JCAP Jernigan Capital Inc

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.  )

Filed by the Registrant ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

Jernigan Capital, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Dear Stockholder,

You are cordially invited to attend a special meeting of stockholders of Jernigan Capital, Inc., a Maryland corporation, to be held on [•], 2020 at [9:30 a.m.], Central Daylight Time, at the offices of Jernigan Capital, Inc., 6410 Poplar Avenue, Suite 650, Memphis, Tennessee 38119. As part of our precautions regarding the novel coronavirus, or COVID-19 pandemic, the special meeting may be held solely by means of remote communication rather than in person. If we take this step, we will announce the decision to do so in advance and provide details on how to participate in a press release issued by the Company and on our website, www.jernigancapital.com. We will also file the press release with the U.S. Securities and Exchange Commission, which we refer to as the SEC, as definitive additional soliciting material. We encourage you to vote by proxy-over the Internet, by telephone or by mail well in advance of the special meeting, to ensure your shares are represented whether or not you decide to attend.

At the special meeting, you will be asked to consider and vote on the merger of NexPoint RE Merger, Inc., an affiliate of NexPoint Advisors, L.P., with and into Jernigan Capital, Inc., which we refer to as the merger, and the other transactions contemplated by the Agreement and Plan of Merger, dated as of August 3, 2020 and as it may be amended from time to time, among Jernigan Capital, Inc., Jernigan Capital Operating Company, LLC, NexPoint RE Merger, Inc. and NexPoint RE Merger OP, LLC, which we refer to as the merger agreement. If the merger is completed, you, as a holder of common shares of Jernigan Capital, Inc., will be entitled to receive $17.30 in cash, without interest and less any applicable withholding taxes, in exchange for each common share you own, as more fully described in the enclosed proxy statement.

Our board of directors has unanimously approved the merger agreement and declared the merger agreement and the transactions contemplated by the merger agreement, including the merger, to be advisable and in the best interests of Jernigan Capital, Inc. and our stockholders. Our board of directors recommends that you vote “FOR” the approval of the merger and the other transactions contemplated by the merger agreement.

The merger and the other transactions contemplated by the merger agreement must be approved by the affirmative vote of the holders of common shares entitled to cast not less than a majority of all the votes entitled to be cast on the matter. The notice of special meeting and proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the merger, the merger agreement and the other transactions contemplated by the merger agreement. We encourage you to read carefully the enclosed proxy statement, including the annexes. You may also obtain more information about Jernigan Capital, Inc. from us or from documents we have filed with the SEC.

Your vote is very important regardless of the number of common shares that you own. Whether or not you plan to attend the special meeting, we request that you authorize a proxy to vote your common shares by either completing and returning the enclosed proxy card as promptly as possible or authorizing your proxy or voting instructions by telephone or through the Internet. The enclosed proxy card contains instructions regarding voting. If you attend the special meeting, you may continue to have your common shares voted as instructed in your proxy, or you may

withdraw your proxy at the special meeting and vote your common shares in person. If you fail to vote by proxy or in person, or fail to instruct your broker on how to vote, it will have the same effect as a vote “AGAINST” approval of the merger and the other transactions contemplated by the merger agreement.

On behalf of the board of directors, thank you for your continued support.

This proxy statement is dated August [•], 2020 and is first being mailed to our stockholders on or about August [•], 2020.

authorize a proxy to vote your common shares by either marking, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope or authorizing your proxy or voting instructions by telephone or through the Internet. If you attend the special meeting, you may continue to have your common shares voted as instructed in your proxy, or you may withdraw your proxy at the special meeting and vote your common shares in person. If you fail to vote by proxy or in person, or fail to instruct your broker, bank or other nominee on how to vote, the effect will be that the common shares that you own will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the proposal to approve the merger and the other transactions contemplated by the merger agreement.

The approval of the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger, and the approval of the proposal regarding any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement, each requires the affirmative vote of a majority of the votes cast on the proposal. If you fail to vote by proxy or in person, or fail to instruct your broker on how to vote, it will have no effect on the outcome of such proposals. Abstentions are not considered votes cast and therefore will have no effect on the outcome of these proposals. Your broker cannot vote on any of the proposals, including the proposal to approve the merger and the other transactions contemplated by the merger agreement, without your instructions.

Any proxy may be revoked at any time prior to its exercise by delivery of a properly executed, later-dated proxy card, by authorizing your proxy or voting instructions by telephone or through the Internet at a later date than your previously authorized proxy, by submitting a written revocation of your proxy to our Secretary, or by voting in person at the special meeting. Attendance alone will not be sufficient to revoke a previously authorized proxy.

