii)that would, or would reasonably be expected to, prevent or materially impair the ability of the MAA Disclosure Letter (provided, that no such sale, pledge, transfer or other distribution would result in MAA or any MAA Subsidiary making (or increasing) distributions in excess of MAA’s regular quarterly dividend in order for MAAParties to maintain its status as a REIT underconsummate the Code and/or avoid or reduce the imposition of any entity-level income or excise Tax under the Code for any taxable year ending on orMergers before the Parent Merger), (B) by MAA, or any wholly-owned MAA Subsidiary, with, to or from any existing wholly-owned MAA Subsidiary, (C) subject to Section 6.2(b)(viii)(C) of the MAA Disclosure Letter, in the ordinary course of business consistent with past practice not to exceed the amount of remaining disposition activity (after taking into account all other transactions permitted under this Section 6.2(b)(viii)) included in the assumptions accompanying MAA’s 2013 guidance as publicly disclosed prior to the date of this Agreement, and (D) pledges or encumbrances of direct or indirect equity interests in entities from time to time under MAA’s existing revolving credit facility that (1) acquire properties that are the subject of MAA Pending Acquisitions, or (2) are not currently included in MAA’s borrowing base under MAA’s existing revolving credit facility and are set forth on Section 6.2(b)(viii) of the MAA Disclosure Letter;Outside Date;
(ix)(viii) incur, create, assume, refinance, replace or prepay any Indebtedness for borrowed money or issue or amend the terms of any debt securities of MAA or any of the MAA Subsidiaries, or assume, guarantee or endorse, or otherwise become responsible (whether directly, contingently or otherwise) for the Indebtedness of any other Person (other than a wholly owned MAA Subsidiary), except (A) Indebtedness incurred under MAA’s existing revolving credit facility for working capital purposes in that would, or would reasonably be expected to, prevent or materially impair the ordinary course of business consistent with past practice (including to the extent necessary to pay dividends permitted bySection 6.2(b)(iii)), (B) Indebtedness incurred in connection with the funding of any transactions permitted by thisSection 6.2(b), (C) refinancing of any existing Indebtedness (provided, that the terms of such new Indebtedness shall not be materially more onerous on MAA compared to the existing Indebtedness and the principal amount of such replacement Indebtedness shall not be materially greater than the Indebtedness it is replacing); (D) any additional Indebtedness in an amount that, in the aggregate, does not exceed $7,500,000; and (E) as set forth on Section 6.2(b)(ix)ability of the MAA Disclosure Letter.Parties to consummate the Mergers before the Outside Date;
(x)(ix) make any loans, advances or capital contributions to, or investments in, any other Person (including to any of its officers, directors,trustees, Affiliates, agents or consultants), make any change in its existing borrowing or lending arrangements for or on behalf of such Persons, or enter into any “keep well” or similar agreement to maintain the financial condition of another entity other than (A) by MAAthat would, or a wholly owned MAA Subsidiarywould reasonably be expected to, MAAprevent or a wholly owned MAA Subsidiary, and (B) loans or advances required to be made under anymaterially impair the ability of the MAA Leases, ground leases pursuantParties to which any third party is a lessee or sublessee on any MAA Property or any existing joint venture arrangements to which a MAA Subsidiary is a party as ofconsummate the date hereof;Mergers before the Outside Date;
(xi)(x) enter into, renew, modify, amend or terminate or waive, release, compromise or assign any rights or claims under, any MAA Material Contract (or any contract that, if existing as of the date hereof, would be a MAA Material Contract), other than (A) any termination that would, or renewal in accordance withwould reasonably be expected to, prevent or materially impair the terms of any existing MAA Material Contract, (B) the entry into any modification or amendment of, or waiver or consent under, any mortgage or related agreement to which MAA or any MAA Subsidiary is a party as required or necessitated by this Agreement or the transactions contemplated hereby;provided, that any such modification, amendment, waiver or consent does not increase the principal amount thereunder or otherwise materially adversely affect MAA, (C) the entry into any commercial leases in the ordinary course of business, (D) any renewal of anyability of the MAA Insurance Policies upon its scheduled termination on substantiallyParties to consummate the same terms as currently in effect, (E) as may be reasonably necessary to comply with the terms of this Agreement or (F) as otherwise expressly permitted by thisSection 6.2(b);
(xii) waive, release, assign any material rights or claims or make any payment, direct or indirect, of any liability of MAA or any MAA SubsidiaryMergers before the same comes due in accordance with its terms, other than in the ordinary course of business consistent with past practice or as otherwise expressly permitted by thisSection 6.2(b);Outside Date;
(xiv) except as required by applicable Law, or as set forth on Section 6.2(b)(xiv) of the MAA Disclosure Letter, (A) hire any officer (with a title of senior vice president or higher) of MAA or promote or appoint any Person to a position of officer (with a title of senior vice president or higher) of MAA (other than to replace any officer that departs after the date of this Agreement), in each case without consultation with the Colonial Board, (B) increase in any manner the amount, rate or terms of compensation or benefits of any of MAA’s directors or officers not required by any plan or arrangement as in effect on the date hereof, (C) enter into, adopt, amend or terminate any employment, bonus, severance or retirement contract or other compensation or MAA Employee Benefit Plan other than in the ordinary course of business and subject to the limitations set forth in clause (E) below, (D) accelerate the vesting or payment of any award under the MAA Equity Incentive Plans or of any other compensation or benefits except pursuant to the existing terms of any MAA Benefit Plan or other agreement in effect as of the date hereof, (E) except with respect to cash bonuses not to exceed $2,500,000 in the aggregate and the granting of up awards with respect to 15,000 shares in the aggregate, grant any awards under the MAA Equity Incentive Plans or any bonus, incentive, performance or other compensation plan or arrangement, or (F) increase the size of the MAA Board beyond seven directors, except as contemplated inSection 2.5, other than, with respect to clauses (C) and (E) (as to non-equity awards only), increases in salary in the ordinary course of business and consistent with past practice in the case of non-officer employees, or in connection with any non-officer employee hires or the promotion of any non-officer employees, consistent with past practice;
(xv)(xi) fail to maintain all financial books and records in all material respects in accordance with GAAP (or any interpretation thereof) or make any material change to its methods of accounting in effect at December 31, 2012,2015, except as required by a change in GAAP (or any interpretation thereof) or in applicable Law, or make any change, other than in the ordinary course of business consistent with past practice, with respect to accounting policies, principles or practices unless required by GAAP or the SEC;
(xvi)(xii) enter into any new line of business;
(xvii)(xiii) fail to duly and timely file all material reports and other material documents required to be filed with any Governmental Authority, subject to extensions permitted by Law or applicable rules and regulations;
(xviii) except as set forth in Section 6.2(b)(xviii) of the MAA Disclosure Letter,(xiv) enter into, or modify in a manner adverse to MAA or Colonial,Post, any MAA Tax Protection Agreement, make, change or rescind any material election relating to Taxes, change a material method of Tax accounting, amend any material income Tax Return, settle or compromise any material federal, state, local or foreign Tax liability, audit, claim or assessment, enter into any material closing agreement related to Taxes, or knowingly surrender any right to claim any material Tax refund, except, in each case, (A) to the extent required by Law or (B) to the extent necessary (x) to preserve MAA’s qualification as a REIT under
the Code or (y) to qualify or preserve the status of any MAA Subsidiary as a disregarded entity or partnership for United StatesU.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be;
(xix)(xv) adopt a plan of merger, complete or partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization, except in connection with any MAA Pending Acquisitions permitted pursuant toSection 6.2(b)(vii) and in a manner that would not reasonably be expected (A) to be materially adverse to MAAPost or (B) to prevent or impair the ability of MAAPost to consummate the Mergers;
(xx)(xvi) form any new funds or joint ventures;
(xxi) except (A) pursuantventures that would, or would reasonably be expected to, MAA’s budget previously provided to Colonial, (B) capital expenditures necessary to repair any casualty losses in an amount up to $2,000,000prevent or tomaterially impair the extent such losses are covered by existing insurance, and (C) capital expenditures in the ordinary course of business consistent with past practice necessary to repair and/or prevent damage to anyability of the MAA PropertiesParties to consummate the Mergers before the Outside Date;
(xvii) take any action, or fail to take any action, which action or failure would, or would reasonably be expected to cause MAA to fail to qualify as is necessary in the event of an emergency situation, after prior notice to Colonial (provided, that if the nature of such emergency renders prior notice to Colonial impracticable, MAA shall provide notice to Colonial as promptly as reasonably practicable after making such capital expenditure), make or commit to make any capital expenditures in excess of $500,000 individually or $1,000,000 in the aggregate;a REIT;
(xxii) amend or modify the compensation terms or any other obligations of MAA contained in the engagement letter with JP Morgan a manner materially adverse to MAA, any MAA Subsidiary or Colonial or engage other financial advisors in connection with the transactions contemplated by this Agreement;
(xxiii)(xviii) except to the extent permitted bySection 7.4, take any action that would reasonably be expected to prevent or delay the consummation of transactions contemplated by this Agreement; or
(xxiv)(xix) authorize, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
(c) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit (i) MAA from taking any action, at any time or from time to time, that in the reasonable judgment of the MAA Board, upon advice of counsel to MAA, is necessary for MAA to avoid or to continue to avoid incurring entity-level income or excise Taxes under the Code or to maintain its qualification as a REIT under the Code for any period or portion thereof ending on or prior to the PartnershipParent Merger Effective Time, including making dividend or other distribution payments in accordance withSection 7.19 to shareholders of MAA in accordance with this Agreement or otherwise, or to qualify or preserve the status of any MAA Subsidiary as a disregarded entity or partnership for United StatesU.S. federal income tax purposes or as a Qualified REIT Subsidiary or a Taxable REIT Subsidiary under the applicable provisions of Section 856 of the Code, as the case may be; and (ii) MAA LP from taking any action, at any time or from time to time, as MAA LP determines to be necessary to: (A) be in compliance at all times with all of its obligations under any MAA Tax Protection Agreement, and (B) avoid liability for any indemnification or other payment under any MAA Tax Protection Agreement.
Section 6.3No Control of Other Party’sParty��s Business. Nothing contained in this Agreement shall give Colonial,Post, directly or indirectly, the right to control or direct MAA’s or any MAA Subsidiary’s operations prior to the PartnershipParent Merger Effective Time, and nothing contained in this Agreement shall give MAA, directly or indirectly, the right to control or direct Colonial’sPost’s or any ColonialPost Subsidiary’s operations prior to the PartnershipParent Merger Effective Time.
Prior to the PartnershipParent Merger Effective Time, each of ColonialPost and MAA shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1Preparation of Proxy Statement; Shareholders Meetings; Consent SolicitationShareholders’ Meetings.
(a) As promptly as reasonably practicable following the date of this Agreement, (i) ColonialPost and MAA shall jointly prepare the Joint Proxy Statement in preliminary form for inclusion in MAA’s Form S-4 to be filed by MAA with the SEC, (ii) MAA shall prepare and cause to be filed with the SEC the Form S-4 with respect to the MAA Common Stock and the MAA Series I Preferred Stock issuable in the Parent Merger, which will include the Joint Proxy Statement with respect to the ColonialPost Shareholder Meeting and MAA Shareholder Meeting, (iii) MAA shall prepare the consent solicitation statement with respect to the MAA Partner Approval (the “MAA Consent Solicitation”) and (iv)(iii) MAA shall prepare and cause to be submitted to the NYSE the application and other agreements and documentation necessary for the listing of the MAA Common Stock and MAA Series I Preferred Stock issuable in the Parent Merger on the NYSE. Each of ColonialPost and MAA shall use its reasonable best efforts to (v)(w) have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing, (w)(x) ensure that the Form S-4 complies in all material respects with the applicable provisions of the Exchange Act or Securities Act, (x)(y) mail or deliver the Joint Proxy Statement to its respective shareholders as promptly as practicable after the Form S-4 is declared effective and (y)(z) keep the Form S-4 effective for so long as necessary to complete the Mergers. MAA shall use its reasonable best efforts to mail or deliver the MAA Consent Solicitation concurrently with the mailing of the Joint Proxy Statement. MAA shall use its reasonable best efforts to have the application for the listing of the MAA Common Stock and the MAA Series I Preferred Stock accepted by the NYSE as promptly as is practicable following submission. Each of ColonialPost and MAA shall furnish all information as may be reasonably requested concerning itself, its Affiliates and the holders of its capital stock to the other and provide such other assistance as may be reasonably requested in connection with the preparation, filing and distribution of the Form S-4 and Joint Proxy Statement and the preparation and filing of the NYSE listing application. Each of Colonial LP and MAA LP shall furnish all information as may be reasonably requested concerning itself, its Affiliates and the holders of its partnership interests to the other and provide such other assistance as may be reasonably requested in connection with the preparation and distribution of the MAA Consent Solicitation. The Form S-4, the Joint Proxy Statement the MAA Consent Solicitation and the NYSE listing application shall include all information reasonably requested by such other Party to be included therein. Each of ColonialPost and MAA shall promptly notify the other upon the receipt of any comments from the SEC or the NYSE or any request from the SEC for amendments or supplements to the Form S-4 or Joint Proxy Statement or from the NYSE for amendments ofor supplements to the NYSE listing application, and shall, as promptly as practicable after receipt thereof, provide the other with copies of all correspondence between it and its Representatives, on one hand, and the SEC or the NYSE, on the other hand, and all written comments with respect to the Joint Proxy Statement or the Form S-4 received from the SEC or to the NYSE listing application from the NYSE and advise the other Party of any oral comments with respect to the Joint Proxy Statement or the Form S-4 received from the SEC or to the NYSE listing application from the NYSE. Each of ColonialPost and MAA shall use its reasonable best efforts to respond as promptly as practicable to any comments from the SEC with respect to the Joint Proxy Statement, and MAA shall use its reasonable best efforts to respond as promptly as practicable to any comment from the SEC with respect to the Form S-4 and to any comments from the NYSE with respect to the NYSE listing application. Notwithstanding the foregoing, prior to (x) filing the Form S-4 (or any amendment or supplement thereto) or mailing the Joint Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, or (y) submitting the NYSE listing application to the NYSE or responding to any comments of the NYSE with respect thereto, or (z) mailing the MAA Consent Solicitation (or any amendment or supplement thereto), each of ColonialPost and MAA shall cooperate and provide the other a reasonable opportunity to review and comment on such document or response (including the proposed final version of such document or response) and shall give reasonable and good faith consideration to any comments thereon made by the other Party or its counsel and, with respect to clause (x) above, each of ColonialPost and MAA also shall have consented to the filing and mailing contemplated therein (which consent shall not be unreasonably withheld, conditioned or delayed). MAA shall advise Colonial,Post, promptly after it receives notice thereof, (A) of the time of effectiveness of the Form S-4, the
issuance of any stop order relating thereto or the suspension of the qualification of the MAA Common Stock and MAA Series I Preferred Stock issuable in connection with the Parent Merger for offering or sale in any
jurisdiction, and MAA shall use its reasonable best efforts to have any such stop order or suspension lifted, reversed or otherwise terminated and (B) of the time the NYSE listing application is accepted. MAA shall take any other action required to be taken under the Securities Act, the Exchange Act, NYSE rules and regulations, any applicable foreign or state securities or “blue sky” Laws and the rules and regulations thereunder in connection with the issuance of the MAA Common Stock and the MAA Series I Preferred Stock in the Parent Merger, and ColonialPost shall furnish all information concerning ColonialPost and the holders of the ColonialPost Common SharesStock as may be reasonably requested in connection with any such actions. MAA shall also take any other action required to be taken under the Securities Act, any applicable foreign or state securities or “blue sky” Laws and the rules and regulations thereunder in connection with the issuance of the New MAA OP Units in the Partnership Merger, and ColonialPost shall furnish all information concerning Colonial, ColonialPost, Post LP and the holders of the ColonialPost OP Units as may be reasonably requested in connection with any such actions.
(b) If, at any time prior to the receipt of the ColonialPost Shareholder Approval or the MAA Shareholder Approval, any information relating to ColonialPost or MAA, or any of their respective Affiliates, should be discovered by ColonialPost or MAA which, in the reasonable judgment of ColonialPost or MAA, should be set forth in an amendment of, or a supplement to, any of the Form S-4 or the Joint Proxy Statement, so that any of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party which discovers such information shall promptly notify the other Parties hereto, and ColonialPost and MAA shall cooperate in the prompt filing with the SEC of any necessary amendment of, or supplement to, the Joint Proxy Statement or the Form S-4 and, to the extent required by Law, in disseminating the information contained in such amendment or supplement to shareholders of ColonialPost and the shareholders of MAA. If, at any time prior to the receipt of the MAA Partner Approval, any information relating to Colonial or MAA, or any of their respective Affiliates, should be discovered by Colonial or MAA which, in the reasonable judgment of MAA, should be set forth in an amendment of, or a supplement to, the MAA Consent Solicitation, so that the MAA Consent Solicitation would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party which discovers such information shall promptly notify the other Parties hereto, and Colonial and MAA shall cooperate in the prompt amendment of, or supplement to, the MAA Consent Solicitation and, to the extent required by Law, in disseminating the information contained in such amendment or supplement to holders of MAA OP Units. For purposes ofSection 4.15,Section 5.15 and thisSection 7.1, any information concerning or related to Colonial,Post, its Affiliates or the ColonialPost Shareholder Meeting will be deemed to have been provided by Colonial,Post, and any information concerning or related to MAA, its Affiliates or the MAA Shareholder Meeting will be deemed to have been provided by MAA. Nothing in thisSection 7.1(b) shall limit the obligations of any Party underSection 7.1(a).
(c) Subject to the exercise of Colonial’sPost’s rights with respect to a Superior Proposal underSection 7.4, ColonialPost shall, in accordance in all material respects with applicable Law and the Colonial DeclarationPost Articles of TrustIncorporation and ColonialPost Bylaws, establish a record date for, duly call, give notice of, convene and hold the ColonialPost Shareholder Meeting. ColonialPost shall use its reasonable best efforts to cause the Joint Proxy Statement to be mailed to the shareholders of ColonialPost entitled to vote at the ColonialPost Shareholder Meeting and, subject to the exercise of Colonial’sPost’s rights with respect to a Superior Proposal underSection 7.4, to hold the ColonialPost Shareholder Meeting as soon as practicable after the Form S-4 is declared effective under the Securities Act. ColonialAct;provided that in no event shall Post be required to hold the Post Shareholder Meeting prior to the thirty-fifth (35th) day following the date hereof. Post shall, through the ColonialPost Board, recommend to its shareholders that they vote in favor of the Parent Merger as contemplated by the Plan of Merger, include such recommendation in the Joint Proxy Statement and solicit and use its reasonable best efforts to obtain the ColonialPost Shareholder Approval, except to the extent that the ColonialPost Board shall have made a Change in ColonialPost Recommendation as permitted bySection 7.4(b) and subject to the exercise of Colonial’sPost’s rights with respect to a Superior Proposal underSection 7.4. Notwithstanding the foregoing provisions of thisSection 7.1(c), if, on a date for which the Colonial Shareholder Meeting is scheduled, Colonial has not received proxies representing a sufficient number of Colonial Common Shares to obtain the Colonial Shareholder
Approval, whether or not a quorum is present, ColonialPost shall have the right to make one or more successive postponements or adjournments of the Colonial Shareholder Meeting;provided, that the ColonialPost Shareholder Meeting is not postponed(i) for the absence of a quorum, (ii) to allow reasonable additional time for the filing and mailing of any supplemental or adjourned to a date that is more than thirty (30) days after the date foramended disclosure which the ColonialPost Board has determined in good faith after consultation with outside counsel is reasonably necessary under Law and for such supplemental or amended disclosure to be disseminated and reviewed by Post’s shareholders prior to the Post Shareholder Meeting, was originally scheduled (excluding any postponement(iii) to allow reasonable additional time to solicit additional proxies to the extent Post reasonably believes necessary in order to obtain the Post Shareholder Approval or adjournments(iv) if otherwise reasonably required by applicable Law).Law or if the directors of Post have determined in good faith after consultation with outside counsel that failure to do so would be inconsistent with their fiduciary duties under applicable Law.
(d) Subject to the exercise of MAA’s rights with respect to a Superior Proposal underSection 7.4, MAA shall, in accordance in all material respects with applicable Law and the MAA Charter and MAA Bylaws,
establish a record date for, duly call, give notice of, convene and hold the MAA Shareholder Meeting. MAA shall use its reasonable best efforts to cause the Joint Proxy Statement to be mailed to the shareholders of MAA entitled to vote at the MAA Shareholder Meeting and, subject to the exercise of MAA’s rights with respect to a Superior Proposal underSection 7.4, to hold the MAA Shareholder Meeting as soon as practicable after the Form S-4 is declared effective under the Securities Act.Act;provided that in no event shall MAA be required to hold the MAA Shareholder Meeting prior to the thirty-fifth (35th) day following the date hereof. MAA shall, through the MAA Board, recommend to its shareholders that they vote in favor of the Parent Merger, include such recommendation in the Joint Proxy Statement, and solicit and use its reasonable best efforts to obtain the MAA Shareholder Approval, except to the extent that the MAA Board shall have made a Change in MAA Recommendation as permitted bySection 7.4(b) and subject to the exercise of MAA’s rights with respect to a Superior Proposal underSection 7.4. Notwithstanding the foregoing provisions of thisSection 7.1(d)7.1(d), if, on a date for which the MAA Shareholder Meeting is scheduled, MAA has not received proxies representing a sufficient number of shares of MAA Common Stock to obtain the MAA Shareholder Approval, whether or not a quorum is present, MAA shall have the right to make one or more successive postponements or adjournments of the MAA Shareholder Meeting;provided, thatMeeting (i) for the absence of a quorum, (ii) to allow reasonable additional time for the filing and mailing of any supplemental or amended disclosure which the MAA Board has determined in good faith after consultation with outside counsel is reasonably necessary under Law and for such supplemental or amended disclosure to be disseminated and reviewed by MAA’s shareholders prior to the MAA Shareholder Meeting, is not postponed or adjourned(iii) to a date that is more than thirty (30) days afterallow reasonable additional time to solicit additional proxies to the date for whichextent MAA reasonably believes necessary in order to obtain the MAA Shareholder Meeting was originally scheduled (excluding any postponementsApproval or adjournments(iv) if otherwise reasonably required by applicable Law).Law or if the directors of MAA have determined in good faith after consultation with outside counsel that failure to do so would be inconsistent with their fiduciary duties under applicable Law.
(e) Subject to the exercise of Colonial’sPost’s or MAA’s rights with respect to a Superior Proposal underSection 7.4, ColonialPost and MAA will use their respective reasonable best efforts to hold the ColonialPost Shareholder Meeting and the MAA Shareholder Meeting on the same date and as soon as reasonably practicable after the date of this Agreement.Agreement;provided that in no event shall Post or MAA be required to hold the Post Shareholder Meeting or MAA Shareholder Meeting, as applicable, prior to the thirty-fifth (35th) day following the date hereof.
Section 7.2Access to Information.
(a) During the Interim Period, to the extent permitted by applicable Law and contracts, and subject to reasonable restrictions described in writing imposed from time to time upon advice of counsel, each of ColonialPost and MAA shall, and shall cause each of the ColonialPost Subsidiaries and the MAA Subsidiaries, respectively, to, afford to the other Party and to the Representatives of such other Party reasonable access during normal business hours and upon reasonable advance notice to all of their respective properties, offices, books, contracts, commitments, personnel and records and, during such period, each of ColonialPost and MAA shall, and shall cause each of the ColonialPost Subsidiaries and the MAA Subsidiaries, respectively, to, (i) furnish reasonably promptly to the other Party a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of U.S. federal or state securities Laws, and (ii) furnish, upon reasonable request, all other information (financial or otherwise) concerning its business, properties and personnel as such other Party may reasonably request. No representation or warranty as to the accuracy of information provided pursuant to thisSection 7.2 is made and the Parties may not rely on the accuracy of such information except to the extent expressly set forth in the representations and warranties included inArticle IV orArticle V, and no investigation under thisSection 7.2 or otherwise shall affect any of the representations and warranties of the ColonialPost Parties or of the MAA Parties, respectively, contained in this Agreement or any condition to the obligations of the Parties under this Agreement. Notwithstanding the foregoing, neither ColonialPost nor MAA shall be required by thisSection 7.2 to provide the other Party or the Representatives of such other Party with access to or to disclose information (x)(A) that is subject to the terms of a confidentiality agreement with a third party entered into prior to the date of this Agreement or entered into after the date of this Agreement in the ordinary course of business consistent with past practice (if ColonialPost or MAA, as applicable, has used reasonable best efforts to obtain
permission or consent of such third party to such disclosure), (y)(B) the disclosure of which would violate any Law or legal or contractual duty of the Party or any of its Representatives, or (z)(C) that is subject to any attorney-client, attorney work product or other legal privilege or would cause a risk of a loss of privilege to the disclosing Party.Party or (D) if it reasonably
determines that such access is reasonably likely to disrupt materially or impair or interfere with its, or its Subsidiaries’, business or operations;provided that the Parties will work in good faith to determine a means to provide access that will not disrupt materially or impair or interfere with such business or operations. Each of ColonialPost and MAA will use its reasonable best efforts to minimize any disruption to the businesses of the other Party that may result from the requests for access, data and information hereunder. Prior to the PartnershipParent Merger Effective Time, each of the ColonialPost Parties and each of the MAA Parties shall not, and shall cause their respective Representatives and Affiliates not to, contact or otherwise communicate with parties with which the other Party has a business relationship (including tenants/subtenants) regarding the business of such other Party or this Agreement and the transactions contemplated hereby without the prior written consent of such other Party (provided that, for the avoidance of doubt, nothing in thisSection 7.2(a) shall be deemed to restrict a Party and its respective Representatives and Affiliates from contacting such parties in pursuing its own business activities (operating in the ordinary course)).
(b) Each of ColonialPost and MAA will hold, and will cause its respective Representatives and Affiliates to hold, any nonpublic information, including any information exchanged pursuant to thisSection 7.2, in confidence to the extent required by and in accordance with, and will otherwise comply with, the terms of the Confidentiality Agreement, which shall remain in full force and effect pursuant to the terms thereof notwithstanding the execution and delivery of this Agreement or the termination thereof.
(c) Each of ColonialPost and MAA will give prompt written notice to the other upon becoming aware of the occurrence or impending occurrence of any event or circumstance relating to it or any of the ColonialPost Subsidiaries or the MAA Subsidiaries, respectively, which could reasonably be expected to have, individually or in the aggregate, a ColonialPost Material Adverse Effect or a MAA Material Adverse Effect, as the case may be.
