Colonial Properties Trust

Colonial Properties Trust

Colonial Properties Trust, Securities Settlement

The lawsuit was settled for additional disclosures in the proxy statement mailed to shareholders. The following is a summary of the proceedings in the lawsuit: ‘On June 3, 2013, Colonial Properties Trust (‘Colonial’) and Mid-America Apartment Communities, Inc. (‘MAA’) jointly announced their approval of an agreement and plan of merger (the ‘Merger Agreement’), by and among MAA, MidAmerica Apartments, L.P., Martha Merger Sub, L.P., Colonial and Colonial Realty Limited Partnership, pursuant to which MAA and Colonial would combine (the ‘Proposed Merger’). Under the terms of the Merger Agreement, each Colonial shareholder would receive 0.360 shares of MAA common stock for each share of Colonial common share of beneficial interest held immediately prior to the effective time of the Proposed Merger. On June 19, 2013, Bobby F. Williams (‘Plaintiff’) filed the Action styled as a derivative and putative class action lawsuit in the Circuit Court of Jefferson County, Alabama (the ‘Court’). The Action names as defendants Colonial (as a nominal defendant), Colonial Realty Limited Partnership, Thomas H. Lowder, Carl F. Bailey, Edwin M. Crawford, M. Miller Gorrie, William M. Johnson, James K. Lowder, Herbert A. Meisler, Claude B. Nielsen, Harold W. Ripps, and John W. Spiegel, who are members of Colonial’s Board of Trustees (the ‘Trustee Defendants,’ and with Colonial and Colonial Realty Limited Partnership, the ‘Colonial Defendants’), and MAA, Mid-America Apartments, L.P., and Martha Merger Sub, L.P. (the ‘MAA Defendants,’ and with the Colonial Defendants, the ‘Defendants’). The Action alleged that the Trustee Defendants breached their fiduciary duties to Colonial’s shareholders by seeking to sell Colonial through an allegedly unfair process, for an unfair price and on unfair terms, and alleged that Colonial Realty Limited Partnership and the MAA Defendants aided and abetted such alleged breaches. The Action sought, among other things, equitable relief enjoining the Proposed Merger and attorneys’ fees and costs. Plaintiff filed a motion for expedited discovery on July 2, 2013. On July 11, 2013 the Colonial Defendants and the MAA Defendants filed oppositions to Plaintiffs motion for expedited discovery, as well as their own motions to dismiss the complaint and motions for protective order. The motions to dismiss argued, among other things, that plaintiff had no standing to bring a claim for breach of fiduciary duty against the Trustee Defendants, and that Alabama law does not recognize ‘aiding and abetting breach of fiduciary duty’ as a cause of action. The Court set a motions hearing for August 8, 2013. A Joint Consent Solicitation/Prospectus on Form S-4 was publicly filed with the Securities and Exchange Commission (the ‘SEC’) by Colonial and MAA on July 19, 2013. Plaintiff filed an Amended Complaint on August 2, 2013. Counsel for the parties engaged in extensive arms’ length negotiations concerning a possible settlement of the Action, and, on August 14, 2013, reached an agreement in principle concerning the proposed settlement of the Action between and among Plaintiff, on behalf of himself and the putative settlement class (the ‘Settlement Class,’ as defined below), and Defendants, the terms of which were set forth in a memorandum of understanding dated August 14, 2013 (the ‘Memorandum of Understanding’) which, among other things, provided (i) Defendants would make certain additional disclosures recommended by Plaintiff in an amendment to Form S-4 to be filed with the SEC on or about August 22,2013 and (ii) Defendants would provide Plaintiffs counsel with certain reasonable and customary confirmatory discovery to confirm the fairness and adequacy of the Settlement. Pursuant to the Memorandum of Understanding, on August 22, 2013, Defendants filed an Amendment to Form S-4 with the SEC, containing agreed-upon additional disclosures, and on September 24, 2013, the parties entered into a Stipulation and Agreement Governing Confidentiality of Confirmatory Discovery. On September 27, 2013, Colonial’s and MAA’s shareholders voted to approve the Proposed Merger, and on October 1, 2013, MAA and Colonial publicly announced the completion of the merger. Pursuant to the Memorandum of Understanding, on September 27,2013, Colonial and MAA produced in excess of 1,100 pages of confirmatory discovery documents to Plaintiffs counsel, which Plaintiffs counsel reviewed and analyzed. The confirmatory discovery depositions ofDefendants Carl Bailey (former lead trustee of Colonial’s Board of Trustees) and Thomas Lowder (former Chairman of the Board and CEO of Colonial) were taken on October 9, 2013, and the confirmatory discovery deposition of Ragavan Balasubramanian (Managing Director, Real Estate Mergers and Acquisitions at Bank of America Merrill Lynch, financial advisor to Colonial) was taken on October 10, 2013. Plaintiffs counsel have represented that they retained and consulted with a financial advisor to assist them in prosecuting the Action and in conducting confirmatory discovery, including reviewing documents and preparing for depositions, and to assist in evaluating the terms of any potential settlement of the Action, including on the terms set forth herein. Plaintiff brought his claims in good faith and continues to believe that the claims in the Action have merit, but believes that, on the basis of information available to him, including publicly available information, his investigation, the confirmatory discovery referenced herein, and consultation with his independent expert, the Disclosures filed with the SEC on August 22, 2013 and the settlement terms herein satisfy his concerns with respect to the Proposed Merger and that his efforts in prosecuting the Action have resulted in relief for Colonial shareholders, which, under the circumstances, is fair, reasonable, adequate and in the best interests of Plaintiff and the putative Settlement Class.’

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