Holders of our common shares may not exercise any appraisal rights, dissenters’ rights or the rights of an objecting stockholder to receive the fair value of the stockholder’s common shares in connection with the merger because, as permitted by the Maryland General Corporation Law, as amended (which we refer to as the MGCL), our articles of incorporation provide that stockholders are not entitled to exercise such rights unless our board of directors, upon the affirmative vote of a majority of the entire board, determines that the rights apply. Our board of directors has made no such determination.

We encourage you to read the accompanying proxy statement in its entirety and to submit a proxy or voting instructions so that your common shares will be represented and voted even if you do not attend the special meeting. If you have any questions or need assistance in submitting a proxy or your voting instructions, please call our proxy solicitor, [•], toll-free at [•].

Memphis, Tennessee

August [•], 2020

The following questions and answers address briefly some questions you may have regarding the special meeting and the proposed mergers. These questions and answers may not address all questions that may be important to you as a stockholder. Please refer to the more detailed information contained elsewhere in this proxy statement, as well as the additional documents to which it refers or which it incorporates by reference, including the merger agreement, a copy of which is attached to this proxy statement as Annex A.

Performance Award Units. Pursuant to the merger agreement, immediately prior to the company merger effective time, each PSU award that is then outstanding will be cancelled in exchange for a number of Company shares equal to the number of PSUs that would vest based on the Company’s relative TSR, calculated as of the date of the company merger effective time (and with the last day of the applicable performance period being deemed to be the date of the company merger effective time), and such Company shares will automatically be converted into the right to receive the merger consideration, less any applicable withholding taxes, subject to and conditioned upon the occurrence of the closing of the company merger.

waived, it is anticipated that the mergers will be completed in the fourth quarter of 2020. Pursuant to the merger agreement, the closing of the mergers will take place on the third business day after satisfaction or waiver of the conditions to the mergers described under “The Merger Agreement—Conditions to the Mergers” (other than those conditions that by their nature are to be satisfied or waived at the closing of the mergers, but subject to the satisfaction or waiver of such conditions) or at such other date as mutually agreed to by the parties to the merger agreement. For further information regarding the timing of the closing of the mergers, see “The Merger Agreement—Effective Times; Closing Date.”

proxy but fail to provide voting instructions or abstain on any of the proposals listed on the proxy card, your shares will be counted for purpose of determining whether a quorum is present at the special meeting. If your shares are held in “street name” by your bank, broker or other nominee and you do not tell the bank, broker or other nominee how to vote your shares, these shares will not be counted for purposes of determining whether a quorum is present for the transaction of business at the special meeting.

Holders of shares of our common stock should read “The Mergers—Material U.S. Federal Income Tax Consequences” beginning on page 61 for a more detailed discussion of the U.S. federal income tax consequences of the receipt the merger consideration in exchange for our common stock pursuant to the merger. Such holders should also consult their tax advisors for a complete analysis of the effect of the merger on their U.S. federal, state, local and/or foreign taxes in light of their particular circumstances.

February 2020, (3) certain severance payments and benefits that may become payable upon a qualifying termination following the closing of the mergers and (4) potential conflicts of interest resulting from Mr. Dondero’s status as an affiliate of Parent and Parent OP. See “The Mergers—Interests of Our Directors and Executive Officers in the Mergers” for additional information about interests that our directors and executive officers have in the mergers that are different than yours.

Jernigan Capital, Inc.

6410 Poplar Avenue, Suite 650

Memphis, Tennessee 38119

Attention: John A. Good

(901) 567-9510

You may also contact [•], our proxy solicitor, as follows:

[•]

[•]

[•]

Toll-Free: 1-800-[•]

If your broker holds your common shares, you should also contact your broker for additional information.

This proxy statement and the documents that we incorporate by reference herein contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (which we refer to as the Securities Act), and Section 21E of the Exchange Act). Also, documents we subsequently file with the SEC and incorporate by reference may contain forward-looking statements. These forward-looking statements include, among others, statements about the expected benefits of the mergers, the expected timing and completion of the mergers and the future business, performance and opportunities of the Company. Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). Forward-looking statements generally can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “foresee,” “looking ahead,” “is confident,” “should,” “will,” “predicted,” “likely,” or similar words or phrases intended to identify information that is not historical in nature. Forward-looking statements are based on expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, without limitation:

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q, and those set forth in the Company’s other reports and information filed with the SEC, which are accessible on the SEC’s website at www.sec.gov.

Jernigan Capital, Inc.