(d) Each Party shall cooperate and participate, as reasonably requested by the other Party from time to time, in efforts to oversee the integration of the Parties’ operations in connection with, and taking effect upon consummation of, the Mergers subject to applicable Law, including, without limitation, providing such reports on operational matters and participating on such teams and committees as the Parties shall mutually agree.
Section 7.3Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each of the Parties hereto shall use its reasonable best efforts (subject to, and in accordance with, applicable Law) to take, or cause to be taken, all actions and to do promptly, or cause to be done promptly, and to assist and cooperate with each other in doing, all things necessary, proper or advisable under applicable Law to consummate and make effective, as promptly as practicable, the Mergers and the other transactions contemplated by this Agreement, including preparing and filing as promptly as practicable all documentation to effect all requirednecessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents necessary to consummate the Mergers and the other transactions contemplated by this Agreement. In furtherance and not in limitation of the foregoing, each of the Parties hereto agrees to use its reasonable best efforts to (i) cooperate with the other Party in determining which filings are required to be made prior to the Closing with, and which consents, clearances, approvals, permits or authorizations are required to be obtained prior to the Closing from, any Governmental Authority in connection with the execution and delivery of this Agreement and the consummation of the Mergers and the other transactions contemplated hereby and in timely making all such filings, (ii) promptly furnish the other Party, subject in appropriate cases to appropriate confidentiality agreements to limit disclosure to outside lawyers and consultants, with such information and reasonable assistance as such other Party and its Affiliates may reasonably request in connection with their preparation of necessary filings, registrations and submissions of information to any Governmental Authority with respect to this Agreement or the transactions contemplated hereby, (iii) supply as promptly as reasonably practicable and to the extent necessary any additional information and documentary material that may be requested pursuant to any applicable Laws by any Governmental Authority, and (iv) take or cause to be taken all other actions necessary, proper or advisable to obtain applicable clearances, consents, authorizations, approvals or waivers and cause the expiration or termination of the
applicable waiting periods with respect to the Mergers under any applicable Laws as promptly as reasonably practicable and, in any event, no later than the Outside Date.
(b) Subject to the terms and conditions of this Agreement, each of the Parties hereto shall, in connection with the efforts referenced inSection Index to Financial Statements
5.3(a)7.3(a), use its reasonable best efforts to: (i) cooperate in all respects with each other in connection with any investigation or other inquiry, including any proceeding initiated by a private party with respect to this Agreement or the transactions contemplated hereby; (ii) promptly notify the other Party of any material communication concerning this Agreement or any of the transactions contemplated hereby to that Party from or with any Governmental Authority and consider in good faith the views of the other Party and keep the other Party reasonably informed of the status of matters related to the transactions contemplated by this Agreement, including furnishing the other with copies of any written notices or other material communications received by such Party from, or given by such Party to, any U.S. or foreign Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby, except that any materials concerning one Party’s valuation of the other Party may be redacted; and (iii) to the extent reasonably practicable, permit the other Party to review in draft any proposed written communication to be submitted by it to any Governmental Authority with reasonable time and opportunity to comment, and consult with each other in advance of any in-person or telephonic meeting or conference with any Governmental Authority or, in connection with any proceeding by a private party with respect to this Agreement or the transactions contemplated hereby, with any other Person, and, to the extent permitted by the applicable Governmental Authority or Person, use reasonable best efforts not agree to participate in any meeting or discussion with any Governmental Authority relating to any filings or investigations concerning this Agreement or any of the transactions contemplated hereby unless it consults with the other Party and its Representatives in advance and so long as it is acceptable to the Governmental Authority invites the other Party’s Representatives to attend in accordance with applicable Laws. The Parties may, as they deem advisable and necessary, designate competitively sensitive information provided to the other under thisSection 7.3 as “outside counsel only.” Such materials and the information contained therein shall be given only to outside counsel of the recipient and will not be disclosed by such outside counsel to employees, officers, or directors of the recipient without the advance written consent of the Party providing such materials.
(c) In furtherance and not in limitation of the foregoing, subject to the terms and conditions of this Agreement, each of the Parties hereto shall (i) use its reasonable best efforts to resolve objections, if any, as may be asserted with respect to the transactions contemplated by this Agreement under any Laws, including defending any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby (including seeking to have any stay, temporary restraining order or preliminary injunction entered by any court or other Governmental Authority vacated or reversed), and (ii) take, or cause to be taken, all such further reasonable actions as may be necessary to resolve such objections, if any, as any Governmental Authority or any other Person may assert under any Law with respect to the Mergers and the other transactions contemplated hereby, and to avoid or eliminate each and every impediment under any Law so as to enable the Closing to occur as promptly as reasonably practicable and, in any event, no later than the Outside Date , including (but only with the prior written consent of the other Party) (x) proposing, negotiating, committing to and effecting, by consent decree, hold separate order or otherwise, the sale, divestiture, license or disposition of any assets of MAA, Colonial or any of their respective Subsidiaries or Affiliates, and (y) otherwise taking or committing to take any actions that after the Closing would limit the freedom of MAA, Colonial or their respective Subsidiaries’ or Affiliates’ freedom of action with respect to one or more of MAA’s, Colonial’s or their Subsidiaries’ businesses or assets, in each case as may be required in order to effect the satisfaction of the conditions to the Mergers set forth inArticle VIII and to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any suit or proceeding that would otherwise have the effect of preventing or delaying the Closing;provided,however, that neither MAA nor Colonial shall be required to become subject to, or consent or agree to or otherwise take any action with respect to, any Order, requirement, condition, understanding or agreement of or with a Governmental Authority to sell, to license, to hold separate or otherwise dispose of, or to conduct, restrict, operate, or otherwise change
their assets or businesses, unless such Order, requirement, condition, understanding or agreement is conditioned upon the occurrence of the Closing.Date. Notwithstanding the foregoing or any other provision of this Agreement, nothing in thisSection 7.3 shall limit a Party’s right to terminate this Agreement pursuant toSection 9.1 so long as such Party has, prior to such termination, been complying with its obligations under thisSection 7.3.
(d) Each of MAA and ColonialPost shall, if any Takeover Statute becomes applicable to this Agreement, the Mergers, or any other transactions contemplated hereby or thereby, grant approvals and use all reasonable best efforts to ensure that the Mergers and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby or thereby and otherwise to minimize the effect of such Takeover Statute on this Agreement, the Mergers and the other transactions contemplated hereby.
Section 7.4Acquisition Proposals; Changes in Recommendation.
(a) Each of MAAPost and ColonialMAA agrees that it shall not, nor shall it permit any of its Subsidiaries to, authorize or permit any of its officers, trustees, directors or employees to, and shall use its reasonable best efforts to cause its and its Subsidiaries’ other Representatives not to, directly or indirectly, (i) initiate, solicit or knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer by or with a Third Party with respect to (A) any merger, consolidation, share exchange, business combination or similar transaction
involving it which would result in any Person beneficially owning more than twenty percent (20%) of the outstanding voting securities of Post, Post LP, MAA or MAA LP, as the case may be, or any of its Subsidiaries,successor thereto or parent company thereof, (B) any sale, lease, exchange, mortgage, pledge, license, transfer or other disposition, directly or indirectly, by merger, consolidation, sale of equity interests, share exchange, joint venture, business combination or otherwise, of any of its assets or that of its Subsidiaries (including stock or other ownership interests of its Subsidiaries) representing more than twenty percent (20%) or more of the consolidated assets of Post and the Post Subsidiaries, or MAA and the MAA Subsidiaries, as determinedthe case may be, on a book-valueconsolidated basis, (C) any issue,issuance, sale or other disposition of (including by way of merger, consolidation, share exchange, joint venture, business combination share exchange or any similar transaction)otherwise) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing more than twenty percent (20%) of the outstanding voting securities of Post, Post LP, MAA or more of its voting power,MAA LP, as the case may be, or any successor thereto or parent company thereof, (D) any tender offer or exchange offer that, if consummated, would result in which any Person or “group” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) shall seek to acquireacquiring beneficial ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire beneficial ownership, of more than twenty percent (20%) or more of the outstanding shares of any class of itsthe outstanding voting securities of Post, Post LP, MAA or MAA LP, as the case may be, or any successor thereto or parent company thereof, (E) any recapitalization, restructuring, liquidation, dissolution or other similar type of transaction in which a Third Party shall acquire beneficial ownership of more than twenty percent (20%) or more of the outstanding sharesvoting securities of Post, Post LP, MAA or MAA LP, as the case may be, or any classsuccessor thereto or parent company thereof, or (F) a merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, reclassification, share exchange, business combination or similar transaction involving Post or MAA, as the case may be, pursuant to which the shareholders of itsPost or MAA, as the case may be, immediately preceding such transaction hold less than eighty percent (80%) of the voting securitiesequity interests in the surviving or resulting entity of such transaction (any such proposal, offer or transaction (other than a proposal or offer made by one Party to this Agreement or an Affiliate thereof) being hereinafter referred to as an “Acquisition Proposal”), (ii) engage in any negotiations concerning, or provide any confidential information or data to any person relating to an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal, (iii) approve or execute or enter into any letter of intent, agreement in principle, merger agreement, asset purchase or share exchange agreement, option agreement or other similar agreement related toproviding for any Acquisition Proposal (an “Acquisition Agreement”), or (iv) publicly propose publicly or agree to do any of the foregoing.
(b)
(i) Notwithstanding anything in this Agreement to the foregoing,contrary, the ColonialPost Board and the MAA Board shall each be permitted to take the following actions, prior to its respective meetingreceipt of shareholders to be held pursuant toSection 7.1(c)the Post Shareholder Approval or(d), MAA Shareholder Approval, as applicable, and subject to compliance with the other terms of thisSection 7.4 and to first entering into a confidentiality agreement having provisions that are no less favorable to such party than those contained in the Confidentiality Agreement, to engage in discussions and negotiations with, or provide any nonpublic information or data to, any Personeach case in response to an unsolicited bona fide written Acquisition Proposal by such Person made after the date of this Agreement (that(provided that the Acquisition Proposal by such Person did not result from a breach of thisSection 7.4 (other than an unintentional and inadvertent breach hereof that was not intended to result in an Acquisition Proposal nevertheless resulted in an Acquisition Proposal)) and which the ColonialPost Board or the MAA Board, as applicable, concludes in good faith (after consultation with outside legal counsel and financial advisors) either constitutes or is
reasonablywould likely to lead to a Superior Proposal, if and only to the extent that the directors of MAAPost or the trustees of Colonial,MAA, as applicable, conclude in good faith (after consultation with outside legal counsel) that failure to do so would be inconsistent with their fiduciary duties under applicable Law. ColonialLaw: (A) engage in discussions and negotiations regarding such Acquisition Proposal, (B) provide any nonpublic information or data to the Person who made such Acquisition Proposal after entering into an Acceptable Confidentiality Agreement (as defined below) with such Person, and (C) effect any nonappealable, final action that any court of competent jurisdiction orders Post or MAA, as applicable, to take;provided,however, that MAA or Post, as applicable, shall have an opportunity to appear before any such court of competent jurisdiction with respect to such matter if such court will entertain MAA’s or Post’s, as applicable, motion to be heard with respect to such action. Post and MAA, as applicable, shall provide the other Party with a copy of any nonpublic information or data provided to a third partyThird Party pursuant to the prior sentence prior to or simultaneously with furnishing such information to such third party.Third Party to the extent such nonpublic information or data has not been previously
provided to MAA or Post, as the case may be. For purposes herein, an “Acceptable Confidentiality Agreement” means a confidentiality agreement having provisions that are no more favorable to the applicable counterparty than those contained in the Confidentiality Agreement with respect to MAA, provided that such confidentiality agreement may contain a less restrictive or no standstill restriction and shall not be required to restrict the submission of an Acquisition Proposal to the Post Board or the MAA Board, as applicable;providedfurther that if the provisions of such confidentiality agreement (including without limitation any provisions related to a standstill restriction) are materially more favorable or less restrictive in the aggregate to such counterparty (and any of its Affiliates and representatives named therein) than the provisions of the Confidentiality Agreement are with respect to MAA, then, notwithstanding the foregoing, such agreement will be deemed to be an Acceptable Confidentiality Agreement if Post offers to amend the Confidentiality Agreement so as to make the provisions of the Confidentiality Agreement as materially favorable or as unrestrictive in the aggregate as the confidentiality agreement signed by such counterparty. (ii) Each Party shall notify the other Party promptly (but in no event later than one (1) Business Day) after receipt of any Acquisition Proposal, or any request for nonpublic information relating to such Party or any of its Subsidiaries by any person that informs such Party or any of its Subsidiaries that Index to Financial Statements
itsuch Person is considering making, or has made, an Acquisition Proposal, or any inquiry from any person seeking to have discussions or negotiations with such Party relating to a possible Acquisition Proposal. Such notice shall be made orally and promptly thereafter confirmed in writing, and shall indicate the identity of the person making the Acquisition Proposal, inquiry or request and the material terms and conditions of any inquiries, proposals or offers (including a copy thereof if in writing and any relatedmaterial documentation or correspondence)correspondence that sets forth any terms of such Acquisition Proposal). Each Party shall also promptly, and in any event within one (1) Business Day, notify the other Party, orally and promptly thereafter in writing, if it enters into discussions or negotiations concerning any Acquisition Proposal or provides nonpublic information or data to any person in accordance with thisSection 7.4(b)7.4(c) and keep the other Party promptly informed in all material respects of the status and terms of any such proposals, offers, discussions or negotiations on a currenttimely basis, including by promptly providing a copy of all material documentation or correspondence relating thereto.
(iii) Except as provided inSection 7.4(b)(iv) orSection 7.4(b)(v), neither the ColonialPost Board, the MAA Board, nor any committee thereof shall withhold, withdraw or modify in any manner adverse to the other Party, or propose publicly to withhold, withdraw or modify in any manner adverse to the other Party, the approval, recommendation or declaration of advisability by the ColonialPost Board or the MAA Board, as applicable, or any such committee thereof with respect to this Agreement or the transactions contemplated hereby (a “Change in ColonialPost Recommendation” or a “Change in MAA Recommendation,” respectively).
(iv) Notwithstanding anything in this Agreement to the contrary, with respect to an Acquisition Proposal, the ColonialPost Board or the MAA Board, as applicable, may make in writing a Change in ColonialPost Recommendation or a Change in MAA Recommendation, as applicable (and in the event that the ColonialPost Board or the MAA Board, as applicable, determines such Acquisition Proposal to be a Superior Proposal, in accordance with thisSection 7.4, terminate this Agreement in writing pursuant toSection 9.1), if and only if (A) an unsolicited bona fide written Acquisition Proposal (that(provided that the Acquisition Proposal did not result from a breach of thisSection 7.4 (other than an unintentional and inadvertent breach hereof that was not intended to result in an Acquisition Proposal nevertheless resulted in an Acquisition Proposal)) is made to ColonialPost or MAA, as applicable, and is not withdrawn, (B) the ColonialPost Board or the MAA Board, as applicable, has concluded in good faith (after consultation with outside legal counsel and financial advisors) that such Acquisition Proposal constitutes a Superior Proposal, (C) the trusteesdirectors of ColonialPost or the directors of MAA, as applicable, have concluded in good faith (after consultation with outside legal counsel) that failure to do so would be inconsistent with their fiduciary duties under applicable Law, (D) four (4) Business Days (the “Notice Period”) shall have elapsed since the Party proposing to take such action has given written notice to the other Party advising such other Party that the notifying Party intends to take such action and specifying in reasonable detail the reasons therefor, including the terms and conditions of any such Superior Proposal that is the basis of the proposed action (a “Notice of Recommendation Change”), which Notice of
Recommendation Change or intention shall not be deemed a Change in Post Recommendation or Change in MAA Recommendation, as applicable, for any purpose of this Agreement, (E) during such Notice Period, the notifying Party has considered and, at the reasonable request of the other Party, engaged in good faith discussions with such Party regarding any adjustment or modification of the terms of this Agreement proposed by the other Party, and (F) the directors or trustees, as applicable, of the Party proposing to take such action, following such Notice Period, again reasonably determinesconclude in good faith (after consultation with outside legal counsel and taking into account any adjustment or modification of the terms of this Agreement proposed by the other Party) that the failure to do so would be inconsistent with their fiduciary duties under applicable Law;Law and that such Acquisition Proposal continues to constitute a Superior Proposal;provided,however,
that (1) if, during the Notice Period, any material revisions are made to the Superior Proposal (it being understood that a material revision shall include, without limitation, any material change in the purchase price or form of consideration in such Superior Proposal), the ColonialPost Board or the MAA Board, as applicable, shall promptly give a new written notice to the other Party and shall comply in all respects with the requirements of thisSection 7.4(b)(iv), which shall apply anew, with respect to such new written notice (provided,however, that in this instance the Notice Period shall be three (3) Business Days instead of four (4) Business Days) and (2) in the event the ColonialPost Board or the MAA Board, as applicable, does not determine that such Acquisition Proposal is a Superior Proposal, but thereafter determines to make a Change in ColonialPost Recommendation or a Change in MAA Recommendation, as applicable, pursuant to thisSection 7.4 with respect to an Acquisition Proposal, the foregoing procedures referred to in thisSection 7.4(b)(iv) shall apply anew and shall also apply to any subsequent withdrawal, amendment or change with respect thereto.thereto (provided,however, that in this instance the Notice Period shall be three (3) Business Days instead of four (4) Business Days).
(v) Notwithstanding anything in this Agreement to the contrary, in circumstances not involving or relating to an Acquisition Proposal, the ColonialPost Board or the MAA Board, as applicable, may make a Change in ColonialPost Recommendation or a Change in MAA Recommendation, as applicable, if and only if (A) a material fact, effect, event, development or change in circumstances has occurred or arisen after the date of this Agreement that was neithernot known to such Party nor(or, if known, the consequences of which were not reasonably foreseeable to the Post Board or the MAA Board, as applicable, as of the date of this AgreementAgreement) (and which change or development does not relate to an Acquisition Proposal), (B) the directors or trustees, as applicable, of the Party proposing to take such action have first reasonably determined in good faith (after consultation with outside legal counsel) that failure to do so would be inconsistent with their fiduciary duties under applicable Law, (C) four (4) Business Days (the “Intervening Event Notice Period”) shall have elapsed since the Party proposing to take such action has given a Notice of Recommendation Change (which Notice of Recommendation Change or intention shall not be deemed a Change in Post Recommendation or Change in MAA Recommendation, as applicable, for any purpose of this Agreement) to the other Party advising that the notifying Party intends to take such action and specifying in reasonable detail the reasons therefor, (D) during such four-Business-Dayfour-Business Day period, the notifying Party has considered and, at the reasonable request of the other Party, engaged in good faith discussions with such Party regarding, any adjustment or modification of the terms of this Agreement proposed by the other Party, and (E) the directors or trustees, as applicable, of the Party proposing to take such action, following such Intervening Event Notice Period, again reasonably determine in good faith (after consultation with outside legal counsel, and taking into account any adjustment or modification of the terms of this Agreement proposed by the other Party) that failure to do so would be inconsistent with their fiduciary duties under applicable Law;provided,however, that in the event the ColonialPost Board or the MAA Board, as applicable, does not make a Change in ColonialPost Recommendation or a Change in MAA Recommendation, as applicable, following such four-Business-Dayfour-Business Day period, but thereafter determines to make a Change in ColonialPost Recommendation or a Change in MAA Recommendation, as applicable, pursuant to thisSection 7.4 in circumstances not involving an Acquisition Proposal, the foregoing procedures referred to in thisSection 7.4(b)(v) shall apply anew and shall also apply to any subsequent withdrawal, amendment or change.change (provided,however, that in this instance the Intervening Event Notice Period shall be three (3) Business Days instead of four (4) Business Days).
(vi) Nothing contained in thisSection 7.4 shall prohibit either Party or its Subsidiaries, directly or indirectly, from (A) taking and disclosing to its respective shareholders or unitholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act (or any similar communication to its shareholders in connection with the making or amendment of a tender offer or exchange offer) or from making a statement contemplated by Item 1012(a) of Regulation M-A or Rule 14d-9 promulgated under the Exchange Act, (B) making any other disclosure to its shareholders with regard to the transactions contemplated by this Agreement or froman Acquisition Proposal that the Post Board or the MAA Board, as applicable, determines (after consultation with outside counsel) is reasonably required by applicable Law or (C) issuing a “stop, look and listen” statement pending disclosure of its position thereunder;provided,however, that compliance with such rules shall not in any way limit or modify the effect that any action taken pursuant to such rules has under any other provision of this Agreement, includingSection 7.1(c) or(d), as applicable, andprovided,further, that any such disclosure that addresses the approval, recommendation or declaration of advisability by the ColonialPost Board or the MAA Board, as applicable, with respect to this Agreement or an Acquisition Proposal shall be deemed to be a Change in ColonialPost Recommendation or Change in MAA Recommendation, as applicable, unless the ColonialPost Board or the MAA Board, as applicable, of such party, in connection with such communication publicly states that its recommendation with respect to this Agreement and the transactions contemplated hereby has not changed or refers to the prior recommendation of such party, without disclosing any Change in ColonialPost Recommendation or Change in MAA Recommendation, as applicable.
(c) For purposes of thisSection 7.4 and this Agreement, “Superior Proposal” means a written bona fide Acquisition Proposal (except that, for purposes of this definition, the references in the definition of “Acquisition Proposal” to “twenty percent (20%)” and to “eighty percent (80%)” shall be replaced by “fifty“seventy-five percent (50%(75%)”) made by a Third Party that does not contain any financing conditions and is otherwise on terms that the ColonialPost Board or the MAA Board, as applicable, determines in its good faith judgment, after consultation with outside legal counsel and financial advisors, taking into account all factors and matters deemed relevant in good faith by the Post Board or the MAA Board, as applicable, including financial, legal, regulatory and any other aspects of the transaction described in such proposal and such other relevant factors (including without limitation, the identity of the Person making such proposal, any break-up fees, expense reimbursement provisions, conditions to consummation and feasibility and certainty of consummation (including whether consummation is reasonably capable of being completed on a timely basis on the terms proposed), as well as any changes to the financial terms of this Agreement proposed by the other Party in response to such proposal or otherwise), described in such proposal, would, if consummated, be more favorable to ColonialPost and its shareholders, or to MAA and its shareholders, as applicable, from a financial point of view than the transactions contemplated by this Agreement.
(d) Each of ColonialPost and MAA agrees that (i) it will and will cause its Subsidiaries, and its and their Representatives to, cease immediately and terminate any and all existing activities, discussions or negotiations with any third partiesThird Parties conducted heretofore with respect to any Acquisition Proposal, and (ii) it will not release any third partyThird Party from, or waive any provisions of, any confidentiality or standstill agreement to which it or any of its Subsidiaries is a party with respect to any Acquisition Proposal. Each of ColonialPost and MAA agrees that it will use its reasonable best efforts to promptly inform its and its Subsidiaries’ respective Representatives of the obligations undertaken in thisSection 7.4.
(e)
(i) Notwithstanding any Change in ColonialPost Recommendation or Change in MAA Recommendation, as applicable, unless, in the case of a Change in Post Recommendation, such Change in ColonialPost Recommendation or Change in MAA Recommendation, as applicable, is with respect to a Superior Proposal and this Agreement is terminated pursuant toSection 9.1, each of Colonial and MAA(A) Post shall cause the adoption of this Agreement to be submitted to a vote of its respective shareholders at the ColonialPost Shareholder Meeting and (B) MAA shall cause (x) the amendment to the MAA Charter that increases the number of authorized shares of MAA Common Stock to 145,000,000 and (y) the approval of the issuance of the MAA Common Stock to be issued in the Parent Merger to be submitted to a vote of its shareholders at the MAA Shareholder Meeting, respectively.Meeting.
(ii) Without the prior written consent of each of ColonialPost and MAA (which shall not be unreasonably withheld, conditioned or delayed), or otherwise as set forth on Section 7.4(e)(ii) of the Colonial Disclosure Letter or MAA Disclosure Letter, adoption of this Agreement and approval of the Mergers and the other transactions contemplated hereby is the only matter, other than (A) a vote to approve an amendment to the
MAA Charter to increase the authorized shares of MAA Common Stock, (B) a vote on the issuance of the MAA Common Stock to be issued in the Parent Merger, and/or (C) any say-on-golden parachute vote that may be required pursuant to Section 14A(b)(2) of the Exchange Act and Rule 14a-21(c) thereunder and a proposal to approve the adjournment of the Colonial ShareholdersPost Shareholder Meeting or the MAA ShareholdersShareholder Meeting, as applicable, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the Colonial ShareholdersPost Shareholder Meeting or the MAA ShareholdersShareholder Meeting, as applicable, to obtain the approval of Colonial’s shareholderPost’s shareholders or MAA’s shareholders, as applicable, which either ColonialPost or MAA, as applicable, shall propose to be acted on by its respective shareholders at the Colonial ShareholdersPost Shareholder Meeting or the MAA ShareholdersShareholder Meeting, as applicable.
(iii) Notwithstanding anything to the contrary set forth in thisSection 7.4 or elsewhere in this Agreement, if either ColonialPost or MAA, as applicable, receives a written Acquisition Proposal from any third PersonThird Party following the date hereof and(provided that the Acquisition Proposal from such Third Party did not asresult from a result of a violationbreach of thisSection 7.4 (other than an unintentional and inadvertent breach hereof that was not intended to result in an Acquisition Proposal nevertheless resulted in an Acquisition Proposal)), then ColonialPost or MAA, as applicable, or its respective Representatives may contact such third PersonThird Party in writing solely for the purpose of clarifying such Acquisition Proposal (the “Clarification Request”);provided,however, that ColonialPost shall deliver a copy of all Clarification Requests to MAA, and MAA shall deliver a copy of all Clarification Requests to Colonial,Post, in each case concurrentlypromptly with the delivery of such Clarification Requests to any third Person.
(f) References in thisSection 7.4 to the ColonialPost Board or the MAA Board shall mean the board of trusteesdirectors of ColonialPost or the board of directors of MAA, as applicable, or a duly authorized committee thereof.
(g) Neither partyPost nor MAA shall submit to the vote of its respective shareholders any Acquisition Proposal other than the Mergers prior to the termination of this Agreement.
