About EDGAR Online | Login
 
Enter your Email for a Free Trial:
The following is an excerpt from a S-4 SEC Filing, filed by BAY APARTMENT COMMUNITIES INC on 5/5/1998.
Next Section Next Section Previous Section Previous Section
AVALONBAY COMMUNITIES INC - S-4 - 19980505 - THE_MERGER

THE MERGER

Holders of both Bay common stock and Avalon common stock, except those stockholders who hold common stock in both companies, will experience a substantial reduction in their respective percentage

16

ownership interests and effective voting power relative to their respective percentage ownership interests in Bay and Avalon prior to the Merger. In the future, additional shares of common stock of the Surviving Corporation may be issued in public offerings, in connection with share-for-share mergers and acquisitions, redemptions of operating partnership units, or otherwise, which would further reduce the percentage ownership interests of holders of common stock in the Surviving Corporation. After the Merger, neither the current holders of Bay common stock nor the current holders of Avalon common stock will have separate approval rights with respect to any actions or decisions of the Surviving Corporation.

STATUS OF THE MERGER AS A TAX-FREE REORGANIZATION

The Merger is expected to qualify for treatment as a tax-free reorganization under Section 368(a) of the Code. As a result, neither Bay nor Avalon stockholders should recognize taxable gain as a result of the Merger (except in connection with cash paid to holders of Avalon common stock for fractional share interests). It is a condition to the Merger that we obtain legal opinions from our respective counsel stating that the Merger should be treated as a tax-free reorganization. However, these legal opinions will not be binding on the Internal Revenue Service ("IRS"). In the event that the Merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, each Avalon stockholder will recognize gain or loss equal to the difference between the stockholder's tax basis in the Avalon common stock and Avalon preferred stock and the fair market value of the Bay common stock and Bay preferred stock, as the case may be, received as consideration in the Merger. See "Certain Federal Income Tax Considerations--Tax Consequences of the Merger."

BROKERAGE PARTNERS