6410 Poplar Avenue, Suite 650

Memphis, Tennessee 38119

(901) 567-9510

The Company was formed as a Maryland corporation in October 2014 and is structured as an Umbrella Partnership REIT, conducting its investment activities through its operating company, Jernigan Capital Operating Company, LLC. We are a commercial real estate company that invests primarily in new or recently constructed and opened self-storage facilities located predominately in dense urban submarkets within the top-50 United States Metropolitan Statistical Areas, or MSAs. Our investments include wholly owned self-storage facilities, as well as mortgage loans secured by self-storage facilities, which are typically coupled with equity interests. The Company’s website is www.jernigancapital.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the SEC. Our common shares are listed on the NYSE under the symbol “JCAP.” For additional information about us and our business, please refer to “Where You Can Find More Information.”

Jernigan Capital Operating Company, LLC

6410 Poplar Avenue, Suite 650

Memphis, Tennessee 38119

(901) 567-9510

The Operating Company was formed as a Delaware limited liability corporation in December 2015. The Company is the sole managing member of the Operating Company through which the Company operates its business, and, as of the date of this proxy statement, the Company owns approximately 93% of the Operating Company Units. Prior to February 20, 2020, the Operating Company was externally managed and advised by the Manager. The Manager was led by our founder and former Executive Chairman, Dean Jernigan, our CEO, John A. Good, and our President and CIO, Jonathan Perry. On February 20, 2020, our common stockholders voted to approve the internalization of management pursuant to the Purchase Agreement. On February 20, 2020, we closed the internalization described in the Purchase Agreement, resulting, among other things, in the Operating Company acquiring substantially all of the operating assets and liabilities of the Manager and each of the employees of the Manager became an employee of the Company. Since February 20, 2020, we have been an internally advised REIT.

NexPoint RE Merger, Inc.

c/o NexPoint Real Estate Advisors, L.P.

300 Crescent Court, Suite 700

Dallas, TX 75201

(972) 419-6213

Parent is a Maryland corporation and an affiliate of the NexPoint Advisors. Parent was formed solely for the purpose of acquiring us by means of the merger contemplated by the merger agreement and has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement.

NexPoint Advisors is a registered investment adviser to a suite of funds and investment offerings, including a closed-end fund, a business development company, an interval fund, and various real estate vehicles. NexPoint Advisors is part of a multibillion-dollar global alternative investment platform.

NexPoint RE Merger OP, LLC

c/o NexPoint Real Estate Advisors, L.P.

300 Crescent Court, Suite 700

Dallas, TX 75201

(972) 419-6213

Parent OP is a Delaware limited liability company. Parent is the sole member of Parent OP. Parent OP was formed solely for purposes of facilitating Parent’s acquisition of us by means of the merger contemplated by the merger agreement and has not carried on any activities to date, except for activities

incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, on the closing date, the Parent OP will merge with and into the Operating Company, and the Operating Company will continue as the surviving entity.

Affiliates of Parent, Parent OP and NexPoint Advisors, including the NexPoint Entities, collectively beneficially own all of the issued and outstanding shares of Series A Preferred Stock of the Company. Pursuant to the terms of the Series A Articles Supplementary, so long as any shares of Series A Preferred Stock are outstanding, the holders of Series A Preferred Stock, voting as a single class, may nominate and elect one director to our board of directors, whom we refer to as the Series A director, at each annual meeting of stockholders.

At the last annual meeting of stockholders, such holders elected James D. Dondero to serve as the Series A director.

The Series A Preferred Stock of the Company may not be converted into common stock of the Company, is not entitled to vote for members of the board of directors other than the Series A director and lacks contractual rights to control the Company.

This proxy statement is being furnished to our stockholders in connection with the solicitation of proxies by our board of directors to be exercised at a special meeting to be held on [•], 2020 at [9:30 a.m.], Central Daylight Time. The special meeting will be held at the offices of Jernigan Capital, Inc., 6410 Poplar Avenue, Suite 650, Memphis, Tennessee 38119. As part of our precautions regarding the COVID-19 pandemic, the special meeting may be held solely by means of remote communication rather than in person. If we take this step, we will announce the decision to do so in advance and provide details on how to participate in a press release issued by the Company and on our website, www.jernigancapital.com. We will also file the press release with the SEC as definitive additional soliciting material. We encourage you to vote by proxy-over the Internet, by telephone or by mail well in advance of the special meeting, to ensure your shares are represented whether or not you decide to attend. The purpose of the special meeting is for you to consider and vote on the following matters:

Pursuant to our bylaws, only the matters set forth in the Notice of Special Meeting may be brought before the special meeting. The affirmative vote of holders of common shares entitled to cast not less than a majority of all the votes entitled to be cast on the matter is required to approve the merger and the other transactions contemplated by the merger agreement and for the mergers to occur. A copy of the merger agreement is attached as Annex A to this proxy statement, which we encourage you to read carefully in its entirety.