Section 7.5Public Announcements. Except with respect to any Change in ColonialPost Recommendation, Change in MAA Recommendation or any action taken by ColonialPost or the ColonialPost Board, or by MAA or the MAA Board, pursuant to and in accordance withSection7.4, so long as this Agreement is an effect, the Parties hereto shall consult with each other before issuing any press release or otherwise making any public statements or filings with respect to this Agreement or any of the transactions contemplated by this Agreement, and none of the Parties shall issue any such press release or make any such public statement or filing prior to obtaining the other Parties’ consent (which consent shall not be unreasonably withheld, conditioned or delayed);provided,however, that a Party may, without obtaining the other Parties’ consent, issue such press release or make such public statement or filing as may be required by Law, Order or the applicable rules of any stock exchange if for any reason it is not reasonably practicable to consult with the other Party before making any public statement with respect to this Agreement or any of the transactions contemplated by this Agreement. The Parties have agreed upon the form of a joint press release announcing the Mergers and the execution of this Agreement and shall make such joint press release no later than one (1) Business Day following the date on which this Agreement is signed.
Section 7.6Indemnification; Directors’ and Officers’ Insurance.
(a) Without limiting any additional rights that any manager, director, officer, trustee, employee, agent, or fiduciary may have under any employment or indemnification or similar agreement or under the Colonial DeclarationPost Articles of Trust,Incorporation, the ColonialPost Bylaws, the ColonialPost LP Agreement or, if applicable, similar organizational documents (including any limited liability company agreement or partnership agreement) or agreements of any ColonialPost Subsidiary (including any successor entities) (the “Organizational Documents”) or this Agreement from and after the Parent Merger Effective Time, MAA and MAA LP (the “IndemnifyingParties”), jointly and severally, shall:shall, for a period of six (6) years from the Parent Merger Effective Time: (i) indemnify and hold harmless each person who is at the date hereof, was previously, or is during any of the period from the date hereof through the date of the Parent Merger Effective Time, serving as a manager, director, officer, trustee or fiduciary of ColonialPost or any of the ColonialPost Subsidiaries and acting in such capacity (collectively, the “Indemnified
Parties”) to the fullest extent authorized or permittednot prohibited by applicable Law, as now or hereafter in effect, in connection with any Claim and any losses, claims, damages, liabilities, costs, Claim Expenses, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of any thereof) relating to or resulting from such Claim; and (ii) promptly pay on behalf of or,(in any event within ten (10) Business Days after any request for payment or advancement, as applicable) pay on behalf of or advance to each of the Indemnified Parties, to the fullest extent authorized or permittednot prohibited by applicable Law, as now or hereafter in effect, any Claim Expenses incurred in defending, serving as a witness with respect to or otherwise participating with respect to any Claim in advance of the final disposition of such Claim, including payment on behalf of or advancement to the Indemnified Party of any Claim Expenses incurred by such Indemnified Party in connection with enforcing any rights with respect to such indemnification and/or advancement, in each case without the requirement of any bond or other security, but subject to MAA’s receipt of an undertaking by or on behalf of such Indemnified Party to repay such Claim Expenses if it is ultimately determined under applicable Laws or any of the Organizational Documents that such Indemnified Party is not entitled to be indemnified;provided,however, that none of the Indemnifying Parties shall be liable for any amounts paid in settlement effected without MAA’s prior written consent and shall not be obligated to pay the fees and expenses of more than one counsel (selected by a plurality of the applicable Indemnified Parties) for all Indemnified Parties in any jurisdiction with respect to any single Claim except to the extent an Indemnified Party is advised by counsel that such Indemnified Party has conflicting interests with one or more other Indemnified Parties in the outcome of such action (in which event such Indemnified Party shall be entitled to engage separate counsel, the fees and expenses for which the Indemnifying Parties shall be liable);provided,further, that if, at any time prior to the sixth (6th) anniversary of the PartnershipParent Merger Effective Time, any Indemnified Party delivers to MAA or MAA LP a written notice asserting that indemnification is
required in accordance with thisSection 7.6 with respect to a Claim, then the provisions for indemnification contained in thisSection 7.6 with respect to such Claim shall survive the sixth (6th) anniversary of the PartnershipParent Merger Effective Time and shall continue to apply until such time as such Claim is fully and finally resolved. The indemnification and advancement obligations of the Indemnifying Parties pursuant to thisSection 7.6(a) shall extend to acts or omissions occurring at or before the Parent Merger Effective Time and any Claim relating thereto (including with respect to any acts or omissions occurring in connection with the approval of this Agreement, the Mergers and the consummation of the other transactions contemplated by this Agreement, including the consideration and approval thereof and the process undertaken in connection therewith and any Claim relating thereto), and all rights to indemnification and advancement conferred hereunder shall continue as to a person who has ceased to be a director, officer, trustee, employee, agent, or fiduciary of ColonialPost or any of the ColonialPost Subsidiaries after the date hereof and shall inure to the benefit of such person’s heirs, executors and personal and legal representatives. As used in thisSection 7.6(a): (x)(A) the term “Claim” means any threatened, asserted, pending or completed Action (including that any Indemnified Party in good faith believes might lead to the institution of any such Action) or inquiry, whether civil, criminal, administrative, investigative or otherwise, including any arbitration or other alternative dispute resolution mechanism, and whether instituted by any Party hereto, any Governmental Authority or any other Person arising out of or pertaining to matters that relate to such Indemnified Party’s duties (including with respect to any acts or omissions occurring in connection with the approval of this Agreement, the Mergers and the consummation of the other transactions contemplated by this Agreement, including the consideration and approval thereof and the process undertaken in connection therewith and any Claim relating thereto) or service as a manager, director, officer, trustee, employee, agent or fiduciary of ColonialPost or, any of the ColonialPost Subsidiaries or, to the extent such person is or was serving at the request or for the benefit of ColonialPost or any of the ColonialPost Subsidiaries, any other entity or any Employee Benefit Plan maintained by any of the foregoing at or prior to the Parent Merger Effective Time; and (y)(B) the term “ClaimExpenses” means reasonable attorneys’ fees and all other reasonable costs, expenses and obligations (including experts’ fees, travel expenses, court costs, retainers, transcript fees, duplicating, printing and binding costs, as well as telecommunications, postage and courier charges) paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in, any Claim, including any Action relating to a claim for indemnification or advancement brought by an Indemnified Party as contemplated in thisSection 7.6. No Indemnifying Party shall settle, compromise or consent to the entry of any judgment in, or seek termination with respect to, any actual or threatened Claim in respect of which
indemnification may be sought by an Indemnified Party hereunder unless such settlement, compromise or judgment includes an unconditional release of such Indemnified Parties from all liability arising out of such Claim. No Indemnified Party shall be liable for any amounts paid in any settlement effected without its prior express written consent.
(b) Without limiting the foregoing, MAA agrees that all rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Parent Merger Effective Time now existing in favor of the current or former trustees, directors, officers, agents or fiduciaries of ColonialPost or any of the ColonialPost Subsidiaries as provided in the Organizational Documents and indemnification or similar agreements of ColonialPost shall survive the Parent Merger and shall continue in full force and effect in accordance with their terms. For a period of six (6) years from the Parent Merger Effective Time, (i) MAA shall and shall cause the MAA Subsidiaries (including MAA LP) to honor and fulfill in all respects the obligations of MAA and the MAA Subsidiaries (including MAA LP) to the Indemnified Parties and any trustees, employees, agents, or fiduciaries (including fiduciaries under or with respect to any employee benefit plan (within the meaning of Section 3(3) of ERISA)) of Post or any of the Post Subsidiaries under the Organizational Documents and any indemnification or similar agreement of ColonialPost or any ColonialPost Subsidiary entered into prior to the Partnership Merger Effective Time and (ii) subject to any limitations imposed by the MAATBCA and the TRULPA, the charter and bylaws and the limited partnership agreement or other organizational documents (including any limited liability company agreement or partnership agreement) of MAA, MAA LP and the MAA Subsidiaries (including any successor entities) and the organizational documents of any applicable ColonialPost Subsidiary (including any limited liability company agreement or partnership agreement) shall contain provisions no less favorable to the Indemnified Parties and any trustees, employees, agents, or fiduciaries (including fiduciaries under or with respect to any employee benefit plan (within the meaning of Section 3(3) of ERISA)) of Post or any of the Post Subsidiaries with respect to indemnification, advancement of expenses and limitations on liability of directors and officers than are set forth in the Organizational Documents, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Parent Merger Effective Time in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Parent Merger Effective Time, were directors, officers, trustees, employees, agents or fiduciaries (including fiduciaries under or with respect to any employee benefit plan (within the meaning of ColonialSection 3(3) of ERISA)) of Post or any of the ColonialPost Subsidiaries, unless such modification shall be required by applicable Law and then only to the minimum extent required by applicable Law.
(c) Prior to the PartnershipParent Merger Effective Time, ColonialPost shall purchase,obtain and fully pay the premium for, and MAA shall cause to be maintained in full force and effect (and the obligations under to be honored), during the six (6) year period beginning on the date of the PartnershipParent Merger Effective Time, a “tail” prepaid insurance policy or policies (which policy or policies by their respective express terms shall survive the Mergers), from Post’s current insurance carrier or an insurance carrier with the same or better credit rating as Post’s current insurance carrier, of at least the same coverage and amounts and containing terms and conditions, retentions and limits of liability that are no less favorable to the directors, officers, agents or fiduciaries of ColonialPost or any of the ColonialPost Subsidiaries as Colonial’sPost’s and the ColonialPost Subsidiaries’ existing policy or policies, for the benefit of the current and former trustees, directors, officers, agents or fiduciaries of ColonialPost and each ColonialPost Subsidiary with a claims reporting or discovery period of six (6) years from the PartnershipParent Merger Effective Time with respect to directors’ and officers’ liability insurance for Claims arising from facts or events that occurred on or prior to the PartnershipParent Merger Effective Time;provided,however, that in no event shall the aggregate premium payable for such “tail” insurance policy for its entire period exceed an amount per year of coverage equal to 300% of the current annual premium paid by ColonialPost for such insurance (such amount being the “Maximum Premium”). If ColonialPost is unable to obtain the “tail” insurance described in the first sentence of thisSection 7.6(c) for an amount equal to or less than the Maximum Premium, ColonialPost shall be entitled to obtain as much comparable “tail” insurance as possible for an amount equal to
the Maximum Premium. If ColonialPost is unable to, purchaseor does not, obtain and fully pay the premium for such “tail” insurance contemplated in the two preceding sentences, MAA shall at Colonial’s request, purchase,obtain and fully pay the premium for and maintain in full force and effect (and honor the obligations under), during the six (6) year period beginning on the date of the PartnershipParent Merger Effective Time, a “tail” insurance policy or policies (which policy or policies by their respective express terms shall survive the Mergers) from onePost’s current insurance carrier or morean insurance carriers believed to be sound and reputablecarrier with respect to directors’ and officers’ liabilitythe same or better credit rating as Post’s current insurance and fiduciary liability insurancecarrier, of at least the same coverage and amounts and containing terms and conditions, retentions and limits of liability that are no less favorable to directors, officers, agents, or fiduciaries of ColonialPost or any of the ColonialPost Subsidiaries as ColonialPost or any of the ColonialPost Subsidiaries’ existing policy or policies for the benefit of the current and former directors, officers, agents or fiduciaries of ColonialPost or any ColonialPost Subsidiary with a claims reporting or discovery period of six (6) years from the PartnershipParent Merger Effective Time;provided,however, that in no event shall MAA be required to pay more than the Maximum Premium as the aggregate premium for such “tail” insurance policies for its entire period, in which case MAA will obtain as much comparable “tail” insurance as possible for an amount equal to the Maximum Premium.
(d) If any of MAA, MAA LP or any of their respective successors or assigns (i) consolidates with or merges with or into any other Person and shall not be the continuing or surviving company, partnership or other entity of such consolidation or merger or (ii) liquidates, dissolves or winds-up, or transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of MAA or MAA LP, as applicable, shall assume the obligations set forth in thisSection 7.6.
(e) MAA shall pay all reasonable expenses, including reasonable attorneys’ fees, that may be incurred by any Indemnified PersonParty in enforcing the indemnity and other obligations provided in thisSection 7.6;provided,however, that such Indemnified PersonParty provides an undertaking to repay such expenses if it is determined by a final and non-appealable judgment of a court of competent jurisdiction that such Person is not legally entitled to indemnification under Law.
(f) The provisions of thisSection 7.6 are intended to be for the express benefit of, and shall be enforceable by, each Indemnified Party and other Person referred to in thisSection 7.6 (who are intended to be third party beneficiaries of thisSection 7.6), his or her heirs and his or her personal representatives, shall be binding on all successors and assigns of MAA and Colonial,Post, and shall not be amended in a manner that is adverse to the Indemnified PersonParty (including his or her successors, assigns and heirs) without the prior written consent of the Indemnified PersonParty (including the successors, assigns and heirs) affected thereby. The exculpation and indemnification provided for by thisSection 7.6 shall be in addition to, and not in substitution for, any other rights to indemnification or exculpation which an Indemnified Party and other Person referred to in thisSection 7.6 is entitled, whether pursuant to applicable Law, contract or otherwise.
(g) Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under the Organizational Documents, the GBCC, any other Law, any agreement with any Indemnified Party or other Person with Post or any Post Subsidiary, any policy that is or has been in existence with respect to
the Colonial Post or any of the ColonialPost Subsidiaries for any of their respective trustees, directors, managers, officers or other employees, it being understood and agreed that (i) the indemnification provided for in thisSection 7.6 is not prior to or in substitution for any such claims under such policies;(ii) the indemnification provided by Colonial,Post, MAA and MAA LP under thisSection 7.6 with respect to any Claim shall be specifically in excess of any valid and collectible insurance available to such Persons for such Claim; and (iii) to the extent that any Indemnified Party receives any payment with respect to a Claim under any insurance maintained by Colonial,Post, MAA or MAA LP after payment by Colonial,Post, MAA or MAA LP of any amounts with respect to indemnification provided for in thisSection 7.6, such Indemnified Party shall promptly pay the duplicative portion of such insurance payment to Colonial,Post, MAA or MAA LP, as applicable.
Section 7.7Appropriate Action; ConsentsIndex to Financial Statements
(a) Subject to the terms and conditions set forth in this Agreement, each of ColonialPost and MAA shall, and shall cause the ColonialPost Subsidiaries and the MAA Subsidiaries, respectively, to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Party in doing, all things necessary, proper or advisable under applicable Law or pursuant to any contract or agreement to consummate and make effective, as promptly as practicable, the Mergers and the other transactions contemplated by this Agreement, including (i) the taking of all actions necessary to cause the conditions to Closing set forth inArticle VIII to be satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers, consents and approvals from Persons (other than Governmental Authorities, which are addressed inSection 7.3) necessary in connection with the consummation of the Mergers and the other transactions contemplated by this Agreement and the making of all necessary registrations and filings and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Authority or other Persons necessary in connection with the consummation of the Mergers and the other transactions contemplated by this Agreement, (iii) subject toSection 7.8(e), the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the Mergers or the other transactions contemplated by this Agreement, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacated or reversed, so as to enable the Closing to occur as soon as reasonably possible, and (iv) the execution and delivery of any additional instruments necessary to consummate the Mergers and the other transactions contemplated by this Agreement and to fully carry out the purposes of this Agreement.
(b) In connection with and without limiting the foregoing, each of MAA and ColonialPost shall use its reasonable best efforts to give (or shall cause the MAA Subsidiaries or the ColonialPost Subsidiaries, respectively, use its reasonable best efforts to give) any notices to third parties, and each of MAA and ColonialPost shall use, and cause each of their respective Affiliates to use, its reasonable best efforts to obtain any third party consents not covered bySection 7.7(a) that are necessary, proper or advisable to consummate the Mergers and the other transactions contemplated by this Agreement.
(c) Prior to the Closing, if requested by MAA, the Post Parties shall take such actions as are reasonably necessary to liquidate Post GP and the limited partner of Post LP that is a subsidiary of Post and distribute the interests in Post LP held by Post GP and such subsidiary to Post.
(d) Immediately prior to the Closing, if requested by MAA, the Post Parties shall take such actions as are reasonably necessary to liquidate special purpose entities holding up to $800 million of assets and distribute such assets to Post LP to the extent necessary to permit MAA and MAA LP to satisfy certain bond covenants following the Closing (including a reasonable amount in excess of such covenants) and to the extent such assets are reasonably available in special purpose entities.
Section 7.8Notification of Certain Matters; Transaction Litigation.
(a) The ColonialPost Parties shall give prompt notice to the MAA Parties, and the MAA Parties shall give prompt notice to the ColonialPost Parties, of any notice or other communication received by such Party from any Person alleging that the consent of such Person is or may be required in connection with the Mergers or the other transactions contemplated by this Agreement such that the failure to obtain such consent would result in a failure of the condition inSection 8.1(e).Agreement.
(b) The ColonialPost Parties shall give prompt notice to the MAA Parties, and the MAA Parties shall give prompt notice to the ColonialPost Parties, if (i) any representation or warranty made by it contained in this Agreement becomes untrue or inaccurate such that, itif uncured, would reasonably be reasonableexpected to expect thatresult in any of the applicable closing conditions would be incapableset forth inArticle VIII not being capable of being satisfied byprior to the Outside Date or (ii) it fails to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement such that, itif uncured, would be reasonable to expect thatresult in any of the applicable closing conditions wouldset forth inArticle VIII not to be incapable
of being satisfied by the Outside Date;satisfied;provided,however, that no such notification shall affect the representations, warranties, covenants or agreements of the Parties or the conditions to the obligations of the Parties under this Agreement. Without limiting the foregoing, the ColonialPost Parties shall give prompt notice to
the MAA Parties, and the MAA Parties shall give prompt notice to the ColonialPost Parties, if, to the Knowledge of such Party, the occurrence of any state of facts, change, development, event or condition would cause, or would reasonably be expected to cause, any of the conditions to Closing set forth hereininArticle VIII not to be satisfied or satisfaction to be materiallyreasonably delayed.
(c) Notwithstanding anything to the contrary in this Agreement, the failure by the ColonialPost Parties or the MAA Parties to provide notice underSection 7.8(a),Section 7.8(b) orSection 7.8(d) shall not constitute a breach of covenant for purposes ofSection 8.2(b) orSection 8.3(b).
(d) Each of the Parties hereto agrees to give prompt written notice to the other Parties upon becoming aware of the occurrence or impending occurrence of any event or circumstance relating to it or any of the other ColonialPost Subsidiaries or the other MAA Subsidiaries, respectively, which could reasonably be expected to have, individually or in the aggregate, a ColonialPost Material Adverse Effect or a MAA Material Adverse Effect, as the case may be.
(e) The ColonialPost Parties shall give prompt notice to the MAA Parties, and the MAA Parties shall give prompt notice to the ColonialPost Parties, of any Action commenced or, to such Party’s Knowledge, threatened against, relating to or involving such Party or any of the other ColonialPost Subsidiaries or the other MAA Subsidiaries, respectively, which relates to this Agreement, the Mergers or the other transactions contemplated by this Agreement. The ColonialPost Parties shall give the MAA Parties the opportunity to reasonably participate in the defense and settlement of any litigation against the ColonialPost Parties and/or their trusteesdirectors relating to this Agreement and the transactions contemplated hereby, and no such settlement shall be agreed to without MAA’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed). The MAA Parties shall give the ColonialPost Parties the opportunity to reasonably participate in the defense and settlement of any litigation against the MAA Parties and/or their directors relating to this Agreement and the transactions contemplated hereby,hereby.
(f) The Post Parties shall give the MAA Parties the opportunity to reasonably participate in the defense and no such settlement of the matter set forth on Section 1.1 of the Post Disclosure Letter (the “Specified Action”), including without limitation by providing the MAA Parties with all pleadings, motions, memoranda and material correspondence, as well as decisions or other actions by the court in the Specified Action, reasonable opportunity to review and comment in advance on all pleadings, motions and memoranda to be filed by the Post Parties, and advance notice of any hearings or status conferences with the court in the Specified Action. No settlement of the Specified Action shall be agreed to without Colonial’sMAA’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).
Section 7.9OP Merger Sub; Pending Closing.
(a) MAA and MAA LP shall take all actions necessary to ensure that, prior to Between the Partnership Merger Effective Time, OP Merger Sub shall not conduct any business or make any investments or incur or guarantee any Indebtedness other than as specifically contemplated by this Agreement.
(b) Between the Partnership Effective Time and the Parent Merger Effective Time, ColonialMAA and Post shall not take any action or conduct any business of any nature whatsoever other than as specifically contemplated by this Agreement (including without limitation, Section 7.11 hereof) and as necessary to effect the Parent Merger.
Section 7.10Section16 Matters. Prior to the PartnerParent Merger Effective Time, ColonialPost and MAA shall, as applicable, take all such steps to cause any dispositions of ColonialPost Common SharesStock (including derivative securities with respect to ColonialPost Common Shares)Stock) or acquisitions of MAA Common Stock resulting from the transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to ColonialPost to be exempt under Rule 16b-3 promulgated under the Exchange Act. Upon request, ColonialPost shall promptly furnish MAA with all requisite information for MAA to take the actions contemplated by thisSection 7.10.
Section 7.11Delisting. Each of the Parties agrees to cooperate with the other Parties in taking, or causing to be taken, all actions necessary to delist the Post Common Stock and the Post Series A Preferred Stock from the NYSE and terminate their registration under the Exchange Act; provided, that such delisting and termination shall not be effective until after the Parent Merger Effective Time.
Section 7.12 Director and Officer Resignations. Post shall use commercially reasonable efforts to cause to be delivered to MAA resignations executed by each director and officer of Post and the Post Subsidiaries in office immediately prior to the Parent Merger Effective Time.
Section 7.13 Certain Tax Matters.
(a) Each of MAA and ColonialPost shall use their respective commercially reasonable efforts (before and, as relevant, after the Parent Merger Effective Time) to cause the Parent Merger to qualify as a reorganization
within the meaning of Section 368(a) of the Code. Provided ColonialPost shall have received the opinion of counsel referred to inSection 8.3(f) and MAA shall have received the opinion of counsel referred to inSection 8.2(f), the Parties shall treat the Parent Merger as a “reorganization” under Section 368(a) of the Code and no Party shall take any position for tax purposes inconsistent therewith, except to the extent otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code.
(b) MAA and ColonialPost shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer or stamp taxes, any transfer, recording, registration and other fees and any similar taxes that become payable in connection with the transactions contemplated by this Agreement (together with any related interests, penalties or additions to Tax, “Transfer Taxes”), and shall cooperate in attempting to minimize the amount of Transfer Taxes. Subject toSection 3.5(c)(iii), from and after the Partnership Merger Effective Time, MAA and MAA LP (or ColonialPost LP) shall pay or cause to be paid, without deduction or withholding from any consideration or amounts payable to holders of ColonialPost Common SharesStock or ColonialPost OP Units, all Transfer Taxes.
(c) The Parties agree and acknowledgeAny holder of Post OP Units that receives New MAA OP Units pursuant to the Partnership Merger shall be entitled, upon request, to become an “Electing Partner” as such term is defined in the MAA LP Agreement,provided that the income, assets, and operationsmaximum aggregate amount set forth in Schedule 13.10A to the MAA LP Agreement in respect of such holders of New MAA OP Units shall not exceed $10,000,000. Any such request shall be made in writing to MAA LP and certain MAA Subsidiaries will affectshall comply with the ability of Colonial to qualifynotice provisions set forth inSection 10.2. Any holder who makes such a request shall be designated as a REITan Electing Partner for its taxable year ending at the Parent Merger Effective Time. The Parties shall cooperate (and shall cause their Affiliates, agents, and advisors to cooperate) and to take such actions (or, as applicable, refrain from taking actions) as reasonably deemed necessary by Colonial or MAA to permit Colonial to qualify as a REIT for its taxable year ending at the Parent Merger Effective Time including, without limiting the foregoing, filing elections to treat each corporation in which Colonial acquires an interest as a resultpurposes of the Partnership Merger as a Taxable REIT SubsidiaryMAA LP Agreement and included on the list of Colonialsuch partners set forth on or priorSchedule 13.10A to the Closing DateMAA LP Agreement, provided that the maximum aggregate amount set forth in Schedule 13.10A to the MAA LP Agreement in respect of the Parent Merger.such holders of New MAA OP Units shall not exceed $10,000,000.
Section 7.127.14 Voting of Shares; Voting of MAAPost OP Units.
(a) MAA shall vote all Colonialshares of Post Common SharesStock beneficially owned by it or any of the MAA Subsidiaries as of the record date for the ColonialPost Shareholder Meeting, if any, in favor of approval of the Parent Merger. ColonialPost shall vote all shares of MAA Common Stock beneficially owned by it or any of the ColonialPost Subsidiaries as of the record date for the MAA Shareholder Meeting, if any, in favor of approval of the Parent Merger and issuance of the MAA Common Stock to be issued in the Parent Merger.
(b) MAAPost shall vote all MAAPost OP Units beneficially owned by it or any of the MAAPost Subsidiaries, if any, in favor of the MAAPost Partner Approval.
Section 7.137.15 Termination of ColonialPost Equity Incentive Plans, ColonialPost DRIP and ColonialPost ESPP.
(a) Prior to the PartnershipParent Merger Effective Time, the ColonialPost Board shall adopt such resolutions or take such other actions as may be required by the ColonialPost Equity Incentive Plans no later than immediately prior to the PartnershipParent Merger Effective Time to effect the intent ofArticle IIIhereof.
(b) The ColonialPost Board shall adopt such resolutions or take such other actions as may be required to terminate the ColonialPost DRIP, effective prior to the PartnershipParent Merger Effective Time, and ensure that no purchase or other rights under the ColonialPost DRIP enable the holder of such rights to acquire any interest in MAA or any MAA Subsidiary as a result of such purchase or the exercise of such rights at or after the PartnershipParent Merger Effective Time.
(c) The Index to Financial Statements
ColonialPost Board shall adopt such resolutions or take such other actions as may be required to provide that with respect to the ColonialPost ESPP: (A)(i) participants in the ColonialPost ESPP (“ESPP Participants”) may not increase their payroll deductions under the ColonialPost ESPP from those in effect on the date of this Agreement; (B)(ii) no new ESPP Participants may commence participation in the ColonialPost ESPP following the date of this Agreement; (C)(iii) all participation in and purchases under the ColonialPost ESPP shall be suspended effective as
prior to the Closing on a date specified by Post (subject to the consent of June 30, 2013MAA, which consent shall not be unreasonably withheld, delayed or conditioned) or on such other date as MAA shall reasonably request (the “ESPP Suspension Date”), such that the offering period in effect as of the date of this Agreement will be the final offering period under the ColonialPost ESPP until otherwise determined by the MAA Board after the PartnershipParent Merger Effective Time; and (D)(iv) with respect to any offering period under the ColonialPost ESPP in effect as of the date of thethis Agreement, ColonialPost shall ensure that such offering period ends at the ESPP Suspension Date and that each ESPP Participant’s accumulated contributions for such offering period are applied to the purchase of ColonialPost Common SharesStock in accordance with the terms of the ColonialPost ESPP unless the ESPP Participant has previously withdrawn from such offering period in accordance with the terms of the ColonialPost ESPP. Any cash remaining in the ColonialPost ESPP after purchases occurring on the ESPP Suspension Date shall be refunded to ColonialPost ESPP participants promptly following the ESPP Suspension Date.
(d) If requested by MAA, ColonialPost shall (or shall cause each applicable ColonialPost Subsidiary to) terminate each ColonialPost Employee Benefit Plan intended to be qualified within the meaning of Section 401(a) of the Code as of the day prior to the Closing Date (but contingent upon the occurrence of the Mergers) and adopt all required compliance amendments pursuant to written resolutions, the form and substance of which shall be reasonable satisfactory to MAA.
Section 7.147.16 Governance.
(a) Prior to the PartnershipParent Merger Effective Time, the MAA Board shall adopt resolutions (subject to and effective immediately following the PartnershipParent Merger Effective Time), and the MAA Board shall take all other actions necessary so that, effective immediately following the PartnershipParent Merger Effective Time, the number of directors that will comprise the full MAA Board shall be 12thirteen (13) as set forth in, and in accordance with,Section 2.5. The current chairman of the MAA Board shall remain chairman of the MAA Board after the PartnershipParent Merger Effective Time. After the Partnership Merger Effective Time, the headquarters of MAA will remain at MAA’s current headquarters in Memphis, Tennessee, and the NYSE ticker symbol of MAA will remain MAA’s current NYSE ticker symbol of “MAA”.
(b) By written notice to MAA within two weeks fromat least ten (10) days prior to the date hereof, Colonialmailing of the Joint Proxy Statement, Post shall designate the ColonialPost Designees to be appointed to the MAA Board pursuant to, and in accordance with,Section 2.5;provided, that (1) Thomas H. Lowderthe three (3) Post Designees shall be a Colonial Designee, and (2) each other Colonial Designee shall be one ofselected from the current Colonial trusteesPost directors listed on Section 7.147.16 of the ColonialPost Disclosure Letter.
Section 7.157.17 Tax Representation Letters.
(a) The ColonialPost Parties shall (i) use their reasonable best efforts to obtain or cause to be provided, as appropriate, the opinions of counsel referred to inSection 8.2(e)Post 368 Opinion andSection 8.3(f), the Post REIT Opinions, (ii) (A) deliver to Hogan Lovells USKing & Spalding LLP, counsel to Colonial, and Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, counsel to MAA,Post, or other counsel described inSection 8.2(e) andSection 8.3(e), respectively, a tax representation letter, dated as of the effective date of the Form S-4 (as relevant) and the Closing Date and signed by an officer of ColonialPost and ColonialPost LP, in form and substance as set forth inExhibit FC-1, containing representations of the Post Parties for purposes of rendering the Post REIT Opinions (and any similar opinion dated as of the effective date of the Form S-4), and (B) deliver to Bass, Berry & Sims PLC, counsel to MAA, or other counsel described inSection 8.3(e), a tax representation letter, dated as of the Closing Date and signed by an officer of Post and Post LP, in form and substance as set forth onExhibit C-2, containing representations of the Post Parties for purposes of rendering the MAA REIT Opinion, which such representations inExhibits C-1 andC-2 shall be subject to such changes or modifications from the language set forth on such exhibit as may be deemed necessary or appropriate by Hogan Lovells USKing & Spalding LLP (or such ColonialPost counsel rendering such opinion) or Baker, Donelson, Bearman, CaldwellBass, Berry & Berkowitz, PCSims PLC (or such other MAA counsel rendering such opinion) and shall be reasonably acceptable to and approved by MAA, or Colonial, respectivelyin the case ofExhibit C-1, and Post, in the case ofExhibit C-2 (in either case, which approval shall not be unreasonably conditioned, withheld or
delayed), containing representations of the Colonial Parties for purposes of rendering the opinions described inSection 8.2(e) andSection 8.3(e) (and any similar opinion dated as of the effective date of the Form S-4), and (iii) deliver to Goodwin Procter LLP, counsel to MAA, and Hogan Lovells USKing & Spalding LLP, counsel to Colonial,Post, or other counsel described inSection 8.2(f) andSection 8.3(f), respectively, tax representation letters, dated as of the effective date of the Form S-4 and the Closing Date, respectively, and signed by an officer of ColonialPost and ColonialPost LP, in form and substance as shall be mutually agreeable to ColonialPost and MAA, containing representations of the ColonialPost Parties as shall be reasonably necessary or appropriate to enable Goodwin Procter LLP to render an opinion on the effective date of the Form S-4 and on the
Closing Date, as described inSection 8.2(f), respectively, and Hogan Lovells US, LLP to render an opinionMAA 368 Opinion on the effective date of the Form S-4 and on the Closing Date, as described inSection 8.3(f),respectively, and King & Spalding LLP to render the Post 368 Opinion on the effective date of the Form S-4 and on the Closing Date, respectively.
(b) The MAA Parties shall (i) use their reasonable best efforts to obtain or cause to be provided, as appropriate, the opinions of counsel referred to inSection 8.2(f)MAA 368 Opinion andSection 8.3(e), the MAA REIT Opinion, (ii) (A) deliver to Baker, Donelson, Bearman, CaldwellBass, Berry & Berkowitz, PC,Sims PLC, counsel to MAA, or other counsel described inSection 8.2(e)8.3(e) (and any similar opinion dated as of the effective date of the Form S-4), a tax representation letter, dated as of the effective date of the Form S-4 and the Closing Date and signed by an officer of MAA and MAA LP, in form and substance as set forth inExhibit G-1D-1, containing representations of the MAA Parties for purposes of rendering the opinion described inSection 8.3(e),MAA REIT Opinion, and (B) to deliver to Hogan Lovells USKing & Spalding LLP, counsel to Colonial,Post, or other counsel described inSection 8.2(e), a tax representation letter, dated as of the Closing Date and signed by an officer of MAA and MAA LP, in form and substance as set forth inExhibit G-2D-2, containing representations of the MAA Parties for purposes of rendering the opinion described inSection 8.2(e),Post REIT Opinions, which such representations inExhibits G-1D-1 andG-2D-2 shall be subject to such changes or modifications from the language set forth on such exhibit as may be deemed necessary or appropriate by Baker, Donelson, Bearman, CaldwellBass, Berry & Berkowitz, PCSims PLC (or such other MAA counsel rendering such opinion) or by Hogan Lovells USKing & Spalding LLP (or such counsel rendering the opinion) and shall be reasonably acceptable to and approved by Colonial,Post, in the case ofExhibit G-1D-1, and MAA, in the case ofExhibit G-2D-2 (in either case, which approval shall not be unreasonably conditioned, withheld or delayed), and (iii) deliver to Goodwin Procter LLP, counsel to MAA, and Hogan Lovells USKing & Spalding LLP, counsel to Colonial,Post, or other counsel described inSection 8.2(f) andSection 8.3(f), respectively, tax representation letters, dated as of the effective date of the Form S-4 and the Closing Date, respectively, and signed by an officer of MAA and MAA LP, in form and substance as shall be mutually agreeable to ColonialPost and MAA, containing representations of the MAA Parties as shall be reasonably necessary or appropriate to enable Goodwin Procter LLP to render an opinionthe MAA 368 Opinion on the effective date of the Form S-4 and on the Closing Date, as described inSection 8.2(f), respectively, and Hogan Lovells US,King & Spalding LLP to render an opinionthe Post 368 Opinion on the effective date of the Form S-4 and on the Closing Date, as described inrespectively.
Section 8.3(f), respectively.
Section 7.167.18 Accrued Dividends. In the event that a distribution with respect to the ColonialPost Common SharesStock or the Post Series A Preferred Stock permitted under the terms of this Agreement has (i) a record date prior to the Partnership Merger Effective Time and (ii) has not been paid as of the Partnership Merger Effective Time, (A) the holders of Colonialshares of Post Common SharesStock and Colonialthe holders of Post OP Units shall be entitled to receive such distribution from ColonialPost (or ColonialPost LP, as applicable) and (B) the holders of the shares of Post Series A Preferred Stock shall be entitled to receive such distribution from Post, in each case, immediately prior to the time such shares or units are exchanged pursuant toArticle III of this Agreement.
Section 7.177.19 Dividends.
(a) From and after the date of this Agreement until the earlier of the Parent Merger Effective Time and termination of this Agreement pursuant toSection 9.1, neither MAA nor Post shall make, declare or set aside any dividend or other distribution to its respective stockholders without the prior written consent of MAA (in the case of Post) or Post (in the case of MAA);provided,however, that the written consent of the other Party shall not be required (but written notice shall be given) for (i) in the case of Post, the authorization and payment of quarterly distributions at a rate not in excess of the regular quarterly cash dividend most recently declared prior to the date of this Agreement (which is $0.47 per quarter) and (ii) in the case of MAA, for the authorization and payment of quarterly distributions at a rate not in excess of the regularly quarterly cash dividend most recently declared prior to the date of this Agreement (which is $0.82 per quarter);provided that it is agreed that the Parties shall take such actions as are necessary to ensure that if either the holders of Post Common Stock or the holders of MAA Common Stock receive a distribution for a particular quarter prior to the Closing Date, then the holders of Post
Common Stock and the holders of MAA Common Stock, respectively, shall also receive a distribution for such quarter, whether in full or pro-rated for the applicable quarter, as necessary to result in the holders of Post Common Stock and the holders of MAA Common Stock receiving dividends covering the same periods prior to the Closing Date.
(b) Notwithstanding the foregoing or anything else to the contrary in this Agreement, each of Post and MAA, as applicable, shall be permitted to declare and pay a dividend to its stockholders, the record date and payment date for which shall be the close of business on the last Business Day prior to the Closing Date, distributing any amounts determined by such Party (in each case in consultation with the other Party) to be the minimum dividend required to be distributed in order for such Party to qualify as a REIT and to avoid to the extent reasonably possible the incurrence of income or excise Tax (any dividend paid pursuant to this paragraph, a “REIT Dividend”).
(c) If either Party determines that it is necessary to declare a REIT Dividend, it shall notify the other Party at least 20 days prior to the date of the Post Shareholder Meeting, in the case of a declaration by Post, or the MAA Shareholder Meeting, in the case of a declaration by MAA, and such other Party shall be entitled to declare a dividend per share payable (i) in the case of Post, to holders of Post Common Stock, in an amount per share of Post Common Stock equal to the quotient obtained by dividing (A) the REIT Dividend declared by MAA with respect to each share of MAA Common Stock by (B) the Exchange Ratio and (ii) in the case of MAA, to holders of MAA Common Stock, in an amount per share of MAA Common Stock equal to the product of (x) the REIT Dividend declared by Post with respect to each share of Post Common Stock and (y) the Exchange Ratio. The record date and payment date for any dividend payable pursuant to thisSection 7.19(c) shall be the close of business on the last Business Day prior to the Closing Date.
Section 7.20 Employment Matters.
(a) During the period commencing on the Closing and ending on the date that is twelve (12) months after the Closing (or if earlier, the date of the employee’s termination of employment with MAA and the MAA Subsidiaries (including ColonialPost LP and MAA LP)), MAA shall, and shall cause each MAA Subsidiary (including ColonialPost LP and MAA LP), as applicable, to, provide each individual who is an employee of ColonialPost or any ColonialPost Subsidiary immediately prior to the Closing and who remains employed by Colonial,Post, any ColonialPost Subsidiary, MAA or any MAA Subsidiary (including ColonialPost LP and MAA LP) immediately following the Closing (each a “Continuing Employee” and collectively, the “Continuing Employees”) with (i) an aggregate annual base salary and target bonus opportunity (excluding equity-based compensation) at least equal to that provided by Colonial and the Colonial Subsidiaries immediately prior to the Closing, (ii) severance payments and benefits that are no less favorable to those provided by Colonial and the Colonial Subsidiaries immediately prior to the closing, and (iii) all other compensation and benefits, that are, in the aggregate, no less favorable than those provided to similarly situated employees of MAA or the MAA Subsidiary, as applicable, immediately following the Closing. During the period commencing on the Closing and ending on the date that is six (6) months after the Closing, MAA shall, and shall cause each MAA Subsidiary to, provide each Continuing Employee, to the extent their employment is severed during such period, with severance payments and benefits equal to the greater of the severance payments and benefits provided by (i) MAA or any MAA Subsidiary or (ii) Post and the Post Subsidiaries prior to the date of this Agreement and as set forth in Section 7.20(a) of the Post Disclosure Letter.
(b) MAA shall, and shall cause the MAA Subsidiaries (including ColonialPost LP and MAA LP) to, provide credit for each Continuing Employee’s length of service with ColonialPost and the ColonialPost Subsidiaries (as well as service with any predecessor employer of ColonialPost or any ColonialPost Subsidiary) for all purposes
(including (including eligibility, vesting and benefit level, but not for purposes of any benefit accrual under any defined benefit pension plan) under each plan, program, policy, agreement or arrangement of MAA or the MAA Subsidiaries (including ColonialPost LP and MAA LP) (including vacation, paid time-off and severance arrangements) to the same extent that such service was recognized under a similar plan, program, policy, agreement or arrangement of ColonialPost or any ColonialPost Subsidiary, except that no such prior service credit will be required or provided to the extent that (i) it results in a duplication of benefits, or (ii) such service was not recognized under the corresponding ColonialPost Employee Benefit Plan.
(c) To the extent permitted by applicable Law, MAA shall use reasonable best efforts to cause each MAA Employee Benefit Plan in which any Continuing Employee participates that provides health or welfare
benefits to (i) waive all limitations as to preexisting conditions, exclusions, waiting periods and service conditions with respect to participation and coverage requirements applicable to Continuing Employees, other than limitations applicable under the corresponding ColonialPost Employee Benefit Plan or to the extent that such pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods would not have been satisfied or waived under the comparable ColonialPost Employee Benefit Plan and (ii) honor any payments, charges and expenses of Continuing Employees (and their eligible dependents) that were applied toward the deductible and out-of-pocket maximums under the corresponding ColonialPost Employee Benefit Plan in satisfying any applicable deductibles, out-of-pocket maximums or co-payments under a corresponding Colonial BuyerPost Employee Benefit Plan during the calendar year in which the Closing occurs.
(d) Nothing in thisSection 7.177.20 shall (i) confer any rights upon any Person, including any Continuing Employee or former employee of ColonialPost or the ColonialPost Subsidiaries, other than the partiesParties to this Agreement and their respective successors and permitted assigns, (ii) constitute or create an employment agreement or create any right in any Continuing Employee or any other Person to any continued employment or service with or for Colonial,Post, the ColonialPost Subsidiaries, MAA, or the MAA Subsidiaries, or to any compensation or benefits of any nature or kind whatsoever, (iii) constitute or be treated as an amendment, modification, adoption, suspension or termination of any employee benefit plan, program, policy, agreement or arrangement of Colonial,Post, the ColonialPost Subsidiaries, MAA, or the MAA Subsidiaries, or (iv) alter or limit the ability of Colonial,Post, the ColonialPost Subsidiaries, MAA, or the MAA Subsidiaries to amend, modify or terminate any benefit plan, program, policy, agreement or arrangement at any time assumed, established, sponsored or maintained by any of them.
Section 7.18Transfer(e) Post, the Post Subsidiaries, MAA and the MAA Subsidiaries hereby acknowledge that (i) the Mergers will constitute a “Change in Control” (or concept of Assets. Prior tosimilar import) under the Partnership Merger Effective Time, MAA shall transfer, or cause the transferPost Employee Benefit Plans and (ii) as a result of the real property assets listed onMerger, the individuals identified in Section 7.187.20(e) of the MAAPost Disclosure Letter will be deemed to MAA LPhave experienced a “Good Reason” event (or to a subsidiaryconcept of MAA LP) such that (i)similar import), as applicable, for all of the interests owned by MAA, directly or indirectly, in the assets listed onSection 5.18(a) of the MAA Disclosure Letter shall be owned by MAA LP, directly or indirectly, at the Partnership Merger Effective Time, and in connection with such transfer, MAA LP shall issue additional MAA OP Units to MAA and (ii) following completion of the transfer of such real property assets, MAA shall not directly own any assets other than partnership interests in MAA LP or as permittedpurposes under the Amended Partnership Agreement.Post Employee Benefit Plans.
Section 7.19Registration Rights Agreements. At the Closing, Colonial and Colonial LP shall assign and MAA and MAA LP shall assume by appropriate instrument the Registration Rights Agreements set forth in Section 7.19(a) of the Colonial Disclosure Letter, subject to applicable Law;provided, that no such assumption shall be required if the issuance of New MAA OP Units and the shares of MAA Common Stock into which such New MAA OP Units may be exchanged pursuant to the terms of the Amended Partnership Agreement has been registered under the Securities Act.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1Conditions to Each Party’s Obligation to Effect the Mergers. The respective obligations of the Parties to this Agreement to effect the Mergers and to consummate the other transactions contemplated by this
Agreement on the Closing Date are subject to the satisfaction or (to the extent permitted by Law) waiver in writing by each of the Parties at or prior to the PartnershipParent Merger Effective Time of the following conditions:
(a) Shareholder Approvals. Each of the Colonial Shareholder Approval, the MAAPost Shareholder Approval and the MAA PartnerShareholder Approval shall have been obtained.
(b) Registration Statement. The Form S-4 shall have become effective in accordance with the provisions of the Securities Act. No stop order suspending the effectiveness of the Form S-4 shall have been issued by the SEC and remain in effect and no proceeding to that effect shall have been commenced or threatened by the SEC and not withdrawn.
(c) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any Governmental Authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Mergers or any of the other transactions contemplated by this Agreement shall be in effect.
(d) Listing. The shares of MAA Common Stock and MAA Series I Preferred Stock to be issued in the Parent Merger shall have been approved for listing on the NYSE, subject to official notice of issuance, at, or prior to, the Closing.
(e) Third Party Consents. The consents and approvals set forth in Section 8.1(e) of the MAA Disclosure Letter shall have been obtained and shall be in full force and effect, and all conditions
Section 8.2Conditions to Obligations of the MAA Parties. The obligations of the MAA Parties to effect the Mergers and to consummate the other transactions contemplated by this Agreement are subject to the satisfaction or (to the extent permitted by Law) waiver in writing by MAA, at or prior to the PartnershipParent Merger Effective Time, of the following additional conditions:
(a) Representations and Warranties. The representations and warranties set forth inSection 4.3(a) (Capital(Capital Structure) (except the first two sentences),Section 4.4 (Authority) andSection 4.22 (Vote Required), shall be true and correct in all material respects as of the date of this Agreement and as of the PartnershipParent Merger Effective Time, as though made as of the Partnership Merger Effective Time, (ii) the representations and warranties set forth in the first two sentences ofSection 4.3(a) (Capital Structure) shall be true and correct in all but de minimis respects as of the date of this Agreement and as of the Partnership Merger Effective Time, as though made as of the PartnershipParent Merger Effective Time, and (iii)(ii) each of the other representations and warranties of the ColonialPost Parties contained in this Agreement shall be true and correct as of the date of this Agreement and as of the PartnershipParent Merger Effective Time, as though made as of the PartnershipParent Merger Effective Time, except (x)(A) in each case, representations and warranties that are made as of a specific date shall be true and correct only on and as of such date, and (y)(B) in the case of clause (iii)(ii) where the failure of such representations or warranties to be true and correct (without giving effect to any materiality or “Colonial“Post Material Adverse Effect” qualifications set forth therein) would not reasonably be expected to have, individually or in the aggregate, a ColonialPost Material Adverse Effect.
(b) Performance of Covenants and Obligations of the ColonialPost Parties. Each ColonialPost Party shall have performed in all material respects all obligations, and complied in all material respects with all agreements and covenants, required to be performed by it under this Agreement on or prior to the PartnershipParent Merger Effective Time.
(c) Delivery of Certificates. ColonialPost shall have delivered to MAA a certificate, dated the date of the Closing and signed by its chief executive officer or chief financial officer on behalf of the ColonialPost Parties,
certifying to the effect that the conditions set forth inSection 8.2(a),Section 8.2(b) andSection 8.2(d) have been satisfied.
(d) Material Adverse Change. On the Closing Date, there shall not exist any event, change, or occurrence arising after the date of this Agreement that, individually, or in the aggregate, constitutes a ColonialPost Material Adverse Effect.
(e) Opinion Relating to REIT Qualification. MAA shall have received the written opinionopinions (the “Post REIT Opinions”) of Hogan Lovells USKing & Spalding LLP (or other ColonialPost counsel reasonably acceptable to MAA), dated as of the Closing Date and in the form attached hereto asExhibit HE, to the effect that for all taxable periods commencing with its taxable year ended December 31, 20042006 and ending with its taxable year that ends with the Parent Merger, ColonialPost (and each Post REIT Subsidiary) has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and in the case of each Post REIT Subsidiary, that its past, current and intended future organization and operations will permit each such Post REIT Subsidiary to continue to qualify for taxation as a REIT under the Code for its taxable year which includes the Parent Merger Effective Time and thereafter (which opinionopinions shall be based upon the representation letters described inSection 7.15(a)7.17(a)(ii)(A) andSection 7.15(b)7.17(b)(ii)(B)).
(f) Section 368 Opinion. MAA shall have received the written opinion (the “MAA 368 Opinion”) of Goodwin Procter LLP (or other counsel reasonably satisfactory to MAA), dated as of the Closing Date and in the form set forth inExhibit JF, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, and in a full form customary for similar transactions and reasonably satisfactory to Colonial, the Parent Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel shall rely upon the tax representation letters described inSection 7.15(a)7.17(a)(iii) andSection 7.15(b)7.17(b)(iii).
(g) Dissenting Shares. No more than 15% of the outstanding Colonial Common Shares as of the Closing shall be Dissenting Shares.
Section 8.3Conditions to Obligations of the ColonialPost Parties. The obligations of the ColonialPost Parties to effect the Mergers and to consummate the other transactions contemplated by this Agreement are subject to the satisfaction or (to the extent permitted by Law) waiver in writing by Colonial,Post, at or prior to the PartnershipParent Merger Effective Time, of the following additional conditions:
(a) Representations and Warranties. (i) The representations and warranties set forth inSection 5.3(a) (Capital Structure) (except the first two sentences),Section 5.4 (Authority), andSection 5.22 (Vote Required), shall be true and correct in all material respects as of the date of this Agreement and as of the PartnershipParent Merger Effective Time, as though made as of the Partnership Merger Effective Time, (ii) the representations and warranties set forth in the first two sentences ofSection 5.3(a) (Capital Structure) shall be true and correct in all but de minimis respects as of the date of this Agreement and as of the Partnership Merger Effective Time, as though made as of the PartnershipParent Merger Effective Time, and (iii)(ii) each of the other representations and warranties of the PartnershipMAA Parties contained in this Agreement shall be true and correct as of the date of this Agreement and as of the PartnershipParent Merger Effective Time, as though made as of the PartnershipParent Merger Effective Time, except (x)(A) in each case, representations and warranties that are made as of a specific date shall be true and correct only on and as of such date, and (y)(B) in the case of clause (iii)(ii) where the failure of such representations or warranties to be true and correct (without giving effect to any materiality or “MAA Material Adverse Effect” qualifications set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a MAA Material Adverse Effect.
(b) Performance of Covenants or Obligations of the MAA Parties. Each MAA Party shall have performed in all material respects all obligations, and complied in all material respects with all agreements and covenants, required to be performed by it under this Agreement on or prior to the PartnershipParent Merger Effective Time.
(c) Delivery of Certificates. MAA shall have delivered to ColonialPost a certificate, dated the date of the Closing and signed by its chief executive officer or chief financial officer on behalf of the MAA Parties,
certifying to the effect that the conditions set forth inSection 8.3(a),Section 8.3(b) andSection 8.3(d) have been satisfied.
(d) Material Adverse Change. On the Closing Date, there shall not exist any event, change or occurrence arising after the date of this Agreement that, individually or in the aggregate, constitutes a MAA Material Adverse Effect.
(e) Opinion Relating to REIT Qualification. ColonialPost shall have received the written opinion (the “MAA REIT Opinion”) of Baker, Donelson, Bearman, CaldwellBass, Berry & Berkowitz, PCSims PLC (or other MAA counsel reasonably satisfactory to Colonial)Post), dated as of the Closing Date in the form attached hereto asExhibit IG, to the effect that for all taxable periods commencing with its taxable year ended December 31, 2004,2006, MAA has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and that its past, current and intended future organization and operations will permit MAA to continue to qualify for taxation as a REIT under the Code for its taxable year which includes the Parent Merger Effective Time and thereafter (which opinion shall be based upon the representation letters described inSection 7.15(a)7.17(a)(ii)(B) andSection 7.15(b)7.17(b)(ii)(A)).
(f) Section 368 Opinion. ColonialPost shall have received the written opinion (the “Post 368 Opinion”) of Hogan Lovells USKing & Spalding LLP (or other counsel reasonably satisfactory to Colonial)Post), dated as of the Closing Date and in the form set forth inExhibit KH, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, and in a full form customary for similar transactions and reasonably satisfactory to MAA, the Parent Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel shall rely upon the tax representation letters described inSection 7.15(a)7.17(a)(iii) andSection 7.15(b)7.17(b)(iii).
(g) Transfer of Assets. MAA shall have effected, or shall have otherwise caused to be effected, the transfer of assets described inSection 7.18 prior to the Partnership Merger Effective Time.