All holders of record of our common shares as of the record date, which was the close of business on [•], 2020, are entitled to receive notice of and attend and vote at the special meeting or any postponement or adjournment of the special meeting. Each common stockholder will be entitled to cast one vote on each matter presented at the special meeting for each common share that such holder owned as of the record date. On the record date, there were [•] common shares outstanding and entitled to vote at the special meeting.

The presence in person or by proxy of our common stockholders entitled to cast a majority of all the votes entitled to be cast at the special meeting will constitute a quorum for purposes of the special meeting. A quorum is necessary to transact business at the special meeting. Abstentions will be counted as shares present for the purposes of determining the presence of a quorum. If a quorum is not present at the special meeting, we expect that the special meeting will be adjourned to a later date. Pursuant to our bylaws, the chairman of the meeting may adjourn the meeting, whether or not a quorum is present, to a later date, time and place announced at the special meeting.

Completion of the mergers requires approval of the merger and the other transactions contemplated by the merger agreement by the affirmative vote of the holders of common shares entitled to cast not less than a majority of all the votes entitled to be cast on the matter. Each common stockholder is entitled to cast one vote on each matter presented at the special meeting for each common share owned by such stockholder on the record date. Because the required vote for this proposal is based on the number of votes our common stockholders are entitled to cast rather than on the number of votes cast, if you fail to

vote by proxy or in person (including by abstaining), or fail to instruct your broker on how to vote, such failure will have the same effect as voting against the proposal to approve the merger and the other transactions contemplated by the merger agreement.

In addition, the approval of the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger, and the approval of the proposal regarding any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement, each requires the affirmative vote of a majority of the votes cast on the proposal. Approval of these proposals is not a condition to completion of the mergers. For the purpose of each of these proposals, if you fail to vote by proxy or in person, or fail to instruct your broker on how to vote, it will not have any effect on the outcome of such proposals. Abstentions are not considered votes cast and therefore will have no effect on the outcome of these proposals. Your broker cannot vote on any of the proposals, including the proposal to approve the merger and the other transactions contemplated by the merger agreement, without your instructions.

Accordingly, in order for your common shares to be voted, if you are a stockholder of record, you must either return the enclosed proxy card, authorize your proxy or voting instructions by telephone or through the Internet or vote in person at the special meeting. The vote of the holders of our preferred shares is not required to approve any of the proposals at the special meeting and is not being solicited.

As of the record date, our directors and executive officers owned and are entitled to vote an aggregate of approximately [•] of our common shares, entitling them to exercise approximately [•]% of the voting power of our common shares entitled to vote at the special meeting. Our directors and executive officers have informed us that they intend to vote the common shares that they own in favor of the proposal to approve the merger and the other transactions contemplated by the merger agreement, in favor of the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and in favor of the proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement, although they have no obligation to do so.

Votes cast by proxy or in person at the special meeting will be counted by the person appointed by us to act as inspector of election for the special meeting. The inspector of election will also determine the number of common shares represented at the special meeting, in person or by proxy.

Holders of record of our common shares may vote or cause their shares to be voted by proxy using one of the following methods:

Regardless of whether you plan to attend the special meeting, we request that you authorize a proxy for your common shares as described above as promptly as possible.

Under NYSE rules, all of the proposals in this proxy statement are non-routine matters, so there can be no broker non-votes at the special meeting. A broker non-vote occurs when shares held by a bank, broker, trust or other nominee are represented at a meeting, but the bank, broker, trust or other nominee has not received voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares on a particular proposal but has discretionary voting power on other proposals at such meeting. Accordingly, if you own common shares through a broker, bank or other nominee (i.e., in “street name”), you must provide voting instructions in accordance with the instructions on the voting instruction card that your broker, bank or other nominee provides to you, as brokers, banks and other nominees do not have discretionary voting authority with respect to any of the three proposals described