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1Termination. This Agreement may be terminated at any time prior to the PartnershipParent Merger Effective Time, by action taken or authorized by the MAA Board or ColonialPost Board, as applicable, as follows:
(a) by mutual consent of MAA and ColonialPost in a written instrument;
(b) by either MAA or Index to Financial Statements
Colonial,Post, upon written notice to the other Party, if any Governmental Authority of competent jurisdiction shall have issued an order, decree or ruling or taken any other action permanently enjoining or otherwise prohibiting the Mergers, and such order, decree, ruling or other action has become final and nonappealable;provided,however, that the right to terminate this Agreement under thisSection 9.1(b) shall not be available to any Party whose failure to comply with any provision of this Agreement has been the cause of, or resulted in, such action;
(c) by either MAA or Colonial,Post, upon written notice to the other Party, if the Mergers shall not have been consummated on or before 5:00 p.m. (New York time) on December 31, 2013February 28, 2017 (such date and time referred to as the “Outside Date”);provided,however, that the right to terminate this Agreement under thisSection 9.1(c) shall not be available to any Party whose failure to comply with any provision of this Agreement has been the cause of, or resulted in, the failure of the Mergers to occur on or before such date;
(d) by either MAA or Colonial,Post, upon written notice to the other Party, if there shall have been a breach by the other Party of any of the covenants or agreements or any of the representations or warranties set forth in this Agreement on the part of such other Party, which breach, either individually or in the aggregate, would result
in, if occurring or continuing on the Closing Date, the failure to be satisfied of a condition set forth inSection 8.2(a) or(b)Section 8.2(b) orSection 8.3(a) or(b)Section 8.3(b), as the case may be, unless such breach is reasonably capable of being cured, and the other Party shall continue to use its reasonable best efforts to cure such breach, prior to the Outside Date;provided, that a Party shall not have the right to terminate this Agreement pursuant to thisSection 9.1(d) if such Party is then in breach of any of its own respective representations, warranties, covenants or agreements set forth in this Agreement such that the conditions set forth inSection 8.2(a) or(b)Section 8.2(b) orSection 8.3(a) or(b)Section 8.3(b), as the case may be, would not be satisfied;
(e) by either MAA or Colonial,Post, if the MAA Shareholder Approval or ColonialPost Shareholder Approval shall not have been obtained upon a vote taken thereon at the duly convened MAA ShareholdersShareholder Meeting or Colonial ShareholdersPost Shareholder Meeting, as the case may be;be (including after taking into account any adjournment, postponement or recess thereof);provided,however, that the right to terminate this Agreement under thisSection 9.1(e) shall not be available to MAA where a failure to obtain the MAA Shareholder Approval was primarily caused by any action or failure to act of a MAA Party that constitutes a material breach of its obligations underSection 7.1 orSection 7.4 (other than an unintentional and inadvertent breach ofSection 7.4 that was not intended to result in an Acquisition Proposal nevertheless resulted in an Acquisition Proposal), and the right to terminate this Agreement under thisSection 9.1(e) shall not be available to ColonialPost where a failure to obtain the ColonialPost Shareholder Approval was primarily caused by any action or failure to act of a ColonialPost Party that constitutes a material breach of its obligations underSection 7.1 orSection 7.4 (other than an unintentional and inadvertent breach ofSection 7.4 that was not intended to result in an Acquisition Proposal nevertheless resulted in an Acquisition Proposal);
(f) by Colonial,Post, by written notice to MAA:
(i) at any time prior to the receipt of the ColonialPost Shareholder Approval in order to enter into an Acquisition Agreement with respect to a Superior Proposal in accordance withSection 7.4;provided,however, that this Agreement may not be so terminated unless the payment required bySection 9.3(a)(v) is made in full to MAA substantially concurrently with the occurrence of such termination and the entry into such Acquisition Agreement with respect to such Superior Proposal, and in the event that such Acquisition Agreement is not substantially concurrently entered into and such payment is not concurrently made, such termination shall be null and void; or
(ii) if (x) the MAA Board shall have made a Change in MAA Recommendation (provided(provided that Colonial’sit is understood and agreed that neither a Notice of Recommendation Change nor the intention underlying such Notice of Recommendation Change that is not publicly made shall in and of itself be considered a Change in MAA Recommendation;providedfurther that Post’s right to terminate this Agreement pursuant to thisSection 9.1(f)(ii) in respect of a Change in MAA Recommendation shall expire ten (10) Business Days after the date on which ColonialPost receives notice from MAA of such Change in MAA Recommendation) or (y) the MAA Parties shall have materially breached any of their obligations underSection 7.4(other than any immaterial or inadvertent breaches thereof not intended;
(g) by MAA, by written notice to Colonial:Post:
(i) at any time prior to the receipt of the MAA Shareholder Approval in order to enter into an Acquisition Agreement with respect to a Superior Proposal in accordance withSection 7.4;provided,however, that this Agreement may not be so terminated unless the payment required bySection 9.3(a)(vii) is made in full to ColonialPost substantially concurrently with the occurrence of such termination and the entry into such Acquisition Agreement with respect to such Superior Proposal, and in the event that such Acquisition Agreement is not substantially concurrently entered into and such payment is not concurrently made, such termination shall be null and void; or
(ii) if (x) the ColonialPost Board shall have made a Change in ColonialPost Recommendation (provided(provided that it is understood and agreed that neither a Notice of Recommendation Change nor the intention underlying such Notice of Recommendation Change that is not publicly made shall in and of itself be considered a Change in Post Recommendation;providedfurther that MAA’s right to terminate this Agreement pursuant to thisSection 9.1(g)(ii) in respect of a Change in ColonialPost Recommendation shall expire ten (10) Business Days after the date on which MAA receives notice from ColonialPost of such Change in ColonialPost Recommendation) or (y) the Colonial Parties shall have materially breached any of their obligations underSection 7.4 (other than any immaterial or inadvertent breaches thereof not intended to result in an Acquisition Proposal);.
(h) by either MAA or Colonial, if the MAA Partner Approval shall not have been obtained prior to, or contemporaneously with, the MAA Shareholder Meeting;provided,however, that the right to terminate this
Agreement under thisSection 9.1(h) shall not be available to MAA where a failure to obtain the MAA Partner Approval was primarily caused by any action or failure to act of a MAA Party that constitutes a material breach of this Agreement.
Section 9.2Effect of Termination.
(a) In the event that this Agreement is terminated pursuant toSection 9.1, written notice thereof shall be given to the other Party or Parties, specifying the provisions hereof pursuant to which such termination is made and describing the basis therefor in reasonable detail, and subject to compliance withSection 9.3, this Agreement shall forthwith become null and void and of no further force or effect whatsoever without liability on the part of any Party hereto, and all rights and obligations of any Party hereto shall cease;provided,however, that, notwithstanding anything in the foregoing to the contrary (a) no such termination shall relieve any Party hereto of any liability or damages resulting from or arising out of fraud or any intentionalwillful breach of this Agreement; and (b) the Confidentiality Agreement,Section 7.2(b), thisSection 9.2,Section 9.3,Article X(other (other thanSection 10.1) and the definitions of all defined terms appearing in such sections shall survive any termination of this Agreement pursuant toSection 9.1. If this Agreement is terminated as provided herein, all filings, applications and other submissions made pursuant to this Agreement, to the extent practicable, shall be withdrawn from the Governmental Authority or other Person to which they were made. For purposes of the foregoing, “intentionalwillful breach” shall mean a material breach that is a consequence of either (i) an act knowingly undertaken by the breaching Party with the intent of causing a breach of this Agreement or (ii) an act knowingly undertaken by the breaching Party that was reasonably likely to result in a breach of this Agreement (even if a breach of this Agreement was not the conscious object of such act) and which in fact does cause a breach of this Agreement.
Section 9.3Termination Fees and Expense Amount.
(a) If, but only if, this Agreement is terminated:
(i) by either MAA or ColonialPost pursuant toSection 9.1(c), orSection 9.1(e) orSection 9.1(h),(due to a failure to obtain the Post Shareholder Approval) or by ColonialMAA pursuant toSection 9.1(d), and, in all cases, as of the date of the termination of this Agreement (A) all conditions to the consummation of the Mergers set forth inSection 8.1(c) andSection 8.3 (other thanSection 8.3(f)) have been satisfied (or are capable of being satisfied) and (B) there shall not have been a failure to obtain the MAA (x)Shareholder Approval at a vote taken thereon at the duly convened MAA Shareholder Meeting and Post (1) receives or has received a bona fide Acquisition Proposal with respect to MAA afterPost, which proposal has been publicly announced prior to the date of the Post Shareholder Meeting (with respect to a termination underSection 9.1(e)) or prior to the date of the termination of this Agreement (with respect to a termination underSection 9.1(c) orSection 9.1(d)) and, (2) within twelve (12) months of the termination of this Agreement, consummates a transaction regarding, or executes a definitive agreement which is later consummated with respect to, an Acquisition Proposal, then Post shall pay, or cause to be paid, to MAA the Termination Fee plus, if not previously paid pursuant toSection 9.3(a)(iii) below, the Expense Amount, by wire transfer of same day funds to an account designated by MAA, not later than the consummation of such transaction arising from such Acquisition Proposal;
provided,however, that for purposes of thisSection 9.3(a)(i), the references to “twenty percent (20%)” and to “eighty percent (80%)” in the definition of Acquisition Proposal shall be deemed to be references to “seventy-five percent (75%)”;
(ii) by either MAA or Post pursuant toSection 9.1(c) orSection 9.1(e) (due to a failure to obtain the MAA Shareholder Approval) or by Post pursuant toSection 9.1(d) and, in all cases, as of the date of the termination of this Agreement (A) all conditions to the consummation of the Mergers set forth inSection 8.1(c) andSection 8.2 (other thanSection 8.2(f)) have been satisfied (or are capable of being satisfied) and (B) there shall not have been a failure to obtain the Post Shareholder Approval at a vote taken thereon at the duly convened Post Shareholder Meeting and MAA (1) receives or has received a bona fide Acquisition Proposal with respect to MAA, which proposal has been publicly announced prior to the date of the MAA Shareholder Meeting (with respect to a termination underSection 9.1(e) orSection 9.1(h)) or prior to the date of the termination of this Agreement (with respect to a termination underSection 9.1(c) orSection 9.1(d)), and, (y)(2) within twelve (12) months of the termination of this Agreement, consummates a transaction regarding, or executes a definitive agreement which is later consummated with respect to, an Acquisition Proposal, then MAA shall pay, or cause to be paid, to Colonial a fee equal toPost the Termination Fee plus, if not previously paid pursuant toSection 9.3(a)(iv) below, the Expense Amount, by wire transfer of same day funds to an account designated by Colonial,Post, not later than the consummation of such transaction arising from such Acquisition Proposal;provided,,however,, that for purposes of thisSection 9.3(a)(i), the references to “twenty percent (20%)” in the definition of Acquisition Proposal shall be deemed to be references to “fifty percent (50%)”;
(ii) by either MAA or Colonial pursuant toSection 9.1(c) orSection 9.1(e) or by MAA pursuant toSection 9.1(d) and Colonial (x) receives or has received a bona fide Acquisition Proposal with respect to Colonial, which proposal has been publicly announced prior to the date of the Colonial Shareholder Meeting (with respect to a termination underSection 9.1(e)) or prior to the termination of this Agreement (with respect to a termination underSection 9.1(c) orSection 9.1(d)) and (y) within twelve (12) months of the termination of this Agreement, consummates a transaction regarding, or executes a definitive agreement which is later consummated with respect to, an Acquisition Proposal, then Colonial shall pay, or cause to be paid, to MAA the Termination Fee plus, if not previously paid pursuant toSection 9.3(a)(v) below, the Expense Amount, by wire transfer of same day funds to an account designated by MAA, not later than the consummation of such transaction arising from such Acquisition Proposal;provided,however, that for purposes of thisSection 9.3(a)(ii), the references to “twenty percent (20%)” and to “eighty percent (80%)” in the definition of Acquisition Proposal shall be deemed to be references to “fifty“seventy-five percent (50%(75%)”;
(iii) by either MAA or ColonialPost pursuant toSection 9.1(e) because the MAAPost Shareholder Approval shall not have been obtained, by either MAA or Colonial pursuant toSection 9.1(h) because the MAA
Partner Approval shall not have been obtained, or by Colonial pursuant toSection 9.1(d), then MAA shall pay, or cause to be paid, to Colonial the Expense Amount (by wire transfer to an account designated by Colonial) within two (2) Business Days of such termination;
(iv) by either MAA or Colonial pursuant toSection 9.1(e) because the Colonial Shareholder Approval shall not have been obtained, or by MAA pursuant toSection 9.1(d), then ColonialPost shall pay, or cause to be paid, to MAA the Expense Amount (by wire transfer to an account designated by MAA) within two (2) Business Days of such termination;
(iv) by either MAA or Post pursuant toSection 9.1(e) because the MAA Shareholder Approval shall not have been obtained, then MAA shall pay, or cause to be paid, to Post the Expense Amount (by wire transfer to an account designated by Post) within two (2) Business Days of such termination;
(v) by ColonialPost pursuant toSection 9.1(f)(i) then ColonialPost shall pay, or cause to be paid, to MAA the Termination Fee together with the Expense Amount, by wire transfer of same day funds to an account designated by MAA as a condition to the effectiveness of such termination;
(vi) by ColonialPost pursuant toSection 9.1(f)(ii), then MAA shall pay, or cause to be paid, to Colonial the Termination Fee together with Expense Amount, by wire transfer of same day funds to an account designated by Colonial, within two (2) Business Days of such termination;
(vii) by MAA pursuant toSection 9.1(g)(i), then MAA shall pay, or cause to be paid, to ColonialPost the Termination Fee together with the Expense Amount, by wire transfer of same day funds to an account designated by ColonialPost, within two (2) Business Days of such termination;
(vii) by MAA pursuant toSection 9.1(g)(i), then MAA shall pay, or cause to be paid, to Post the Termination Fee together with the Expense Amount, by wire transfer of same day funds to an account designated by Post as a condition to the effectiveness of such termination; or
(viii) by MAA pursuant toSection 9.1(g)(ii), then ColonialPost shall pay, or cause to be paid, to MAA the Termination Fee together with the Expense Amount, by wire transfer of same day funds to an account designated by MAA, within two (2) Business Days of such termination;termination.
(b) Notwithstanding anything to the contrary set forth in this Agreement, the Parties agree that:
(i) under no circumstances shall MAA or ColonialPost be required to pay the Termination Fee andor the Expense Amount on more than one occasion; and
(ii) neither MAA nor ColonialPost shall be required to pay any amount in excess of the sum of the Termination Fee and the Expense Amount, except as set forth inSection 9.3(c) or in the case of such Party’s fraud or intentionalwillful breach of this Agreement.
(c) Each of the Parties hereto acknowledges that (i) the agreements contained in thisSection 9.3 are an integral part of the transactions contemplated by this Agreement, (ii) neither the Termination Fee nor the
Expense Amount is a penalty, and (iii) without these agreements, the Parties would not enter into this Agreement; accordingly, if MAA or Colonial,Post, as the case may be, fails to timely pay any amount due pursuant to thisSection 9.3 and, in order to obtain such payment, either MAA or Colonial,Post, as the case may be, commences a suit that results in a judgment against the other Party for the payment of any amount set forth in thisSection 9.3, such paying Party shall pay the other Party its costs and Expenses in connection with such suit, together with interest on such amount at the annual rate of the prime rate of Citibank, N.A. in effect on the date of payment for the period from the date such payment was required to be made through the date such payment was actually received, or such lesser rate as is the maximum permitted by applicable LawLaw.
(d) Limitations on PaymentPayment.
(i) If one Party to this Agreement (the “Fee Payor”) is required to pay another Party to this Agreement (the “Fee Payee”) an Expense Amount and/or Termination Fee, such Expense Amount and/or Termination Fee, as applicable, shall be paid into escrow on the date such payment is required to be paid by the Fee Payor pursuant to this Agreement by wire transfer of immediately available funds to an escrow account designated in accordance with thisSection 9.3(d). In the event that the Fee Payor is obligated to pay the Fee
Payee the Expense Amount and/or Termination Fee, as applicable, the amount payable to the Fee Payee in any tax year of the Fee Payee shall not exceed the lesser of (i) the Expense Amount and/or Termination Fee, as applicable, of the Fee Payee, and (ii) the sum of (A) the maximum amount that can be paid to the Fee Payee without causing the Fee Payee to fail to meet the requirements of Section 856(c)(2) and (3) of the Code for the relevant tax year, determined as if the payment of such amount did not constitute income described in Sections 856(c)(2) or 856(c)(3) of the Code (“Qualifying Income”) and the Fee Payee has income from unknown sources during such year in an amount equal to 1% of its gross income which is not Qualifying Income (in addition to any known or anticipated income which is not Qualifying Income), in each case, as determined by the Fee Payee’s independent accountants, plus (B) in the event the Fee Payee receives either (x) a letter from the Fee Payee’s counsel indicating that the Fee Payee has received a ruling from the IRS as described below in thisSection 9.3(d) or (y) an opinion from the Fee Payee’s outside counsel as described below in thisSection 9.3(d), an amount equal to the excess of the Expense Amount and/or the Termination Fee, as applicable, less the total amount paid under clause (A) above.
(ii) To secure the Fee Payor’s obligation to pay these amounts, the Fee Payor shall deposit into escrow an amount in cash equal to the Expense Amount or the Termination Fee, as applicable, with an escrow agent selected by the Fee Payor on such terms (subject to thisSection 9.3(d)) as shall be mutually agreed upon by the Fee Payor, the Fee Payee and the escrow agent. The payment or deposit into escrow of the Expense Amount or the Termination Fee, as applicable, pursuant to thisSection 9.3(d) shall be made at the time the Fee Payor is obligated to pay the Fee Payee such amount pursuant toSection 9.3 by wire transfer. The escrow agreement shall provide that the Expense Amount or the Termination Fee, as applicable, in escrow or any portion thereof shall not be released to the Fee Payee unless the escrow agent receives any one or combination of the following: (i) a letter from the Fee Payee’s independent accountants indicating the maximum amount that can be paid by the escrow agent to the Fee Payee without causing the Fee Payee to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code determined as if the payment of such amount did not constitute Qualifying Income and the Fee Payee has income from unknown sources during such year in an amount equal to 1% of its gross income which is not Qualifying Income (in addition to any known or anticipated income which is not Qualifying Income), in which case the escrow agent shall release such amount to the Fee Payee, or (ii) a letter from the Fee Payee’s counsel indicating that (A) the Fee Payee received a ruling from the IRS holding that the receipt by the Fee Payee of the Expense Amount and/or Termination Fee, as applicable, would either constitute Qualifying Income or would be excluded from gross income within the meaning of Sections 856(c)(2) and (3) of the Code or (B) the Fee Payee’s outside counsel has rendered a legal opinion to the effect that the receipt by the Fee Payee of the Expense Amount and/or the Termination Fee, as applicable, should either constitute Qualifying Income or should be excluded from gross income within the meaning of Sections 856(c)(2) and (3) of the Code, in which case the escrow agent shall release the remainder of the Expense Amount and/or the Termination Fee, as applicable, to the Fee Payee. The Fee Payor agrees to amend thisSection 9.3(d) at the reasonable request of the Fee Payee in order
to (i) maximize the portion of the Expense Amount and/or the Termination Fee, as applicable, that may be distributed to the Fee Payee hereunder without causing the Fee Payee to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code, (ii) improve the Fee Payee’s chances of securing a favorable ruling described in thisSection 9.3(d) or (iii) assist the Fee Payee in obtaining a favorable legal opinion from its outside counsel as described in thisSection 9.3(d). Any amount of the Expense Amount and/or the Termination Fee, as applicable, that remains unpaid as of the end of a taxable year shall be paid as soon as possible during the following taxable year, subject to the foregoing limitations of thisSection 9.3(d),;provided, that the obligation of the Fee Payor to pay the unpaid portion of the Expense Amount and/or the Termination Fee, as applicable, shall terminate on the December 31 following the date which is five (5) years from the date of this Agreement. Any costs and expenses of the escrow agent shall be borne solely by the Fee Payee.
Any payment due to a Party described inSection 9.3(c) shall be subject to the same limitations on payment as set forth in thisSection 9.3(d).
(e) Except as set forth in thisSection 9.3, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses whether or not the Mergers are consummated.
Section 9.4Amendment. To the extent permitted by applicable Law, this Agreement may be amended by the Parties hereto, by action taken or authorized by the ColonialPost Board or the MAA Board, as applicable, at any time before or after approval of the matters presented in connection with the Mergers by the shareholders of MAA, shareholders of ColonialPost or holders of MAA OP Units, but, after any such approval, no amendment shall be made which by Law requires further approval by such shareholders or holders without such further approval by such shareholders or holders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties hereto.
Section 9.5Extension; Waiver. At any time prior to the PartnershipParent Merger Effective Time, the Parties hereto, by action taken or authorized by the ColonialPost Board or the MAA Board, as applicable, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other Party hereto, (b) waive any inaccuracies in the representations and warranties of the other Party contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a Party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such Party. The failure of a Party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. No single or partial exercise of any right, remedy, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Any waiver shall be effective only in the specific instance and for the specific purpose for which given and shall not constitute a waiver to any subsequent or other exercise of any right, remedy, power or privilege hereunder.
ARTICLE X
GENERAL PROVISIONS
Section 10.1Non-Survival of Representations, Warranties and Agreements. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, and agreements, shall survive the PartnershipParent Merger Effective Time, except for those covenants and agreements contained herein and therein that by their terms apply or are to be performed in whole or in part after the PartnershipParent Merger Effective Time. The Confidentiality Agreements will survive termination of this Agreement in accordance with its terms.
Section 10.2Notices. All notices, requests, claims, consents, demands and other communications hereunder shall be in writing and shall be delivered personally, by telecopy,e-mail or telefacsimile, by a recognized courier service, or by registered or certified mail, return receipt requested, postage prepaid, and in each case shall be deemed duly given on the date of actual delivery, upon confirmation of receipt. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice, and a copy of each notice shall also be sent via e-mail.Index to Financial Statements
(a) if to the MAA Parties, to:
Mid-America Apartment Communities, Inc. | ||||||
6584 Poplar Avenue | ||||||
Memphis, TN 38138 | ||||||
| Telephone: | (901) 682-6600 | |||||
| Facsimile: | (901) 682-6667 | |||||
| Attention: | H. Eric Bolton Jr. | |||||
| Chief Executive Officer | ||||
Robert J. DelPriore Executive Vice President and General Counsel | ||||
| E-mail: | eric.bolton@maac.com | |||
| robert.delpriore@maac.com | ||||
with copies to: | ||||
Section 10.3Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to each other Party (including by means of electronic delivery), it being understood that the Parties need not sign the same counterpart. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.
Section 10.4Entire Agreement; No Third-Party Beneficiaries. This Agreement (including the schedules, documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof, other than the Confidentiality Agreement, which shall survive the execution and delivery of this Agreement. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person (other than the Parties hereto) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement except for (i) the rights, benefits and remedies granted to the Indemnified Parties underSection 7.6, (ii) after the Partnership Merger Effective Time, the rights of the holders of MAA OP Units to receive the consideration set forth inArticle III in accordance with the provisions of this Agreement; (iii) after the Parent Merger Effective Time, the rights of the holders of Colonial Common Shares to receive the Merger Consideration, and the rights of holders of Colonial Options and Colonial Restricted Share Awards to receive the consideration specified inArticle III in accordance with the provisions of this Agreement, and (iv) the right of Colonial and MAA, on behalf of its respective shareholders, to pursue claims for damages and other relief, including equitable relief, for the other Parties’ intentional breach of this Agreement, to the extent recovery is otherwise permitted underSection 9.2. The representations and warranties in this Agreement may represent an allocation among the Parties of risks associated with particular matters regardless of the knowledge of any of the Parties. Accordingly, Persons other than the Parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 10.5Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability and, unless the effect of such invalidity or unenforceability would prevent the Parties from realizing the major portion of the economic benefits of the Mergers that they currently anticipate obtaining therefrom, shall not render invalid or unenforceable the remaining terms and provisions of this Agreement or affect the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
Section 10.6Assignment. Neither this Agreement nor any of the rights, interests or obligations of the Parties hereunder shall be assigned by any of the Parties hereto (whether by operation of law or otherwise) without the prior written consent of the other Parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
Section 10.7Governing Law. This Agreement and all claims or causes of actions (whether at Law, in contract or in tort) that may be based upon, arise out of or related to this Agreement or the negotiation, execution or performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to agreements entered into and performed entirely therein by residents thereof, without regard to any provisions relating to choice of laws among different jurisdictions, except that (i) the laws of the State of Alabama (including the provisions of the AREITL and the ABNEC applicable to the Parent Merger) will apply to the Parent Merger and to the discharge of the fiduciary duties of the Colonial Board or any committee thereof in connection herewith, and (ii) the laws of the State of Tennessee (including the provisions of the TBCA
applicable to the Parent Merger) will apply to the Parent Merger and the Partnership Merger and to the discharge of the fiduciary duties of the MAA Board or any committee thereof in connection herewith.
Section 10.8Specific Performance; Venue. The Parties agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that monetary damages, even if available, would not be an adequate remedy therefor. It is accordingly agreed that, prior to the termination of this Agreement pursuant toArticle IX, the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (unless the Delaware Court of Chancery shall decline to accept jurisdiction over a particular matter, in which case, in any federal court within the State of Delaware), and each Party hereto hereby waives any requirement for the securing or posting of any bond in connection with such remedy, this being in addition to any other remedy to which they are entitled at Law or in equity. Each of the Parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any other Party or its successors or assigns shall be brought and determined in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (unless the Delaware Court of Chancery shall decline to accept jurisdiction over a particular matter, in which case, in any federal court within the State of Delaware), and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 10.9WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THISSECTION 10.9.
Section 10.10Authorship. The Parties agree that the terms and language of this Agreement are the result of negotiations between the Parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any Party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation.
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IN WITNESS WHEREOF, MAA, MAA LP, Colonial, Colonial LP and OP Merger Sub have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first set forth above.
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EXHIBITS AND SCHEDULES*
Annex B
PLAN OF MERGER
THIS PLAN OF MERGER (the “Plan of Merger”), dated as of June 3, 2013, is by and betweenMID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (“MAA”) andCOLONIAL PROPERTIES TRUST, an Alabama real estate investment trust (“Colonial”). MAA and Colonial are each sometimes referred to herein as a “Party” and collectively as the “Parties.”
RECITALS:
WHEREAS, concurrently with the execution and delivery of this Plan of Merger, Colonial and MAA have entered into an Agreement and Plan of Merger (the “Merger Agreement”) that, among other things, contemplates a merger of Colonial with and into MAA, with MAA being the surviving entity (the “Parent Merger”), on the terms and subject to the conditions set forth in this Plan of Merger and in accordance with the Alabama Real Estate Investment Trust Law (as amended, the “AREITL”), the Alabama Business and Nonprofit Entities Code (“ABNEC”) and the Tennessee Business Corporation Act (as amended, the “TBCA”).
WHEREAS, the board of directors of MAA and the board of trustees of Colonial have determined that it is in the best interests of their respective companies and respective shareholders for MAA and Colonial to combine their businesses by way of a merger of Colonial with and into MAA, with MAA being the surviving entity.
WHEREAS, the MAA Board has authorized the execution and delivery of this Plan of Merger to effectuate the Parent Merger.
WHEREAS, the Colonial Board has deemed the Parent Merger advisable and has authorized the execution and delivery of this Plan of Merger to effectuate the Parent Merger.
NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements of the Parties set forth herein, the Parties hereby agree as follows:
1.Definitions. For purposes of this Plan of Merger, capitalized terms used and not otherwise defined herein shall have the following meanings:
(a) “Colonial Common Shares” means common shares of beneficial interest in Colonial, par value $0.01 per share.
(b) “Colonial Equity Incentive Plans” means the Colonial 2008 Omnibus Incentive Plan, as amended, the Colonial Third Amended and Restated Share Option and Restricted Share Plan, as amended, and the Colonial Non-Employee Trustee Share Option Plan, as amended.
(c) “Colonial Option” means any option to purchase Colonial Common Shares under the Colonial Equity Incentive Plans or otherwise.
(d) “Colonial Restricted Share Award” means an award of Colonial Common Shares granted under the Colonial Equity Incentive Plans that are unvested or subject to a substantial risk of forfeiture.
(e) “Colonial Subsidiary” means Colonial LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) Colonial and/or Colonial LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) Colonial and/or any Person that is a Colonial Subsidiary by reason of the application of clause (a) or clause (c) of this definition of
“Colonial Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) Colonial and/or Colonial LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest.
(f) “MAA Common Stock” means shares of common stock in MAA, par value $0.01 per share.
(g) “MAA Subsidiary” means MAA LP and any corporation, other partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (a) MAA and/or MAA LP directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (b) MAA and/or any Person that is a MAA Subsidiary by reason of the application of clause (a) or clause (c) of this definition of “MAA Subsidiary” is a general partner, manager, managing member, trustee, director or the equivalent, or (c) MAA and/or MAA LP, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest.
(h) “Partnership Merger” means a merger transaction involving Mid-America Apartments, L.P., a Tennessee limited partnership (“MAA LP”) and Colonial Realty Limited Partnership (“Colonial LP”), a Delaware limited partnership, in which immediately prior to the Parent Merger, Colonial LP shall merge with and into MAA LP, with MAA LP continuing as the surviving entity and a subsidiary of MAA thereafter.
(i) “Person” means an individual, corporation, partnership, limited partnership, limited liability company, person (including a “person” as defined in Section 13(d)(3) of the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder), trust, association or other entity or a Governmental Authority or a political subdivision, agency or instrumentality of a Governmental Authority.
2.The Parent Merger. As of the Parent Merger Effective Time (as defined herein), Colonial shall be merged with and into MAA, with MAA being the surviving business entity in the merger. The Parent Merger will have the effects set forth in the AREITL and the TBCA.
3.Effective Time of the Parent Merger. The Parent Merger shall become effective upon the later of such time as the articles of merger have been accepted for record by the Office of the Secretary of State for the State of Alabama or the effective time of the Parent Merger in Tennessee (the “Parent Merger Effective Time”).
4.Effects of Merger on Colonial Common Shares. At the Parent Merger Effective Time and by virtue of the Parent Merger and without any further action on the part of MAA, Colonial, or the holders of any securities of MAA or Colonial:
(a)Cancellation of Certain Colonial Common Shares. Each Colonial Common Share issued and outstanding immediately prior to the Parent Merger Effective Time that is held by MAA, any MAA Subsidiary or any wholly owned Colonial Subsidiary shall no longer be outstanding and shall automatically be retired and shall cease to exist, and no payment shall be made with respect thereto.
(b)Conversion of Certain Colonial Common Shares. Except as indicated otherwise herein, each Colonial Common Share issued and outstanding immediately prior to the Parent Merger Effective Time (other than shares to be cancelled in accordance withSection 4(a) and any Dissenting Shares (as defined in and to the extent provided inSection 4(c))), shall automatically be converted into the right to receive [0.360] (as the same may be adjusted pursuant toSection 4(g), the “Exchange Ratio”) validly issued, fully paid and non-assessable shares of MAA Common Stock ( the “Merger Consideration”), without interest.
(c)Dissenting Shares. Notwithstanding anything herein to the contrary, Colonial Common Shares that are outstanding immediately prior to the Parent Merger Effective Time and that are held by any Person who is entitled to dissent and properly perfects such Person’s dissenters’ rights of appraisal with respect to such Colonial
Common Shares (the “Dissenting Shares”) pursuant to, and who complies in all respects with,Section 10A-2-13.01 et. seq. of the ABNEC shall not be converted into shares of MAA Common Stock as provided inSection 4(b), but rather the holders of Dissenting Shares shall be entitled to payment by MAA of the fair value (as provided in Section 10A-2-13.01 et. seq. of the ABNEC (“ABNEC Article 13”)) of such Dissenting Shares in accordance with ABNEC Article 13;provided,however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to dissent under ABNEC Article 13, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Parent Merger Effective Time into, and shall have become exchangeable solely for the right to receive, shares of MAA Common Stock as provided inSection 4(b).
(d)Fractional Colonial Common Shares. No certificate or scrip representing fractional shares of MAA Common Stock shall be issued upon the surrender for exchange of certificates or the transfer of book-entry shares registered in the transfer books of Colonial, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of MAA. Notwithstanding any other provision herein, each holder of Colonial Common Shares converted pursuant to the Parent Merger who would otherwise have been entitled to receive a fraction of a share of MAA Common Stock shall receive, in lieu thereof, cash, without interest, in an amount equal to such fractional part of a share of MAA Common Stock multiplied by the volume weighted average price of MAA Common Stock for the ten (10) trading days immediately prior to the Closing Date, starting with the opening of trading on the first trading day to the closing of the second to last trading day prior to the Closing Date, as reported by Bloomberg (the “Fractional Share Consideration”).
(e)Conversion of Restricted Colonial Common Shares. Any and all Colonial Common Shares subject to Colonial Restricted Share Awards that are converted into the right to receive MAA Common Stock pursuant toSection 4(b) shall be converted into the right to receive shares of MAA Common Stock that are subject to the same vesting and forfeiture conditions and other terms and conditions as are applicable to the Colonial Restricted Share Award immediately prior to the Parent Merger Effective Time.
(f)Conversion of Colonial Options. Each outstanding Colonial Option, whether or not exercisable at the Parent Merger Effective Time, shall be assumed by MAA by virtue of the Parent Merger and without any action on the part of the holder thereof. Subject to, and in accordance with, the terms of the applicable Colonial Equity Incentive Plan and award agreement or other agreement or other document evidencing Colonial Options, from and after the Parent Merger Effective Time, each Colonial Option so assumed by MAA pursuant to the Parent Merger will otherwise continue to have, and be subject to, the same terms and conditions (including vesting schedule) as were applicable to the corresponding Colonial Option immediately prior to the Parent Merger Effective Time as set forth in the applicable Colonial Equity Incentive Plan (including any applicable award agreement, other agreement or other document evidencing such Colonial Option) immediately prior to the Parent Merger Effective Time, except that, from and after the Parent Merger Effective Time, (A) each Colonial Option, when exercisable, will be exercisable for that number of whole shares of MAA Common Stock equal to the product of the number of Colonial Common Shares that were subject to such Colonial Option immediately prior to the Parent Merger Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of MAA Common Stock and (B) the per share exercise price for the shares of MAA Common Stock issuable upon exercise of such assumed Colonial Option will be equal to the quotient determined by dividing the exercise price of each Colonial Common Share subject to such assumed Colonial Option by the Exchange Ratio, rounded up to the nearest whole cent.
(g)Adjustments. If at any time during the period between the date of this Plan of Merger and the effective time of the Partnership Merger (the “Partnership Merger Effective Time”), Colonial should split, combine or otherwise reclassify the Colonial Common Shares, or make a dividend or other distribution in Colonial Common Shares (including any dividend or other distribution of securities convertible into Colonial Common Shares), or engage in a reclassification, reorganization, recapitalization or exchange or other like change, then (without limiting any other rights of the other Parties hereunder), the Exchange Ratio shall be ratably adjusted to reflect fully the effect of any such change. If at any time during the period between the date of this Plan of Merger and
the Partnership Merger Effective Time, MAA should split, combine or otherwise reclassify the MAA Common Stock, or make a distribution in shares of MAA Common Stock (including any dividend or other distribution of securities convertible into MAA Common Stock), or engage in a reclassification, reorganization, recapitalization or exchange or other like change (without limiting any other rights of the other Parties hereunder), then the Exchange Ratio shall be ratably adjusted to reflect any such change.
(h)Withholding Rights. The Parties, Colonial LP, MAA LP, the respective affiliates of the foregoing and the bank or trust company appointed by MAA to act as exchange agent for the payment and delivery of the Merger Consideration and the Fractional Share Consideration, as applicable, shall be entitled to deduct and withhold from the Merger Consideration and Fractional Share Consideration (and any other consideration otherwise payable pursuant to this Plan of Merger or deemed paid for tax purposes), such amounts as it is required to deduct and withhold with respect to such payments under the Internal Revenue Code of 1986, as amended, or any other provision of state, local or foreign law. Any such amounts so deducted and withheld shall be paid over to the applicable governmental authority in accordance with applicable law and shall be treated for all purposes of this Plan of Merger as having been paid to the person in respect of which such deduction and withholding was made.
(i)Governing Documents. The charter and bylaws of MAA as in effect immediately prior to the Parent Merger Effective Time shall be the charter and bylaws of MAA immediately following the Parent Merger Effective Time, until further amended in accordance with applicable law.
(j)Termination; Abandonment. At any time prior to the Parent Merger Effective Time, this Plan of Merger may be terminated or abandoned by the Board of Directors of MAA or the Board of Trustees of Colonial. In the event of such termination or abandonment, this Plan of Merger shall become void and neither MAA nor Colonial nor their respective shareholders, trustees, directors or officers shall be liable in respect to such termination or abandonment.
5.Effects of Merger on MAA Common Stock. The presently outstanding MAA Common Stock shall remain outstanding, and the present holders of the MAA Common Stock shall retain their present rights therein.
6.Counterparts. This Plan of Merger may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to each other Party, it being understood that the Parties need not sign the same counterpart.
7.No Third Party Beneficiaries. Nothing in this Plan of Merger, express or implied, is intended to or shall confer upon any person (other than the Parties hereto) any right, benefit or remedy of any nature whatsoever under or by reason of this Plan of Merger except for, after the Parent Merger Effective Time, the rights of the holders of Colonial Common Shares to receive the Merger Consideration, and the rights of holders of Colonial Options and Colonial Restricted Share Awards to receive the consideration specified inSection 4 in accordance with the provisions of this Plan of Merger.
8.Effect on Merger Agreement. This Plan of Merger is intended to be the plan of merger for the Parent Merger as required by the ABNEC, AREITL and TBCA and has been executed pursuant to and in accordance with the Merger Agreement for the purpose of effecting the Parent Merger in accordance with the laws of Alabama and Tennessee. The parties to the Merger Agreement shall continue to be bound by the terms and conditions of the Merger Agreement, except that if the terms of this Plan of Merger are in conflict with any of the terms of the Merger Agreement, the terms of this Plan of Merger shall govern to the extent of such conflict.
IN WITNESS WHEREOF, MAA and Colonial have caused this Plan of Merger to be signed by their respective officers thereunto duly authorized, all as of the date first set forth above.
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Annex C
FORM OF COLONIAL PROPERTIES TRUST VOTING AGREEMENT
This Voting Agreement (this “Agreement”) is made and entered into as of June 3, 2013, by and among Mid-America Apartment Communities, Inc., a Tennessee corporation (“Martha”), Mid-America Apartments, L.P., a Tennessee limited partnership (“Martha LP”, and together with Martha, the “Martha Parties”), and the undersigned shareholder (the “Shareholder”) of Colonial Properties Trust, an Alabama real estate investment trust (“George”).
RECITALS
A. Concurrently with the execution of this Agreement, the Martha Parties, George, Colonial Realty Limited Partnership, a Delaware limited partnership (“George LP”), and Martha Merger Sub, L.P., a Delaware limited partnership (“OP Merger Sub”), have entered into an Agreement and Plan of Merger (the “Merger Agreement”) which provides for (i) the merger of George with and into Martha with Martha being the surviving entity (the “Parent Merger”) immediately after (ii) the merger of OP Merger Sub with and into George LP, with George LP continuing as the surviving entity and a subsidiary of Martha LP (the “Partnership Merger”, and together with the Parent Merger, the “Mergers”).
B. As a condition and an inducement to the Martha Parties’ willingness to enter into the Merger Agreement, the Martha Parties have required that the Shareholder, and the Shareholder has agreed, to enter into this Agreement with respect to (i) all common shares of beneficial interest, par value $0.01 per share, of George (“George Common Shares”) that the Shareholder owns beneficially (as defined for purposes of this Agreement in Rule 13d-3 under the Exchange Act) or of record and (ii) all limited partnership interests in George LP designated as a “Partnership Unit” (“George OP Units”) under the Fourth Amended and Restated Agreement of Limited Partnership of George LP, dated as of January 27, 2012, as amended, modified or supplemented from time to time (the “George LP Agreement”), that the Shareholder owns, if any, beneficially or of record.
C. The Shareholder is the beneficial or record owner, and has either sole or shared voting power over, such number of George Common Shares (the “George Shares”) and George OP Units (“George Units”), if any, as is indicated onSchedule A attached hereto.
D. Martha desires the Shareholder to agree, and the Shareholder is willing to agree, subject to the limitations herein, not to Transfer (as defined below) any of the George Shares, New George Shares (as defined below), George Units and New George Units (as defined below), and to vote the George Shares, New George Shares, George Units and New George Units in a manner so as to facilitate consummation of the Mergers.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
1.Definitions. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement. When used in this Agreement, the following terms in all of their tenses, cases and correlative forms shall have the meanings assigned to them in this Section 1 or elsewhere in this Agreement.
“Affiliate” of a specified Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.
“Expiration Date” shall mean the earlier to occur of (i) the approval and adoption of the Merger Agreement at the George Shareholder Meeting or (ii) such date and time as the Merger Agreement shall be terminated pursuant to Article IX thereof.
“Permitted Transfer” shall mean, in each case, so long as (i) such Transfer is in accordance with applicable Law and (ii) the Shareholder is and at all times has been in compliance with this Agreement, any Transfer (x) to an Affiliate or (y) to any member of the Shareholder’s immediate family, or to a trust for the benefit of the Shareholder or any member of the Shareholder’s immediate family, so long as such Affiliate or other permitted transferee (if applicable), in connection with such Transfer, executes a joinder to this Agreement pursuant to which such Affiliate or other permitted transferee (if applicable) agrees to become a party to this Agreement and be subject to the restrictions applicable to the Shareholder and otherwise become a party for all purposes of this Agreement;provided, that no such Transfer shall relieve the transferring Shareholder from his obligations under this Agreement, other than with respect to those George Shares or George Units transferred in accordance with the foregoing provision.
“Transfer” shall mean (i) any direct or indirect offer, sale, assignment, encumbrance, pledge, hypothecation, disposition, loan or other transfer (by operation of Law or otherwise), either voluntary or involuntary, or entry into any contract, option or other arrangement or understanding with respect to any offer, sale, assignment, encumbrance, pledge, hypothecation, disposition, loan or other transfer (by operation of Law or otherwise), of any capital stock (or any security convertible or exchangeable into capital stock) or interest in any capital stock, including, without limitation, a redemption of George OP Units pursuant to the terms of the George LP Agreement, or (ii) entering into any swap or any other agreement, transaction or series of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of such capital stock or interest in capital stock, whether any such swap, agreement, transaction or series of transactions is to be settled by delivery of securities, in cash or otherwise. For purposes of this Agreement, “capital stock” shall include interests in a limited partnership.
2.Agreement to Retain George Shares and George Units.
2.1Transfer and Encumbrance of George Shares and George Units. Other than a Permitted Transfer, until the Expiration Date, the Shareholder shall not (i) Transfer any of the George Shares, New George Shares, George Units or New George Units, or (ii) deposit any George Shares, New George Shares, George Units or New George Units into a voting trust or enter into a voting agreement or arrangement with respect to such George Shares, New George Shares, George Units or New George Units or grant any proxy (except as otherwise provided herein) or power of attorney with respect thereto.
2.2Additional Purchases. The Shareholder agrees that any George Common Shares, George OP Units, other capital shares of George that the Shareholder purchases or otherwise acquires or with respect to which the Shareholder otherwise acquires sole or shared voting power after the execution of this Agreement and prior to the Expiration Date (the “New George Shares”) and other partnership interests of George LP that the Shareholder purchases or otherwise acquires or with respect to which the Shareholder otherwise acquires sole or shared voting power after the execution of this Agreement and prior to the Expiration Date (the “New George Units”) shall, in each case, be subject to the terms and conditions of this Agreement to the same extent as if they constituted the George Shares or George Units, as applicable.
2.3Unpermitted Transfers. Any Transfer or attempted Transfer of any of the George Shares, New George Shares, George Units and New George Units in violation of this Section 2 shall, to the fullest extent permitted by Law, be null and voidab initio, and George and George LP shall not, and shall instruct their transfer agent and other third parties not to, record or recognize any such purported Transfer on the share register of George or the books and records of George LP. Notwithstanding the foregoing or any other provision in this Agreement to the contrary, to the extent any George Shares or George Units held by the Shareholder subject to any Lien (as set forth onSchedule A hereto) become subject to foreclosure, forfeiture or other similar proceedings, thereby causing the Shareholder to be unable to comply with his obligations under this Agreement with respect to such securities, neither the Shareholder nor George shall be deemed to be in breach of this Agreement with respect to the Shareholder’s obligations with respect to such George Shares or George Units.
3.Agreement to Vote and Approve.
3.1George Shares. Hereafter until the Expiration Date, at every meeting of the shareholders of George called with respect to any of the following matters, and at every adjournment or postponement thereof, and on every action or approval by written consent of the shareholders of George with respect to any of the following matters, the Shareholder shall, or shall cause the holder of record on any applicable record date to (including via proxy), vote the George Shares and any New George Shares: (i) in favor of the Parent Merger and (ii) against (a) any Acquisition Proposal for George, (b) any action or agreement that would reasonably be expected to result in any condition to the consummation of the Mergers set forth in Article VIII of the Merger Agreement not being fulfilled, and (c) any action which could reasonably be expected to impede, interfere with, materially delay, materially postpone or materially adversely affect consummation of the transactions contemplated by the Merger Agreement.
3.2George Units. Hereafter until the Expiration Date, on every action or approval by written consent of the partners of George LP with respect to any of the following matters, whether contemplated now or at any time prior to the Expiration Date, and at every meeting of the partners of George LP called with respect to any of the following matters, and at every adjournment or postponement thereof, the Shareholder shall, or shall cause the holder of record on any applicable record date to (including via proxy), vote the George Units and any New George Units: (i) in favor of the Partnership Merger, (ii) in favor of any amendment to the George LP Agreement proposed to facilitate the Partnership Merger or the other transactions contemplated by the Merger Agreement and (iii) against (a) any action or agreement that would reasonably be expected to result in any condition to the consummation of the Mergers set forth in Article VIII of the Merger Agreement not being fulfilled, and (b) any action which could reasonably be expected to impede, interfere with, materially delay, materially postpone or materially adversely affect consummation of the transactions contemplated by the Merger Agreement.
4.Irrevocable Proxy. By execution of this Agreement, the Shareholder does hereby appoint and constitute Martha, H. Eric Bolton, Jr. and Albert M. Campbell, III, and any one or more other individuals designated by Martha, and each of them individually, until the Expiration Date (at which time this proxy shall automatically be revoked), with full power of substitution and resubstitution, as the Shareholder’s true and lawful attorneys-in-fact and irrevocable proxies, to the fullest extent of the Shareholder’s rights with respect to the George Shares, any New George Shares, George Units and any New George Units, to vote each of the George Shares, New George Shares, George Units and New George Units solely with respect to the matters set forth in Section 3 hereof; provided, however, the foregoing shall only be effective if the Shareholder fails to be counted as present, to consent or to vote the Shareholder’s George Shares, New George Shares, George Units and New George Units, as applicable, in accordance with Section 3 above. The Shareholder intends this proxy to be irrevocable and coupled with an interest hereafter until the Expiration Date for all purposes and hereby revokes any proxy previously granted by the Shareholder with respect to the George Shares, New George Shares, George Units or New George Units. The Shareholder hereby ratifies and confirms all actions that the proxies appointed hereunder may lawfully do or cause to be done in accordance with this Agreement.
5.Representations, Warranties and Covenants of the Shareholder. The Shareholder hereby represents, warrants and covenants to the Martha Parties as follows:
5.1Due Authority. The Shareholder has the legal capacity and full power and authority to make, enter into and carry out the terms of this Agreement and to grant the irrevocable proxy as set forth in Section 4 hereof. This Agreement has been duly and validly executed and delivered by the Shareholder and constitutes a valid and binding agreement of the Shareholder enforceable against it in accordance with its terms, except to the extent enforceability may be limited by the effect of applicable bankruptcy, reorganization, insolvency, moratorium or other Laws affecting the enforcement of creditors’ rights generally and the effect of general principles of equity, regardless of whether such enforceability is considered in a proceeding at Law or in equity. If Shareholder is married and the George Shares and George Units set forth on Schedule A hereto constitute community property under applicable Law, this Agreement has been duly authorized, executed and delivered by, and constitutes the valid and binding agreement of, Shareholder’s spouse.
5.2Ownership of George Shares and George Units. As of the date hereof, the Shareholder (i) is the beneficial or record owner of the George Common Shares and George OP Units indicated onSchedule A hereto, free and clear of any and all Liens, other than those created by this Agreement, as disclosed onSchedule A or as would not prevent the Shareholder from performing his obligations under this Agreement, and (ii) has either sole or shared voting power over all of the George Shares and George Units. As of the date hereof, the Shareholder does not own, beneficially or of record, any capital stock or other securities of George or George LP other than the George Common Shares and George OP Units set forth onSchedule A. As of the date hereof, the Shareholder does not own, beneficially or of record, any rights to purchase or acquire any shares of capital stock of George or George LP.
5.3No Conflict; Consents.
(a) The execution and delivery of this Agreement by the Shareholder do not, and the performance by the Shareholder of the obligations under this Agreement and the compliance by the Shareholder with any provisions hereof do not and will not: (i) conflict with or violate in any material respect any Laws applicable to the Shareholder, the George Shares or the George Units, or (ii) result in any material breach of or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the George Shares or the George Units pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Shareholder is a party or by which the Shareholder, the George Shares or the George Units are bound.
(b) No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority or any other Person, is required by or with respect to the Shareholder in connection with the execution and delivery of this Agreement or the consummation by the Shareholder of the transactions contemplated hereby.
5.4Absence of Litigation. There is no Action pending against, or, to the knowledge of the Shareholder, threatened against or affecting, the Shareholder or any of its Affiliates or any of their respective properties or assets (including the George Shares and the George Units) at Law or in equity that could reasonably be expected to impair or adversely affect the ability of the Shareholder to perform the Shareholder’s obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.
6.Further Assurances. From time to time, at the request of Martha and without further consideration, the Shareholder shall take such further action as may reasonably be requested by Martha to carry out the intent of this Agreement.
7.Termination. This Agreement shall terminate and shall have no further force or effect on the Expiration Date.
8.Notice of Certain Events. The Shareholder shall notify Martha promptly of (a) any fact, event or circumstance that would cause, or reasonably be expected to cause or constitute, a breach in any material respect of the representations and warranties of the Shareholder under this Agreement and (b) the receipt by the Shareholder of any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with this Agreement;provided,however, that the delivery of any notice pursuant to this Section 8 shall not limit or otherwise affect the remedies available to any party.
9.Dissenter’s Rights. The Shareholder hereby unconditionally and irrevocably waives, and agrees to prevent the execution of, any rights of appraisal and dissenters’ rights relating to the Parent Merger that the Shareholder may have directly or indirectly by virtue of the ownership of the George Shares or New George Shares.
10.Miscellaneous.
10.1Severability. If any term or other provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
10.2Binding Effect and Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. George and George LP shall be express third party beneficiaries of the agreements of the Shareholder contained in this Agreement.
10.3Amendments and Modifications. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the parties hereto.
10.4Specific Performance; Injunctive Relief. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof or was otherwise breached. It is accordingly agreed that the parties shall be entitled to specific relief hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (unless the Delaware Court of Chancery shall decline to accept jurisdiction over a particular matter, in which case, in any federal court within the State of Delaware), in addition to any other remedy to which they may be entitled at Law or in equity. Any requirements for the securing or posting of any bond with respect to any such remedy are hereby waived.
10.5Notices. All notices, requests, claims, consents, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, sent by overnight courier (providing proof of delivery) to the parties or sent by facsimile or e-mail of a pdf attachment (providing confirmation of transmission) at the following addresses or facsimile numbers (or at such other address or facsimile number for a party as shall be specified by like notice):
(a) if to the Martha Parties to:
Martha Communities, Inc.
6584 Poplar Avenue
Memphis, TN 38138
Telephone: (901) 682-6600
Facsimile: (901) 682-6667
Attention: H. Eric Bolton Jr.
Chief Executive Officer
with a copy (which shall not constitute notice) to:
Goodwin Procter LLP
620 Eighth100 Northern Avenue
New York, NY 10018Boston, MA 02210
and
Bass, Berry & Sims PLC
The Tower at Peabody Place
100 Peabody Place
Suite 1300
Memphis, TN 38103
(b) if to the Post Parties, to:
Post Properties, Inc. 4401 Northside Parkway, Suite 800 Atlanta, GA 30327 | ||
| Telephone: | (404) 846-5000 | |
| Facsimile: | (404) 846-6282 | |
| Attention: | David P. Stockert | |
| Chief Executive Officer | ||
Sherry W. Cohen Executive Vice President and Corporate Secretary | ||
| E-mail: | dave.stockert@postproperties.com | |
| sherry.cohen@postproperties.com | ||
with copies to: King & Spalding LLP 1180 Peachtree Street, N.E. Atlanta, GA 30309 | ||
| Telephone: | (404) 572-4600 | |
| Facsimile: | (404) 572-5100 | |
| Attention: | Keith M. Townsend C. William Baxley Anthony W. Rothermel | |
| E-mail: | ktownsend@kslaw.com bbaxley@kslaw.com trothermel@kslaw.com | |
Section 10.3 Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to each other Party (including by means of electronic delivery), it being understood that the Parties need not sign the same counterpart. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.
Section 10.4 Entire Agreement; No Third-Party Beneficiaries. This Agreement (including the schedules, documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof, other than the Confidentiality Agreement, which shall survive the execution and delivery of this Agreement. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person (other than the Parties hereto) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement except for (i) the rights, benefits and remedies granted to the Indemnified Parties underSection 7.6, (ii) after the Partnership Merger Effective Time, the rights of the holders of Post OP Units to receive the consideration set forth inArticle III in accordance with the provisions of this Agreement, (iii) after the Parent Merger Effective Time, the rights of the holders of Post Common Stock to receive the Merger Consideration, the rights of the holders of Post Preferred Stock to receive the Preferred Merger Consideration, and the rights of holders of Post Options and Post Restricted Stock Awards to receive the consideration specified inArticle III in accordance with the provisions of this Agreement, and (iv) the right of Post and MAA, on behalf of its respective shareholders, to pursue claims for damages and other relief, including equitable relief, for the other Parties’ willful breach of this Agreement, to the extent recovery is otherwise permitted underSection 9.2. The representations and warranties in this Agreement may represent an allocation among the Parties of risks associated with particular matters regardless of the knowledge of any of the Parties. Accordingly, Persons other
than the Parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 10.5 Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability and, unless the effect of such invalidity or unenforceability would prevent the Parties from realizing the major portion of the economic benefits of the Mergers that they currently anticipate obtaining therefrom, shall not render invalid or unenforceable the remaining terms and provisions of this Agreement or affect the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
Section 10.6 Assignment. Neither this Agreement nor any of the rights, interests or obligations of the Parties hereunder shall be assigned by any of the Parties hereto (whether by operation of law or otherwise) without the prior written consent of the other Parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
Section 10.7 Governing Law. This Agreement and all claims or causes of actions (whether at Law, in contract or in tort) that may be based upon, arise out of or related to this Agreement or the negotiation, execution or performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to agreements entered into and performed entirely therein by residents thereof, without regard to any provisions relating to choice of laws among different jurisdictions, except that (i) the provisions of the GBCC and the TBCA applicable to the authorization, effectiveness and effects of the Parent Merger and the provisions of the GRULPA and the TRULPA applicable to the authorization, effectiveness and effects of the Partnership Merger will apply to the Parent Merger and the Partnership Merger and (ii) the applicable Law of the State of Georgia and the State of Tennessee shall apply to the discharge of the fiduciary duties of the Post Board, the MAA Board or any committees thereof in connection herewith.
Section 10.8 Specific Performance; Venue.
(a) The Parties agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, including if the parties hereto fail to take any action required of them hereunder to consummate the transactions contemplated by this Agreement (and, more specifically, that irreparable damage would occur if the Mergers were not consummated, including the parties’ obligations to consummate the Mergers and the obligation of the MAA Parties to pay, and the right of the holders of Post Common Stock and the holders of Post Series A Preferred Stock right to receive, the aggregate Merger Consideration and the Preferred Merger Consideration, as applicable, pursuant to the Mergers, subject in each case to the terms and conditions of this Agreement), and that monetary damages, even if available, would not be an adequate remedy therefor. It is accordingly agreed that, prior to the termination of this Agreement pursuant toArticle IX, the Parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, without proof of damages or otherwise (including the Parties’ obligations to consummate the Mergers and the obligation of the MAA Parties to pay, and the right of the holders of Post Common Stock and the holders of Post Series A Preferred Stock right to receive, the aggregate Merger Consideration and the Preferred Merger Consideration, as applicable, pursuant to the Mergers, subject in each case to the terms and conditions of this Agreement) in the Court of Chancery of the State of Delaware and any appellate court therefrom, unless such court shall decline to accept jurisdiction over a particular matter, in which case, in the Superior Court of the State of Delaware (in the Complex Commercial Litigation Division thereof if permitted by the applicable rules of the Superior Court) and any appellate court therefrom or, if the Superior Court of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court located in the State of Delaware and any federal appellate court therefrom (collectively, the “Delaware Courts”), and each
Party hereto hereby waives any requirement for the securing or posting of any bond in connection with such remedy, this being in addition to any other remedy to which they are entitled at Law or in equity. Each Party agrees that the right of specific performance and other equitable relief is an integral part of the transactions contemplated by this Agreement and without that right neither the Post Parties nor the MAA Parties would have entered into this Agreement. The Parties agree not to assert that a remedy of specific performance or other equitable relief is unenforceable, invalid, contrary to law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. If, prior to the Outside Date, any party brings an action to enforce specifically the performance of the terms and provisions of this Agreement by another party, the Outside Date shall automatically be extended by (i) the amount of time during which such action is pending, plus twenty (20) Business Days, or (ii) such other time period established by the court presiding over such action.
(b) Each of the Parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement (including with respect to any claim or cause of action whether at Law, in equity, in contract or tort and with respect to any claim or cause of action relating to the negotiation, execution or performance of this Agreement) brought by any other Party or its successors or assigns shall be brought and determined in the Delaware Courts (subject to the order of preference of each of the Delaware Courts set forth inSection 10.8(a)), and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Parties agrees not to commence any action, suit or proceeding relating thereto except in the Delaware Courts.
(c) EACH PARTY HEREBY IRREVOCABLY DESIGNATES CT CORPORATION (IN SUCH CAPACITY, THE “PROCESS AGENT”), WITH AN OFFICE AT 1209 NORTH ORANGE STREET, WILMINGTON, DELAWARE 19801 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, FOR AND ON ITS BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT, AND SUCH SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT; PROVIDED THAT IN THE CASE OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY EFFECTING SUCH SERVICE SHALL ALSO DELIVER A COPY THEREOF TO EACH OTHER SUCH PARTY IN THE MANNER PROVIDED INSECTION 10.2. EACH PARTY SHALL TAKE ALL SUCH ACTION AS MAY BE NECESSARY TO CONTINUE SAID APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT ANOTHER AGENT SO THAT SUCH PARTY WILL AT ALL TIMES HAVE AN AGENT FOR SERVICE OF PROCESS FOR THE ABOVE PURPOSES IN WILMINGTON, DELAWARE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE LAW. EACH PARTY EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING IS INTENDED TO BE IRREVOCABLE UNDER THE LAWS OF THE STATE OF DELAWARE AND OF THE UNITED STATES OF AMERICA AND THAT SERVICE MADE AS PROVIDED HEREIN SHALL HAVE THE SAME LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN THE STATE OF DELAWARE.
(d) Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (i) any claim that it is not personally subject to the jurisdiction of the Delaware Courts as described herein for any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in the Delaware Courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (A) the suit, action or proceeding in any such court is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper, or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
(e) EACH PARTY ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY AGREEING TO THE CHOICE OF DELAWARE LAW TO GOVERN THIS AGREEMENT AND TO THE JURISDICTION OF DELAWARE COURTS IN CONNECTION WITH PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. THE PARTIES INTEND THIS TO BE AN EFFECTIVE CHOICE OF DELAWARE LAW AND AN EFFECTIVE CONSENT TO JURISDICTION AND SERVICE OF PROCESS UNDER 6 DEL. C. § 2708, INCLUDING THAT THIS AGREEMENT INVOLVES OVER $100,000 FOR PURPOSES OF THE APPLICATION OF 6 DEL. C. § 2708.
Section 10.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THISSECTION 10.9.
Section 10.10 Authorship. The Parties agree that the terms and language of this Agreement are the result of negotiations between the Parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any Party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation.
[Remainder of this page intentionally left blank]
IN WITNESS WHEREOF, MAA, MAA LP, Post, Post GP and Post LP have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first set forth above.
| MID-AMERICA APARTMENT COMMUNITIES, INC. | ||||
| By: | /s/ H. Eric Bolton, Jr. | |||
| Name: | H. Eric Bolton, Jr. | |||
Title: | Chairman of the Board and Chief Executive Officer | |||
| MID-AMERICA APARTMENTS, L.P. | ||||
| By: | Mid-America Apartment Communities, Inc., its sole general partner | |||
| By: | /s/ H. Eric Bolton, Jr. | |||
| Name: | H. Eric Bolton, Jr. | |||
Title: | Chairman of the Board and Chief Executive Officer | |||
[Signature Page 1 of 2 to Agreement and Plan of Merger]
| POST PROPERTIES, INC. | ||||
| By: | /s/ David P. Stockert | |||
| Name: | David P. Stockert | |||
| Title: | President and Chief Executive Officer | |||
| POST APARTMENT HOMES, L.P. | ||||
| By: | Post GP Holdings, Inc., its sole general partner | |||
| By: | /s/ David P. Stockert | |||
| Name: | David P. Stockert | |||
| Title: | Chief Executive Officer | |||
| POST GP HOLDINGS, INC. | ||||
| By: | /s/ David P. Stockert | |||
| Name: | David P. Stockert | |||
| Title: | President and Chief Executive Officer | |||
[Signature Page 2 of 2 to Agreement and Plan of Merger]
EXHIBITS AND SCHEDULES*
| * | The company will furnish supplementally a copy of any omitted exhibit or schedule to the
|
ARTICLES OF AMENDMENT TO THE
AMENDED AND RESTATED CHARTER
OF
MID-AMERICA APARTMENT COMMUNITIES, INC.
Pursuant to the provisions of Section 48-20-106 of the Tennessee Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Amended and Restated Charter:
| 1. | The name of the Corporation is Mid-America Apartment Communities, Inc. |
| 2. | The first sentence of Article 6 shall be deleted in its entirety and replaced with the following: |
The total number of shares of stock which the Corporation has authority to issue is one hundred forty-five million (145,000,000) shares of Common Stock, $.01 par value per share, and twenty million (20,000,000) shares of Preferred Stock, $.01 par value per share.
| 3. | The Articles of Amendment require shareholder approval. The Articles of Amendment were duly approved and adopted by the Board of Directors on August 12, 2016 and by the
|
| 4. | The Articles of
|
IN WITNESS WHEREOF,MID-AMERICA APARTMENT COMMUNITIES, INC. has caused this amendment to the Charter to be signed in its name and on its behalf by its Chief Financial Officer on this the State of Delaware applicable to agreements entered into and performed entirely therein by residents thereof, without regarding to any provisions relating to choice of laws among different jurisdictions. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any other party or its successors or assigns shall be brought and determined in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (unless the Delaware Court of Chancery shall decline to accept jurisdiction over a particular matter, in which case, in any federal court within the State of Delaware), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
10.7WAIVER OF JURY TRIAL day of , 20 . EACH OF THE MARTHA PARTIES AND THE SHAREHOLDER HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE MARTHA PARTIES OR THE SHAREHOLDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
10.8Entire Agreement. This Agreement contains the entire understanding of the parties in respect of the subject matter hereof, and supersedes all prior negotiations and understandings between the parties with respect to such subject matter.
10.9Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement.
10.10Effect of Headings. The section headings herein are for convenience only and shall not affect the construction of interpretation of this Agreement.
10.11No Agreement Until Executed. Irrespective of negotiations among the parties or the exchanging of drafts of this Agreement, this Agreement shall not constitute or be deemed to evidence a contract, agreement, arrangement or understanding between the parties hereto unless and until (i) the Merger Agreement is executed by all parties thereto, and (ii) this Agreement is executed by all parties hereto.
10.12Legal Representation. This Agreement was negotiated by the parties with the benefit of legal representation and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall not apply to any construction or interpretation thereof.
10.13Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense, whether or not the Mergers are consummated.
10.14Action in Shareholder Capacity Only. No Person executing this Agreement who is or becomes during the term of this Agreement a trustee, officer or fiduciary of George shall be deemed to make any agreement or understanding in this Agreement in such Person’s capacity as a trustee, officer or fiduciary of George. The parties acknowledge and agree that this Agreement is entered into by the Shareholder solely in his capacity as the beneficial owner or record holder of the Shareholder’s George Shares and George Units and nothing in this Agreement shall restrict, limit or affect in any respect any actions taken by the Shareholder in his capacity as a trustee, officer or fiduciary of George. The Shareholder shall have no liability to any of the Martha Parties under this Agreement as a result of any action or inaction by the Shareholder acting in his capacity as an officer, trustee or fiduciary of George, it being understood that any action taken by the Shareholder in such capacity to approve a Change in George Recommendation shall have no effect on the obligations of the Shareholder under this Agreement as the record holder or beneficial owner of the George Shares, New George Shares, George Units and New George Units if this Agreement has not been terminated in accordance with its terms. For the avoidance of doubt, nothing in thisSection 10.14 shall in any way modify, alter or amend any of the terms of the Merger Agreement.
10.15Documentation and Information. The Shareholder consents to and authorizes the publication and disclosure by Martha and George of the Shareholder’s identity and holdings of the George Shares and George Units, and the nature of the Shareholder’s commitments, arrangements and understandings under this Agreement, in any press release or any other disclosure document required in connection with the Mergers or any other transaction contemplated by the Merger Agreement. As promptly as practicable, the Shareholder shall notify Martha of any required corrections with respect to any written information supplied by such Shareholder specifically for use in any such disclosure document, if and to the extent such Shareholder becomes aware that any have become false or misleading in any material respect.
[Signature page follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the date and year first above written.
MID-AMERICA APARTMENT COMMUNITIES, INC. | ||
| By: |
| |
| Name: | Albert M. Campbell III | |
| Title: | Chief Financial Officer | |
MID-AMERICA APARTMENT COMMUNITIES, INC.
ARTICLES OF AMENDMENT TO THE AMENDED AND RESTATED CHARTER
DESIGNATING AND FIXING THE RIGHTS AND
PREFERENCES OF A SERIES OF SHARES OF PREFERRED STOCK
Mid-America Apartment Communities, Inc., a Tennessee corporation (the “Corporation”), certifies to the Tennessee Secretary of State that:
FIRST: Pursuant to the authority expressly vested in the Board of Directors of the Corporation (the “Board of Directors”) by Section 6 of the Corporation’s Amended and Restated Charter, as amended (the “Charter”), and Section 48-16-102 of the Tennessee Code Annotated, as amended, the Board of Directors has, by resolution, duly divided and classified 868,000 shares of the preferred stock of the Corporation into a series designated 8.50% Series I Cumulative Redeemable Preferred Stock (the “Series I Preferred Stock”) and has provided for the issuance of the Series I Preferred Stock. The Corporation is authorized to issue up to 20,000,000 shares of preferred stock, in one or more series, with such designations, powers, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption, in each case, if any, as are permitted by Tennessee law and as the Board of Directors may determine by adoption of an amendment of the Charter, without any further vote or action by the Corporation’s shareholders.
SECOND: Article 6 of the Charter is hereby amended by adding the following:
The preferences, rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption of the shares of Series I Preferred Stock are as follows:
(1) DESIGNATION AND NUMBER. A series of Preferred Stock, designated the “8.50% Series I Cumulative Redeemable Preferred Stock” (the “Series I Preferred Stock”), is hereby established. The maximum number of authorized shares of the Series I Preferred Stock shall be 868,000.
(2) RELATIVE SENIORITY. In respect of rights to receive dividends and to participate in distributions of payments in the event of any liquidation, dissolution or winding up of the Corporation, the Series I Preferred Stock shall rank senior to the Common Stock, and any other class or series of shares of the Corporation ranking, as to dividends and upon liquidation, junior to the Series I Preferred Stock (collectively, “Junior Shares”).
(3) DIVIDENDS.
(a) The holders of the then outstanding Series I Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of any funds legally available therefor, cumulative dividends at the rate of $4.25 per share per year, payable in equal amounts of $1.0625 per share quarterly in cash on the last day of each March, June, September, and December or, if not a Business Day (as hereinafter defined), the next succeeding Business Day. Dividends shall begin on [●] (each such day being hereafter called a “Quarterly Dividend Date” and each period ending on a Quarterly Dividend Date being hereinafter called a “Dividend Period”). Dividends shall be payable to holders of record as they appear in the share records of the Corporation at the close of business on the applicable record date (the “Record Date”), which shall be the 15th day of the calendar month in which the applicable Quarterly Dividend Date falls on or such other date designated by the Board of Directors for the payment of dividends that is not more than 30 nor less than 10 days prior to such Quarterly Dividend Date. The amount of any dividend payable for any Dividend Period shorter than a full Dividend Period shall be prorated and computed on the basis of a 360-day year of twelve 30-day months. Dividends paid on the Series I Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a per share basis among all such shares at the time outstanding.
“Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.
(b) The amount of any dividends accrued on any Series I Preferred Stock at any Quarterly Dividend Date shall be the amount of any unpaid dividends accumulated thereon, to and including such Quarterly Dividend Date, whether or not earned or declared, and the amount of dividends accrued on any shares of Series I Preferred Stock at any date other than a Quarterly Dividend Date shall be equal to the sum of the amount of any unpaid dividends accumulated thereon, to and including the last preceding Quarterly Dividend Date, whether or not earned or declared, plus an amount calculated on the basis of the annual dividend rate of $4.25 per share for the period after such last preceding Quarterly Dividend Date to and including the date as of which the calculation is made based on a 360-day year of twelve 30-day months.
(c) Except as provided below in Section 4 (Liquidation Rights), the Series I Preferred Stock will not be entitled to any dividends in excess of full cumulative dividends as described above and shall not be entitled to participate in the earnings or assets of the Corporation, and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series I Preferred Stock which may be in arrears.
(d) Any dividend payment made on the Series I Preferred Stock shall be first credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.
(e) If, for any taxable year, the Corporation elects to designate as “capital gain dividends” (as defined in Section 857 of the Internal Revenue Code of 1986, as amended (the “Code”)), any portion (the “Capital Gains Amount”) of the dividends paid or made available for the year to holders of all classes of shares (the “Total Dividends”), then the portion of the Capital Gains Amount that shall be allocated to the holders of the Series I Preferred Stock shall equal (i) the Capital Gains Amount multiplied by (ii) a fraction that is equal to (a) the total dividends paid or made available to the holders of the Series I Preferred Stock for the year over (b) the Total Dividends.
(f) No dividends on the Series I Preferred Stock shall be declared by the Board of Directors or be paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibit such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. Notwithstanding the foregoing, dividends on the Series I Preferred Stock will accrue whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared.
(4) LIQUIDATION RIGHTS.
(a) Upon the voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the holders of the Series I Preferred Stock then outstanding shall be entitled to receive and to be paid out of the assets of the Corporation legally available for distribution to its shareholders, before any payment or distribution shall be made on any Junior Shares, the amount of $50.00 per share, plus accrued and unpaid dividends thereon.
(b) After the payment to the holders of the Series I Preferred Stock of the full preferential amounts provided for in paragraph (a) above, the holders of the Series I Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Corporation.
(c) If, upon any voluntary or involuntary dissolution, liquidation, or winding up of the Corporation, the amounts payable with respect to the preference value of the Series I Preferred Stock and any other shares of the
Corporation ranking as to any such distribution on a parity with the Series I Preferred Stock are not paid in full, the holders of the Series I Preferred Stock and of such other shares will share ratably in any such distribution of assets of the Corporation in proportion to the full respective preference amounts to which they are entitled.
(d) Neither the sale, lease, transfer or conveyance of all or substantially all of the property or business of the Corporation, nor the merger or consolidation of the Corporation into or with any other entity or the merger or consolidation of any other entity into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 4 (Liquidation Rights).
(5) REDEMPTION.
(a) OPTIONAL REDEMPTION. On and after October 1, 2026, the Corporation may, at its option, redeem at any time all or, from time to time, part of the Series I Preferred Stock at a price per share (the “Redemption Price”), payable in cash, of $50.00, together with all accrued and unpaid dividends to and including the date fixed for redemption (the “Redemption Date”), without interest, to the full extent the Corporation has funds legally available therefor. The Series I Preferred Stock shall have no stated maturity, except as provided for in Section 8 (Restriction on Ownership), and will not be subject to any sinking fund or mandatory redemption provisions.
(b) PROCEDURES OF REDEMPTION.
(1) Notice of redemption will be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the Redemption Date. Notice of any redemption will also be mailed by the registrar, postage prepaid, not less than 30 nor more than 60 days prior to the Redemption Date, addressed to each holder of record of the Series I Preferred Stock to be redeemed at the address set forth in the share transfer records of the registrar. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series I Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which Series I Preferred Stock may be listed or admitted to trading, such notice shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the number of shares of Series I Preferred Stock to be redeemed; (d) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price; and (e) that dividends on the shares to be redeemed will cease to accumulate on the Redemption Date. If fewer than all of the shares of the Series I Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series I Preferred Stock to be redeemed from such holder.
(2) If notice has been mailed in accordance with Section (5)(b)(1) above and provided that on or before the Redemption Date specified in such notice all funds necessary for such redemption shall have been irrevocably set aside by the Corporation, separate and apart from its other funds in trust for the pro rata benefit of the holders of the Series I Preferred Stock so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Redemption Date, dividends on the Series I Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of Series I Preferred Stock and all rights of the holders thereof as shareholders of the Corporation (except the right to receive the Redemption Price) shall cease. Upon surrender, in accordance with such notice, of the certificates for any Series I Preferred Stock so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such Series I Preferred Stock shall be redeemed by the Corporation at the Redemption Price. In case fewer than all the shares of Series I Preferred Stock represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares of Series I Preferred Stock without cost to the holder thereof.
(3) Any funds deposited with a bank or trust company for the purpose of redeeming Series I Preferred Stock shall be irrevocable except that:
(A) The Corporation shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and
(B) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series I Preferred Stock entitled thereto at the expiration of two years from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings.
(4) No Series I Preferred Stock may be redeemed except from proceeds from the sale of other capital stock of the Corporation, 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.
(5) Unless full accumulated dividends on all Series I Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past Dividend Periods and the then current Dividend Period, no Series I Preferred Stock shall be redeemed or purchased or otherwise acquired directly or indirectly (except by conversion into or exchange for Junior Shares); provided, however, that the foregoing shall not prevent the redemption of Series I Preferred Stock to preserve the Corporation’s REIT status or the purchase or acquisition of Series I Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series I Preferred Stock.
(6) If the Redemption Date is after a Record Date and before the related Quarterly Dividend Date, the dividend payable on such Quarterly Dividend Date shall be paid to the holder in whose name the shares of Series I Preferred Stock to be redeemed are registered at the close of business on such Record Date notwithstanding the redemption thereof between such Record Date and the related Quarterly Dividend Date or the Corporation’s default in the payment of the dividend due. Except as provided above, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on shares of the Series I Preferred Stock to be redeemed.
(7) In case of redemption of less than all Series I Preferred Stock at the time outstanding, the Series I Preferred Stock to be redeemed shall be selected pro rata from the holders of record of such shares in proportion to the number of shares of Series I Preferred Stock held by such holders (with adjustments to avoid redemption of fractional shares) or by any other equitable method determined by the Corporation.
(6) VOTING RIGHTS. Except as required by law or as set forth below, the holders of the Series I Preferred Stock shall not be entitled to vote at any meeting of the shareholders for election of directors or for any other purpose or otherwise to participate in any action taken by the Corporation or the shareholders thereof, or to receive notice of any meeting of shareholders.
(a) Whenever dividends on any Series I Preferred Stock shall be in arrears for six or more quarterly periods, whether or not such quarterly periods are consecutive, the holders of such Series I Preferred Stock (voting separately as a class with all other series of preferred shares upon which like voting rights have been conferred and are exercisable) will be entitled to vote for the election of two additional directors of the Corporation at a special meeting called by the holders of record of at least ten percent (10%) of any series of preferred shares so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting until all dividends accumulated on such Series I Preferred Stock for the past Dividend Periods and the then current Dividend Period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In such case, the entire Board of Directors will be increased by two directors.
(b) So long as any Series I Preferred Stock remains outstanding, the Corporation will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series I Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (such series voting separately as a class), (i) authorize or create, or increase the authorized or issued amount of, any class or series of shares of capital stock ranking prior to the Series I Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or reclassify any authorized shares of the Corporation into such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares; or (ii) amend, alter or repeal the provisions of the Charter, including this amendment to the Charter, whether by merger, consolidation or otherwise (an “Event”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series I Preferred Stock or the holders thereof; provided, however, with respect to the occurrence of any of the Events set forth in (ii) above, so long as the Series I Preferred Stock remains outstanding with the terms thereof materially unchanged, taking into account that upon the occurrence of an Event, the Corporation may not be the surviving entity, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of Series I Preferred Stock and provided further that (x) any increase in the amount of the authorized Preferred Stock or the creating or issuance of any other series of Preferred Stock, or (y) any increase in the amount of authorized Series I Preferred Stock or any other series of Preferred Stock, in each case ranking on a parity with or junior to the Series I Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.
(c) On each matter submitted to a vote of the holders of Series I Preferred Stock in accordance with this Section 6 (Voting Rights), or as otherwise required by law, each share of Series I Preferred Stock shall be entitled to one vote. With respect to each share of Series I Preferred Stock, the holder thereof may designate a proxy, with each such proxy having the right to vote on behalf of the holder.
The foregoing voting provisions of this Section 6 (Voting Rights) will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series I Preferred Stock shall have been redeemed or called for redemption and sufficient funds shall have been deposited in trust to effect such redemption.
(7) CONVERSION. The Series I Preferred Stock is not convertible into or exchangeable for any other property or securities of the Corporation.
(8) RESTRICTIONS ON OWNERSHIP.
(a) Definitions. The following terms shall have the following meanings:
(1) “Acquire” shall mean the acquisition of Beneficial Ownership of Series I Preferred Stock by any means whatsoever including, without limitation, (A) the acquisition of direct ownership of shares by any Person, including through the exercise of any option, warrant, pledge, security interest or similar right to acquire shares, and (B) the acquisition of indirect ownership of shares taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(l)(B) of the Code, and also applying the look-through rule contained in Section 856(h)(3)(A) of the Code to pension trusts described in Section 401(a) of the Code, by a Person who is an “individual” within the meaning of Section 542(a)(2) of the Code, including through the acquisition by any Person of any option, warrant, pledge, security interest or similar right to acquire shares.
(2) “Beneficial Ownership” shall mean, with respect to any Person that is an “individual” as defined in Section 542(a)(2) of the Code, the Series I Preferred Stock owned by such Person after taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and after applying the pension trust look-through rule contained in Section 856(h)(3)(A) of the Code. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.
(3) “Code” shall mean the Internal Revenue Code of 1986, as amended. Any reference herein to any current provision of the Code shall be deemed to refer to any future successor provision of federal income tax law.
(4) “Initial Public Offering” means the public issuance of Series I Preferred Stock pursuant to the Corporation’s prospectus supplement dated [●] as filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) promulgated under the Securities Act of 1933, as amended.
(5) “Ownership Limit” shall initially mean 6% of the outstanding Series I Preferred Stock of the Corporation, and after any adjustment as set forth in Section (8)(h) below, shall mean such greater percentage (but not greater than 9.8%) of the outstanding Series I Preferred Stock as so adjusted.
(6) “Person” shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; but does not include an underwriter that participates in a public offering of the Series I Preferred Stock for a period of 90 days following the purchase by such underwriter of the Series I Preferred Stock.