in this proxy statement. You should instruct your broker, bank or other nominee as to how to vote your common shares following the directions contained in such voting instruction card. If you have not received such voting instructions or require further information regarding such voting instructions, contact your broker, bank or other nominee who can give you directions on how to vote your common shares. If you hold your common shares through a broker, bank or other nominee and wish to vote in person at the special meeting, you must obtain a “legal proxy,” executed in your favor, from the broker, bank or other nominee (which may take several days). Because the proposal to approve the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of common shares entitled to cast not less than a majority of all the votes entitled to be cast on the matter, the failure to provide your bank, broker, trust or other nominee with voting instructions will have the same effect as a vote “AGAINST” the proposal to approve the merger and the other transactions contemplated by the merger agreement. Because the approval of each of (1) the non-binding compensation advisory proposal and (2) the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of a majority of the votes cast on such proposal, and because your bank, broker, trust or other nominee does not have discretionary authority to vote on either proposal, the failure to provide your bank, broker, trust or other nominee with voting instructions will have no effect on approval of either proposal, assuming a quorum is present.

If you are a holder of our restricted share awards, your shares will be voted as you specify on your proxy card and will not be voted if the proxy card is not returned or if you do not vote in person or authorize a proxy by telephone or through the Internet.

If you authorize a proxy, your common shares will be voted at the special meeting as you indicate on your proxy. If no instructions are indicated when you authorize your proxy, your common shares will be voted in accordance with the recommendations of our board of directors. Our board of directors recommends that you vote “FOR” the proposal to approve the merger and the other transactions contemplated by the merger agreement, “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and “FOR” the proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement.

You may revoke your proxy at any time, but only before the proxy is voted at the special meeting, in any of three ways:

Attendance at the special meeting will not, in itself, constitute revocation of a previously granted proxy. If you own common shares in “street name,” you may revoke or change previously granted voting instructions by following the instructions provided by the broker, bank or other nominee that is the registered owner of the shares.

Pursuant to our bylaws, only the matters set forth in the Notice of Special Meeting may be brought before the special meeting.

We will bear the cost of solicitation of proxies for the special meeting. In addition to the use of mails, proxies may be solicited by personal interview, telephone, facsimile, e-mail or otherwise, by our officers, directors and other employees, for which they will not receive additional compensation. We have engaged

[•] to assist in the solicitation of proxies for a fee of $[•], plus reimbursement of out-of-pocket expenses, and we have agreed to indemnify [•] against certain losses, costs and expenses. We also will request persons, firms and corporations holding common shares in their names, or in the names of their nominees, that are beneficially owned by others to send or cause to be sent proxy materials to, and obtain proxies from, such beneficial owners and will reimburse such holders for their reasonable expenses in so doing.

Although it is not currently expected, the special meeting may be adjourned for the purpose of soliciting additional proxies if the holders of a sufficient number of common shares are not present at the special meeting, in person or by proxy, to constitute a quorum or if we believe it is reasonably likely that the merger and the other transactions contemplated by the merger agreement will not be approved at the special meeting when convened on [•], 2020, or when reconvened following any adjournment. Any adjournments may be made to a date not more than 120 days after the original record date without notice (other than by an announcement at the special meeting), by the chairman of the meeting, whether or not a quorum is present (subject to certain restrictions in the merger agreement, including that the special meeting generally may not be held, without Parent’s consent, on a date that is more than 30 days after the date on which the special meeting was originally scheduled).

At any time prior to convening the special meeting, we may postpone the special meeting for any reason without the approval of our common stockholders to a date not more than 120 days after the original record date (subject to certain restrictions in the merger agreement, including that the special meeting generally may not be held, without Parent’s consent, on a date that is more than 30 days after the date on which the special meeting was originally scheduled).

Under the terms of the merger agreement, affiliates of NexPoint Advisors will acquire us and our subsidiaries, including the Operating Company, through the merger of the Parent with and into us and the merger of Parent OP with and into the Operating Company. Pursuant to the terms of the merger agreement, Parent will merge with and into the Company, with the Company continuing as the Surviving Company. Immediately following the effective time of the company merger, the Parent OP will merge with and into the Operating Company, with the Operating Company continuing as the Surviving OC.

This proxy statement does not constitute any solicitation of consents in respect of the operating company merger, and does not constitute an offer to exchange or convert any Operating Company Units that you may own.

Our board of directors and management have continuously considered and discussed various challenges that we have faced as a public company since our “blind pool” initial public offering in March 2015. Such challenges have included elevated levels of new supply of self-storage properties in some of our submarkets, challenges arising from our focus on newly-constructed self-storage facilities, which generally require several years to stabilize, complexities in obtaining financing for unstabilized self-storage properties and periods without ready access to equity capital with which to grow at a price that our board of directors found acceptable. More recently, the Company has faced the challenges resulting from the COVID-19 pandemic, including the resulting economic recession and discount to our estimated net asset value per share that has characterized the performance of our common stock on the NYSE. As part of the Company’s ongoing consideration and evaluation of its long-term business strategy and prospects, our board of directors and members of senior management have regularly assessed the Company’s performance and competitive position with the objective of identifying opportunities to enhance stockholder value. Opportunities discussed have included strategic capital transactions, potential asset acquisitions and dispositions with capital redeployment, joint ventures and business combination transactions.