(7) “REIT” shall mean a Real Estate Investment Trust under Section 856 of the Code.
(8) “Restricted Transfer Redemption Price” shall mean the lower of (A) the price paid by the transferee from whom shares are being redeemed and (B) the average of the last reported sales prices on the New York Stock Exchange of Series I Preferred Stock on the ten trading days immediately preceding the date fixed for redemption by the Board of Directors, or if the Series I Preferred Stock is not then traded on the New York Stock Exchange, the average of the last reported sales prices of the Series I Preferred Stock on the ten trading days immediately preceding the relevant date as reported on any exchange or quotation system over which the Series I Preferred Stock may be traded, or if the Series I Preferred Stock are not then traded over any exchange or quotation system, then the price determined in good faith by the Board of Directors as the fair market value of Series I Preferred Stock on the relevant date.
(9) “Restriction Termination Date” shall mean the first day after the date of the Initial Public Offering on which the Corporation determines pursuant to Section (8)(k) below that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT.
(10) “Transfer” shall mean any sale, transfer, gift, assignment, devise or other disposition that results in a change in the record ownership or Beneficial Ownership of Series I Preferred Stock or the right to vote or receive dividends on Series I Preferred Stock (including (A) the granting of any option or entering into any agreement for the sale, transfer or other disposition of Series I Preferred Stock or the right to vote or receive dividends on Series I Preferred Stock or (B) the sale, transfer, assignment or other disposition or grant of any securities or rights convertible into or exchangeable for Series I Preferred Stock, or the right to vote or receive dividends on Series I Preferred Stock), whether voluntary or involuntary and whether by operation of law or otherwise.
(b) Restrictions.
(1) During the period commencing on the date of the Initial Public Offering and prior to the Restriction Termination Date: (a) no Person shall Acquire any Series I Preferred Stock if, as a result of such acquisition, any “individual”, as defined in Section 542(a)(2) of the Code (other than a pension trust which is described in Section 401(a) of the Code), shall Beneficially Own an amount of Series I Preferred Stock in excess of the Ownership Limit; (b) no Person shall Acquire any shares of Series I Preferred Stock if, as a result of such acquisition, the Series I Preferred Stock and Common Stock of the Corporation would be directly or indirectly owned by less
than 100 Persons (determined without reference to the rules of attribution under Section 544 of the Code); and (c) no Person shall Acquire any shares if, as a result of such acquisition, the Corporation would be “closely held” within the meaning of Section 856(h) of the Code.
(2) Any Transfer that (x) would result in a violation of the restrictions in Section (8)(b)(1)(b) or (c), or (y) a transferring shareholder has actual knowledge will result in a violation of any of the restrictions in Section (8)(b)(1)(a), shall be voidab initio as to the Transfer of such Series I Preferred Stock that would cause the violation of the applicable restriction in Section (8)(b)(1), and the intended transferee shall acquire no rights in such Series I Preferred Stock.
(c) Remedies for Breach.
(1) If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer has taken place that falls within the scope of Section (8)(b)(2) or that a Person intends to Acquire Beneficial Ownership of any shares of the Corporation that will result in violation of Section (8)(b)(1) or (2) (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it or they deem advisable to refuse to give effect to or to prevent such Transfer, including, but not limited to, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer.
(2) Without limitation to Section (8)(b)(2) or (c)(1), any purported transferee of Beneficial Ownership of Series I Preferred Stock acquired in violation of Section (8)(b) shall, if it shall be deemed to have received any such Beneficial Ownership, be deemed to have acted as agent on behalf of the Corporation in acquiring such of the interests as result in a violation of Section (8)(b) and shall be deemed to hold such interests in trust on behalf and for the benefit of the Corporation. The transferee shall have no right to receive dividends or other distributions with respect to such interests, and shall have no right to vote such interests. Such transferee shall have no claim, cause of action, or any other recourse whatsoever against a transferor of interests acquired in violation of Section (8)(b). The transferee’s sole right with respect to such interests shall be to receive at the Corporation’s sole and absolute discretion, either (A) consideration for such interests upon the resale of the interests as directed by the Corporation pursuant to Section (8)(c)(3), or (B) the Restricted Transfer Redemption Price pursuant to Section (8)(c)(3).
(3) The Board of Directors shall, within 6 months after receiving notice of a Transfer that violates Section (8)(c)(2), either (in its sole and absolute discretion) (A) direct the transferee of such interests to sell all interests held in trust for the Corporation pursuant to Section (8)(c)(2) for cash in such manner as the Board of Directors directs or (B) redeem such interests for the Restricted Transfer Redemption Price on such date within such 6 month period as the Board of Directors may determine. If the Board of Directors directs the transferee to sell the interests, the transferee shall receive such proceeds as trustee for the Corporation and pay the Corporation out of the proceeds of such sale all expenses incurred by the Corporation in connection with such sale plus any remaining amount of such proceeds that exceeds the amount paid by the transferee for the interests, and the transferee shall be entitled to retain only the proceeds in excess of such amounts required to be paid to the Corporation.
(d) Notice of Restricted Transfer. Any Person who Acquires or attempts or intends to Acquire shares in violation of Section (8)(b) shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted or intended Transfer on the Corporation’s status as a REIT.
(e) Owners Required To Provide Information. From the date of the Initial Public Offering and prior to the Restriction Termination Date, each person who is a Beneficial Owner of Series I Preferred Stock and each Person (including the shareholder of record) who is holding Series I Preferred Stock for a Beneficial Owner shall provide to the Corporation such information as the Corporation may request, in good faith, in order to determine the Corporation’s status as a REIT.
(f) Remedies Not Limited. Except as provided in Section (8)(m), nothing contained in this Section (8) shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its shareholder in preserving the Corporation’s status as a REIT.
(g) Ambiguity. In the case of an ambiguity in the application of any of the provisions of this Section (8), including any definition contained in Section (8)(a), the Board of Directors shall have the power to determine the application of the provisions of this Section (8) with respect to any situation based on the facts known to it.
(h) Modification of Ownership Limit. Subject to the limitations provided in Section (8)(i), the Board of Directors may from time to time increase the Ownership Limit.
(i) Limitations on Modifications.
(1) The Ownership Limit may not be increased if, after giving effect to such increase, five Persons who are considered “individuals” pursuant to Section 542(a)(2) of the Code could Beneficially Own (including ownership of Common Stock for purposes of this subparagraph (8)(i)(1)), in the aggregate, more than 49.0% in value of the outstanding shares of stock of the Corporation.
(2) Prior to the modification of the Ownership Limit pursuant to subparagraph (8)(h), the Board of Directors may require such opinions of counsel, affidavits, undertakings or agreements as it may deem necessary or advisable in order to determine or ensure the Corporation’s status as a REIT.
(j) Legend. Each certificate for Series I Preferred Stock shall bear a legend referring to the restrictions described above.
(k) Termination of REIT Status. The Board of Directors shall take no action to terminate the Corporation’s status as a REIT or to amend the provisions of this Section (8) until such time as (A) the Board of Directors adopts a resolution recommending that the Corporation terminate its status as a REIT or amend this Section (8), as the case may be, (B) the Board of Directors presents the resolution at an annual or special meeting of the shareholders, and (C) such resolution is approved by holders of a majority of the issued and outstanding Series I Preferred Stock.
(l) Severability. If any provision of this Section (8) or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.
(m) NYSE Settlement. Nothing herein shall preclude the settlement of any transaction with respect to the Series I Preferred Stock of the Corporation entered into through the facilities of the New York Stock Exchange.
THIRD: This amendment to the Charter shall be effective at the time the Tennessee Secretary of State accepts this amendment to the Charter for filing.
FOURTH: This amendment to the Charter was duly adopted by the Board of Directors on [●] without shareholder action, such shareholder action not being required.
[Signature Page to Follow.]
IN WITNESS WHEREOF,MID-AMERICA APARTMENT COMMUNITIES, INC. has caused this amendment to the Charter to be signed in its name and on its behalf by its Chief Financial Officer on this the day of , 20 .
MID-AMERICA APARTMENT COMMUNITIES, INC. | ||
[Signature Page to Voting Agreement]
| By: |
| |
| Name: | Albert M. Campbell III |
| Title: | Chief Financial Officer |
August 14, 2016
The Board of Directors
Mid-America Apartment Communities, Inc.
6584 Poplar Avenue
Memphis, TN 38138
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of view, to Mid-America Apartment Communities, Inc., a Tennessee corporation (“MAA”), of the Exchange Ratio (defined below) set forth in an Agreement and Plan of Merger (the “Merger Agreement”) proposed to be entered by and among MAA, Mid-America Apartments, L.P., a Tennessee limited partnership (“MAA LP”), Post Properties, Inc., a Georgia corporation (“Post”), Post GP Holdings, Inc., a Georgia corporation, and Post Apartment Homes, L.P., a Georgia limited partnership (“Post LP”). As more fully described in the Merger Agreement, (i) Post LP will merge with and into MAA LP, with MAA LP continuing as the surviving entity (the “Partnership Merger”) and (ii) Post will merge with and into MAA, with MAA continuing as the surviving entity (the “Parent Merger” and together with the Partnership Merger, the “Transaction”), and each issued and outstanding share of common stock, par value $.01 per share, of Post (“Post Common Stock”), other than shares of Post Common Stock held by MAA, any subsidiary of MAA or any wholly owned subsidiary of Post, will be converted into the right to receive 0.71 shares (the “Exchange Ratio”) of common stock, par value $0.01 per share (“MAA Common Stock”) of MAA.
In arriving at our opinion, we reviewed a draft of the Merger Agreement dated August 14, 2016 and held discussions with certain senior officers, directors and other representatives and advisors of MAA and certain senior officers and other representatives and advisors of Post concerning the businesses, operations and prospects of MAA and Post. We examined certain publicly available business and financial information relating to MAA and Post as well as certain financial forecasts and other information and data relating to MAA and Post that were provided to or discussed with us by the respective managements of MAA and Post, including information relating to the potential strategic implications and operational benefits (including the amount, timing and achievability thereof) anticipated by the management of MAA to result from the Transaction. We reviewed the financial terms of the Transaction as set forth in the Merger Agreement in relation to, among other things: current and historical market prices and trading volumes of MAA Common Stock and Post Common Stock; the historical and projected earnings and other operating data of MAA and Post; and the capitalization and financial condition of MAA and Post. We considered, to the extent publicly available, the financial terms of certain other transactions which we considered relevant in evaluating the Transaction and analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations we considered relevant in evaluating those of MAA and Post. We also evaluated certain potential pro forma financial effects of the Transaction on MAA. In addition to the foregoing, we conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as we deemed relevant and appropriate in arriving at our opinion. The issuance of our opinion has been authorized by our fairness opinion committee.
In rendering our opinion, we have assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with us and upon the assurances of the managements of MAA and Post that they are not aware of any relevant information that has been omitted or that remains undisclosed to us. With respect to financial forecasts and other information and data relating to MAA and Post provided to or otherwise reviewed by or discussed with us, we have been advised by the respective managements of MAA and Post that such forecasts and other information and data were reasonably prepared on bases reflecting the best currently available estimates and judgments of the managements of MAA and Post as to the future financial performance of MAA and Post and the other matters covered thereby, and have assumed, with your consent, that the financial results (including the potential strategic implications and operational benefits anticipated to result from the Transaction)
reflected in such forecasts and other information and data will be realized in the amounts and at the times projected. We have relied, at your direction, upon the assessments of the managements of MAA and Post as to the ability to integrate the businesses and operations of MAA and Post in accordance with these forecasts.
We have assumed, with your consent, that the Transaction will be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the Transaction, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on MAA, Post or the contemplated benefits of the Transaction. Representatives of MAA have advised us, and we further have assumed, that the final terms of the definitive Merger Agreement will not vary in any material respect from those set forth in the draft reviewed by us. We also have assumed, with your consent, that, for United States federal income tax purposes, the Partnership Merger will qualify as and constitute a tax-free “assets-over” form of merger governed by Treasury Regulations Section 1.708-1(c)(3)(i) and the Parent Merger will qualify as a tax-free reorganization. We have been advised by MAA and Post that each of MAA and Post has operated in conformity with the requirements for qualification as a real estate investment trust (“REIT”) for United States federal income tax purposes since its formation as a REIT and further have assumed, at your direction, that the Transaction will not adversely affect such status or operations of MAA or Post. Our opinion, as set forth herein, relates to the relative values of MAA and Post. We are not expressing any opinion as to what the value of MAA Common Stock actually will be when issued pursuant to the Transaction or the price at which the Post Common Stock will trade at any time. We have not made or been provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of MAA or Post nor have we made any physical inspection of the properties or assets of MAA or Post. We express no view as to, and our opinion does not address, the underlying business decision of MAA to effect the Transaction, the relative merits of the Transaction as compared to any alternative business strategies or transactions that might exist for MAA or the effect of any other transaction in which MAA might engage. We also express no view as to, and our opinion does not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the Transaction, or any class of such persons, relative to the Exchange Ratio. Our opinion is necessarily based upon information available to us, and financial, stock market and other conditions and circumstances existing, as of the date hereof.
Citigroup Global Markets Inc. has acted as financial advisor to MAA in connection with the proposed Transaction and will receive a fee for such services contingent upon the consummation of the Transaction. We also will receive a fee in connection with the delivery of this opinion. We and our affiliates in the past have provided, and currently provide, services to MAA unrelated to the Transaction, for which services we and such affiliates have received and expect to receive compensation, including, without limitation, (a) acting as co-manager on MAA’s $400 million bond issuance in June 2014, (b) acting as book-runner on MAA’s $400 million bond issuance in November 2015 and (c) acting as a lender under MAA’s $750 million revolving credit facility. We and our affiliates have not provided any investment banking services to Post since January 1, 2014. We and our affiliates may also provide services to MAA, Post and their respective affiliates in the future. In the ordinary course of our business, we and our affiliates may actively trade or hold the securities of MAA and Post for our own account or for the account of our customers and, accordingly, may at any time hold a long or short position in such securities. In addition, we and our affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with MAA, Post and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the information of the Board of Directors of MAA in its evaluation of the Transaction, and our opinion is not intended to be and does not constitute a recommendation to any shareholder as to how such shareholder should vote or act on any matters relating to the Transaction or any related matter.
Based upon and subject to the foregoing, our experience as investment bankers, our work as described above and other factors we deemed relevant, we are of the opinion that, as of the date hereof, the Exchange Ratio is fair, from a financial point of view, to MAA.
Very truly yours,
/s/ Citigroup Global Markets Inc.
CITIGROUP GLOBAL MARKETS INC.
August 14, 2016
The Board of Directors
Post Properties, Inc.
4401 Northside Pkwy., Suite 800
Atlanta, GA 30327
Members of the Board of Directors:
You have requested our opinion as to the fairness, from a financial point of view, to the holders of common stock, par value $0.01 per share (the “Company Common Stock”), of Post Properties, Inc. (the “Company”) of the Exchange Ratio (as defined below) in the proposed merger (the “Transaction”) of the Company with Mid-America Apartment Communities, Inc. (the “Acquiror”). Pursuant to the Agreement and Plan of Merger (the “Agreement”), by and among the Acquiror, Mid-America Apartments, L.P. (“Mid-America LP”), the Company, Post GP Holdings, Inc., and Post Apartment Homes, L.P. (“Post LP”), the Company will merge with and into the Acquiror, with the Acquiror continuing as the surviving entity, and each issued and outstanding share of Company Common Stock, other than shares of Company Common Stock held in treasury or owned by the Acquiror, any Acquiror subsidiaries and any wholly owned subsidiary of the Company, will be converted into the right to receive 0.71 shares (the “Exchange Ratio”) of the Acquiror’s common stock, par value $0.01 per share (the “Acquiror Common Stock”). The Agreement also provides, among other things, (i) that each issued and outstanding share of the Company’s existing Series A Preferred Stock (as defined in the Agreement) will convert into a share of newly issued Acquiror Series I Preferred Stock (as defined in the Agreement) having terms substantially the same as those of the Company Series A Preferred Stock, and (ii) that Post LP will merge with and into Mid-America LP with Mid-America LP continuing as the surviving entity.
In connection with preparing our opinion, we have (i) reviewed a draft dated August 12, 2016 of the Agreement; (ii) reviewed certain publicly available business and financial information concerning the Company and the Acquiror and the industries in which they operate; (iii) compared the financial and operating performance of the Company and the Acquiror with publicly available information concerning certain other companies we deemed relevant and reviewed the current and historical market prices of the Company Common Stock and the Acquiror Common Stock and certain publicly traded securities of such other companies; (iv) reviewed certain internal financial analyses and forecasts prepared by or at the direction of the management of the Company and relating to its business and certain internal financial analyses and forecasts prepared by or at the direction of the management of the Acquiror relating to its business and provided to the Company (which were adjusted by the Company and provided to us by the Company for our use in evaluating the Acquiror for purposes of our analyses and opinion), as well as the estimated amount and timing of the cost savings and related expenses and synergies expected to result from the Transaction (the “Synergies”); and (v) performed such other financial studies and analyses and considered such other information as we deemed appropriate for the purposes of this opinion.
In addition, we have held discussions with certain members of the management of the Company and the Acquiror with respect to certain aspects of the Transaction, and the past and current business operations of the Company and the Acquiror, the financial condition and future prospects and operations of the Company and the Acquiror, the effects of the Transaction on the financial condition and future prospects of the Company and the Acquiror, and certain other matters we believed necessary or appropriate to our inquiry.
In giving our opinion, we have relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with us by the Company and the Acquiror or otherwise reviewed by or for us. We have not independently verified any such information or its accuracy or completeness
and, pursuant to our engagement letter with the Company, we did not assume any obligation to undertake any such independent verification. We have not conducted or been provided with any valuation or appraisal of any assets or liabilities, nor have we evaluated the solvency of the Company or the Acquiror under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to us or derived therefrom, including the Synergies, we have assumed that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of the Company and the Acquiror to which such analyses or forecasts relate. We express no view as to such analyses or forecasts (including the Synergies) or the assumptions on which they were based. We have also assumed that the Transaction and the other transactions contemplated by the Agreement will qualify as a tax-free reorganization for United States federal income tax purposes, and will be consummated as described in the Agreement , and that the definitive Agreement will not differ in any material respects from the draft thereof furnished to us. We have also assumed that the representations and warranties made by the Company and the Acquiror in the Agreement and the related agreements are and will be true and correct in all respects material to our analysis. We are not legal, regulatory or tax experts and have relied on the assessments made by advisors to the Company with respect to such issues. We have further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be obtained without any adverse effect on the Company or the Acquiror or on the contemplated benefits of the Transaction.
Our opinion is necessarily based on economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It should be understood that subsequent developments may affect this opinion and that we do not have any obligation to update, revise, or reaffirm this opinion. Our opinion is limited to the fairness, from a financial point of view, to the holders of the Company Common Stock of the Exchange Ratio in the proposed Transaction and we express no opinion as to the fairness of any consideration to be paid in connection with the Transaction to the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the Transaction. Furthermore, we express no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the Transaction, or any class of such persons relative to the Exchange Ratio applicable to the holders of the Company Common Stock in the Transaction or with respect to the fairness of any such compensation.We are expressing no opinion herein as to the price at which the Company Common Stock or the Acquiror Common Stock will trade at any future time.
We note that we were not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of the Company or any other alternative transaction.
We have acted as financial advisor to the Company with respect to the proposed Transaction and will receive a fee from the Company for our services, a substantial portion of which will become payable only if the proposed Transaction is consummated. In addition, the Company has agreed to indemnify us for certain liabilities arising out of our engagement. During the two years preceding the date of this letter, we and our affiliates have had commercial or investment banking relationships with the Company and the Acquiror, for which we and such affiliates have received customary compensation. Such services during such period have included acting as joint lead arranger and joint bookrunner on the Company’s facility agreement in January 2015, as joint lead arranger and joint bookrunner on the Acquiror’s facility agreements in October 2015 and as joint bookrunner on an offering of debt securities by the Acquiror in November 2015. In addition, we and our affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of the Company and the Acquiror. In the ordinary course of our businesses, we and our affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of the Company or the Acquiror for our own account or for the accounts of customers and, accordingly, we may at any time hold long or short positions in such securities or other financial instruments.
On the basis of and subject to the foregoing, it is our opinion as of the date hereof that the Exchange Ratio in the proposed Transaction is fair, from a financial point of view, to the holders of the Company Common Stock.
The issuance of this opinion has been approved by a fairness opinion committee of J.P. Morgan Securities LLC. This letter is provided to the Board of Directors of the Company (in its capacity as such) in connection with and for the purposes of its evaluation of the Transaction. This opinion does not constitute a recommendation to any shareholder of the Company as to how such shareholder should vote with respect to the Transaction or any other matter. This opinion may not be disclosed, referred to, or communicated (in whole or in part) to any third party for any purpose whatsoever except with our prior written approval. This opinion may be reproduced in full in any proxy or information statement mailed to shareholders of the Company but may not otherwise be disclosed publicly in any manner without our prior written approval.
Very truly yours,
J.P. MORGAN SECURITIES LLC
/s/ J.P. Morgan Securities LLC
J.P. Morgan Securities LLC
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20.Indemnification of Officers and Directors
The Tennessee Business Corporation Act, or the TBCA, sets forth in Sections 48-18-502 through 48-18-508 the circumstances governing the indemnification of directors, officers, employees and agents of a corporation against liability incurred in the course of their official capacities. Section 48-18-502 of the TBCA provides that a corporation may indemnify any director against liability incurred in connection with a proceeding if (i) the director acted in good faith, (ii) the director reasonably believed, in the case of conduct in his or her official capacity with the corporation, that such conduct was in the corporation’s best interest, or, in all other cases, that his or her conduct was not opposed to the best interests of the corporation and (iii) in connection with any criminal proceeding, the director had no reasonable cause to believe that his or her conduct was unlawful. In actions brought by or in the right of the corporation, however, the TBCA provides that no indemnification may be made if the director or officer is adjudged to be liable to the corporation. Similarly, the TBCA prohibits indemnification in connection with any proceeding charging improper personal benefit to a director, if such director is adjudged liable on the basis that a personal benefit was improperly received. In cases where the director is wholly successful, on the merits or otherwise, in the defense of any proceeding instigated because of his or her status as a director of a corporation, Section 48-18-503 of the TBCA mandates that the corporation indemnify the director against reasonable expenses incurred in the proceeding. Notwithstanding the foregoing, Section 48-18-505 of the TBCA provides that a court of competent jurisdiction, upon application, may order that a director or officer be indemnified for reasonable expense if, in consideration of all relevant circumstances, the court determines that such individual is fairly and reasonably entitled to indemnification, whether or not the standard of conduct set forth above was met. Officers, employees and agents who are not directors are entitled, through the provisions of Section 48-18-507 of the TBCA to the same degree of indemnification afforded to directors under Sections 48-18-503 and 48-18-505.
MAA’s charter provides that the MAA directors shall not be liable to MAA or its shareholders for monetary damages for breach of fiduciary duty, except for: (1) any breach of the director’s duty of loyalty; (2) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; or (3) unlawful distributions under the TBCA. Furthermore, MAA’s charter and bylaws provide that MAA shall indemnify and advance expenses to a director, officer, employee or agent to the fullest extent permitted under the TBCA.
The indemnification provisions in the MAA charter and bylaws specifically provide that MAA may purchase and maintain insurance on behalf of any MAA director or officer against any liability asserted against and incurred by him in his capacity as a director, officer, employee or agent whether or not MAA would have had the power to indemnify against such liability.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, may be permitted to the MAA directors and officers pursuant to the foregoing provisions or otherwise, MAA has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
Item 21.Exhibits
A list of the exhibits included as part of this registration statement is set forth in the Exhibit Index that immediately precedes such exhibits and is incorporated herein by reference.
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Item 22.Undertakings
The undersigned registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933, as amended, to any purchaser: if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933, as amended, to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
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(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, as amended, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
The Registrant undertakes that every prospectus: (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act, as amended, and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act, as amended, may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Memphis, State of Tennessee, on September 28, 2016.
[Signature Page to Voting Agreement]
Annex D
FORM OF MID-AMERICA APARTMENT COMMUNITIES, INC. VOTING
AGREEMENT
This Voting Agreement (this “Agreement”) is made and entered into as of June 3, 2013, by and among Colonial Properties Trust, an Alabama real estate investment trust (“Colonial”), Colonial Realty Limited Partnership, a Delaware limited partnership (“Colonial LP”, and together with Colonial, the “Colonial Parties”), and the undersigned shareholder (the “Shareholder”) of Mid-America Apartment Communities, Inc., a Tennessee corporation (“MAA”).
/s/ H. Eric Bolton, Jr.
H. Eric Bolton, Jr.
RECITALSChairman of the Board of Directors,
A. Concurrently withPresident and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated on September 28, 2016.
Signature | Title | Date | ||
/s/ H. Eric Bolton, Jr. H. Eric Bolton, Jr. | Chairman of the President and (Principal Executive Officer) | September 28, 2016 | ||
/s/ Albert M. Campbell, III Albert M. Campbell, III | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | September 28, 2016 | ||
* Alan B. Graf, Jr. | Director | September 28, 2016 | ||
* James K. Lowder | Director | September 28, 2016 | ||
* Thomas H. Lowder | Director | September 28, 2016 | ||
* Monica McGurk | Director | September 28, 2016 | ||
* Claude B. Nielsen | Director | September 28, 2016 | ||
* Philip W. Norwood | Director | September 28, 2016 | ||
* W. Reid Sanders | Director | September 28, 2016 | ||
* William B. Sansom | Director | September 28, 2016 | ||
* Gary Shorb | Director | September 28, 2016 | ||
| * By: | /s/ H. Eric Bolton, Jr. | |
| H. Eric Bolton, Jr. | ||
| Attorney-in-fact |
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EXHIBIT INDEX
| Exhibit Index | Description of Document | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2.1*+ | Agreement and Plan of Merger,
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.1
| Amended and Restated
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.2 | Articles of Amendment to the | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.3
| Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and Restated Charter
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.4
| Mid-America Apartment Communities, Inc.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.5 | Mid-America Apartment Communities, Inc. Articles of
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3.6
| Mid-America Apartment Communities, Inc. 25, 1998, as filed with the
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.7 | Mid-America Apartment Communities, Inc. Articles of Amendment to the
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.8 | Mid-America Apartment Communities, Inc. Articles of Amendment to the Amended and
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.9
II-5 Index to Financial Statements
II-6 Index to Financial Statements
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
99.1** | Consent of Citigroup Global Markets Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
99.2** | Consent of J.P. Morgan Securities LLC. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Form of Proxy Card of Mid-America Apartment Communities, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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