The following chronology summarizes the key meetings and events that led to the signing of the merger agreement. The following chronology does not purport to catalogue every conversation among our board of directors, members of our management, our advisors and other parties.

The self-storage industry is backed by a strong industry association that encourages frequent and open communication among industry members and facilitates open dialogue through industry events. From time to time, representatives of the Company, including John Good, our current Chairman and Chief Executive Officer, have met with executives of other companies in the self-storage industry to discuss industry developments and possible opportunities for transactions. In addition, from time to time, we have received unsolicited inquiries and had discussions with those parties about potential strategic transactions, but, except as described below, none of these discussions progressed beyond the initial stages to a specific proposal relating to a potential merger with, or acquisition of, the Company.

On December 16, 2019, the Company announced that it had entered into the Purchase Agreement with its then external manager, JCAP Advisors, to effectuate an internalization transaction. In connection with the internalization transaction, the Company’s board of directors formed a special committee comprised entirely of disinterested directors to review, consider, negotiate and approve the terms of the internalization transaction. The special committee engaged a nationally-recognized investment banking firm as financial advisor in connection with the internalization transaction and, after due consideration and upon receipt of a fairness opinion from the special committee’s then financial advisor, unanimously approved the terms of the Purchase Agreement. Upon recommendation of the special committee, the Company’s board of directors unanimously approved the terms of the Purchase Agreement. Under the terms of the Purchase Agreement, JCAP Advisors would receive (a) 1,794,872 Operating Company Units issuable upon closing, which we refer to as the Initial Consideration, having a value of approximately $31.6 million based on the closing price of the Company’s common stock as of December 16, 2019 (the execution date of the Purchase Agreement), and (b) 769,231 million Operating Company Units, which we

refer to as the Earn-Out Consideration, without regard to continued employment through the company merger effective time, having a value of approximately $13.5 million computed on the same basis as the Initial Consideration. Under the terms of the Purchase Agreement, issuance of the Earn-Out Consideration would be triggered, it at all, upon the earlier of: (1) the Company’s common stock trading at or above a daily volume weighted price of $25.00 per share for at least 30 days during any trailing 365-day period prior to December 31, 2024 or (2) a “change of control” of the Company approved by its board of directors and its stockholders that occurs prior to December 31, 2024.

In connection with the internalization transaction, the Company announced that, effective December 31, 2019, Dean Jernigan, the Company’s founder and then-executive chairman, would retire as director, and Mr. Good would assume the role of chairman.

On December 16, 2019, following the Company’s public announcement of the Purchase Agreement, the executive chairman of a public non-traded REIT in the self-storage industry, which we refer to as Party A, contacted Mr. Good and informed him that an affiliate of Party A had accumulated approximately 1,000,000 shares of Company common stock in open market transactions and intended to vote those shares in favor of the internalization transaction.

On January 7, 2020, Mr. Good met with the chief executive officer of a REIT operating in the self-storage industry, which we refer to as Party B, in conjunction with their mutual attendance at an investor conference in New York. During this meeting, Mr. Good and the chief executive officer of Party B discussed, among other things, their respective companies, developments in the self-storage industry and the Company’s internalization of management. The chief executive officer of Party B expressed an interest in discussing a potential strategic transaction with the Company. Mr. Good indicated that he would apprise the board of directors of his discussions with the chief executive officer of Party B, which Mr. Good subsequently did.

On January 13, 2020, Mr. Good and the executive chairman of Party A met briefly in Deer Valley, Utah during a multi-day industry event. The executive chairman of Party A expressed interest in exploring a reverse merger of Party A into the Company, with the Company continuing as the successor public company to the combined operations. The executive chairman of Party A again informed Mr. Good that the Party A affiliate continued to hold its 1,000,000 common share position in the Company as a passive investment. Mr. Good responded that he would like to learn more about Party A and the possible strategic benefits of a reverse merger transaction, and that he would be available for a further discussion when the executive chairman of Party A had more time. Mr. Good and the executive chairman of Party A agreed to meet in person during Mr. Good’s forthcoming visit to Southern California in late January.

On January 14, 2020, at a meeting during the industry event in Deer Valley, Utah, Mr. Good and the chief executive officer of Party B again discussed, in general terms, the possibility of a strategic transaction between the Company and Party B, but the parties did not discuss valuation, a potential exchange ratio or purchase price or any other specific terms.

On January 24, 2020, Mr. Good met in Dallas with Matt McGraner, the chief investment officer of NexPoint Real Estate Advisors, L.P., which we refer to as NexPoint, an affiliate of the holders of the Company’s Series A Preferred Stock, to discuss the Company’s performance and the status of its investment portfolio, as well as strategies with respect to the ultimate redemption of the Company’s Series A Preferred Stock. During the discussion, Mr. McGraner indicated that in lieu of a redemption of the Series A Preferred Stock and cessation of NexPoint’s investment in the Company, NexPoint may be interested in submitting a proposal to acquire the Company in a potential go-private transaction. At that time, Mr. McGraner provided no indication of value or a range of potential offer prices. There were no further communications between the Company or its advisors and NexPoint with respect to a potential business transaction until May 7, 2020, as discussed below.

On January 28, 2020, Mr. Good and a representative from Jefferies, which had previously provided financial advisory services to the Company from time to time, met with the executive chairman of Party A and other representatives of Party A in Southern California. The executive chairman of Party A again expressed interest in a reverse merger of Party A into the Company. Mr. Good shared publicly available

information regarding the Company’s business model and investment portfolio. The executive chairman of Party A expressed an interest in continuing discussions with Mr. Good, after which Mr. Good indicated that he would apprise the board of directors of his discussion with the executive chairman of Party A, which he subsequently did.

Between February 10, 2020 and February 11, 2020, the Company’s senior management team held an in-person strategic planning meeting in Memphis to discuss, among other things, the Company’s investment portfolio and pipeline, opportunities to consolidate development investments it has financed and the capital required for such consolidation, the Company’s potential for acquiring or building a property management function, and operational challenges facing the Company, together with the key risks that could impede the Company’s ability to achieve its long-term objectives. The Company’s management team observed that the self-storage industry was facing a continued headwind of rental rate compression due to a prolonged cycle of new development and elevated levels of self-storage supply in its markets, but that cap rates had remained low due to large amounts of institutional capital desiring to invest in self-storage due to its long-term track record of strong performance. In light of the then-current circumstances, the Company’s management considered whether a continued focus on consolidating ownership through developer buyouts and overseeing lease-up of developed assets remained the best alternative for the Company and its stockholders in light of the Company’s small size and relatively higher cost of capital.

On February 20, 2020, at a special meeting of stockholders, the Company’s common stockholders approved the transactions contemplated by the Purchase Agreement, and the internalization transaction subsequently closed.

Also on February 20, 2020, in advance of the board’s regularly scheduled meeting on February 21, 2020, the board of directors met in executive session with representatives of Jefferies in attendance. During that meeting, Mr. Good led a presentation on the Company’s strategic positioning and alternatives, based on senior management’s in-person strategic planning meeting in mid-February. The board of directors engaged in extensive discussion of the Company’s business plan and outlook in light of recent market developments, including the potential impact of the Company’s high cost of capital and continued declines in self-storage industry fundamentals resulting from elevated new supply, which management expected would challenge the Company’s ability to grow assets and earnings. Mr. Good provided a detailed update of his conversations to date with the chief executive officer of Party B and the executive chairman of Party A. The board of directors determined that, in light of challenging industry dynamics and the resulting difficulties in generating growth, it was appropriate to consider the possibility of a strategic transaction to maximize stockholder value. The board of directors was supportive of Mr. Good continuing his discussions with, and providing non-public information to, Party B, subject to the negotiation and execution of a non-disclosure agreement. The board of directors further authorized the Company to engage financial and legal advisors in connection with the evaluation of strategic alternatives, including a potential transaction. The Company subsequently engaged King & Spalding as legal counsel and formally engaged Jefferies as the Company’s financial advisor in connection with its exploration of potential business combination transactions.

On February 27, 2020, the Company and Party B executed a non-disclosure agreement, and the Company opened a virtual data room populated with, among other information, selected organizational, financial and property due diligence information relating to the Company, its business and its assets. Upon gaining access to the virtual data room, representatives of Party B and its financial advisors commenced their due diligence investigation of the Company.

On February 28, 2020, Mr. Good and the chief executive officer of Party B spoke by telephone to discuss a framework for executing the Company’s business plan in the context of a strategic business combination between the Company and Party B and agreed to continue their preliminary discussion at an in-person meeting to be held on March 4, 2020 in King & Spalding’s Atlanta offices.

During this period and over the course of the next several weeks, the Company and Party B and their respective financial advisors continued their discussions, and the Company provided answers to questions posed by Party B and its financial advisor regarding the due diligence materials.

On March 4, 2020, Mr. Good and the chief executive officer of Party B met in Atlanta. During the meeting, Mr. Good and the chief executive officer of Party B discussed the strategic vision for the Company’s lending business, certain personnel matters, respective overhead levels and potential buyouts of developers. Mr. Good and the chief executive officer of Party B also discussed the functions of the companies’ respective senior management teams but did not discuss the roles or compensation, if any, of management following the closing of any negotiated transaction.

On March 12, 2020, Mr. Good received an unsolicited call from the executive chairman of Party A to communicate that the Party A affiliate was continuing to acquire Company common shares and was likely to exceed 5% ownership of the Company’s outstanding shares of common stock, necessitating a filing under Section 13 of the Exchange Act, but that Party A intended to remain a passive investor.

On March 23, 2020, the Party A affiliate (together with certain affiliates including Party A), filed a Schedule 13G with the SEC, reporting passive, beneficial ownership, with investment intentions only, of 1,466,214 shares of Company common stock, representing 6.3% of the Company’s then-outstanding common shares.

On March 24, 2020, the chief executive officer of Party B called Mr. Good to communicate that because of the dramatic and abrupt changes in the United States’ economic climate and Party B’s stock price due to the onset of the COVID-19 pandemic, Party B was suspending its due diligence activities with respect to a potential strategic business combination with the Company. The chief executive officer of Party B expressed Party B’s interest in pursuing a transaction in the future and also indicated that Party B would consider providing financing to the Company in the future. Following this conversation, discussions and due diligence efforts between the parties terminated without any discussion of an exchange ratio or potential purchase price.

On March 25, 2020, senior executives of a REIT operating in the self-storage industry, which we refer to as Party C, contacted Mr. Good to explore whether there were any strategic opportunities that Party C and the Company could potentially pursue together. During the call, Mr. Good and the Party C representatives discussed their respective companies and the current state of the self-storage environment and agreed to continue preliminary discussions.

On April 28, 2020, the Party A affiliate (together with certain affiliates including Party A), which had previously filed a Schedule 13G as a passive investor in the Company, filed a Schedule 13D with the SEC, which we refer to as the Schedule 13D Filing, disclosing that Party A and its affiliates may pursue discussions with the Company’s management team regarding the Company’s business, strategy and future plans and alternatives that the Company could employ to maximize stockholder value, including an extraordinary corporate transaction.

On April 29, 2020, the board of directors held a special telephonic meeting to discuss the Schedule 13D Filing. During the meeting, Mr. Good led a discussion about Party A’s business and reiterated that, during his March 12, 2020 telephone call with the executive chairman of Party A, the executive chairman of Party A did not express any interest in pursuing a transaction with the Company or communicate any proposal or request. Accordingly, the board of directors determined that no response from the Company was warranted at that time.

On May 1, 2020, Mr. Good and senior executives of Party C spoke by telephone. During the call, Party C representatives disclosed that Party C was interested in pursuing an all-stock strategic merger transaction with the Company and informed Mr. Good that Party C had been reviewing publicly available information about the Company for the past six weeks and had engaged a financial advisor to assist in the evaluation of a potential transaction. Mr. Good responded that he would inform the Company’s board of directors of his discussions with the Party B representatives.

Between May 4, 2020 and May 6, 2020, representatives of the Company received an unsolicited inquiry from a representative of a sizeable financial institution, which we refer to as Party D, inquiring about the Company and indicating potential interest in some form of strategic transaction, most likely in the form of an equity infusion. Mr. Good informed the members of the board of directors about the inquiry. Party D did

not subsequently communicate an indication of interest or submit a proposal to acquire the Company, and there were no further communications between the Company or its advisors and Party D with respect to a business transaction until June 19, 2020, as further described below.

On May 5, 2020, the executive chairman of Party A contacted Mr. Good by telephone. During the call, the executive chairman of Party A reiterated that Party A remained a friendly suitor but indicated that Party A intended to make an offer to acquire the Company in the near future. The executive chairman of Party A also indicated that Party A had access to capital sources to provide financing for an acquisition.

On May 7, 2020, the Company’s board of directors held a telephonic meeting. Mr. Good informed the board of directors of his discussions to date with representatives of Party C regarding Party C’s interest in pursuing a strategic stock-for-stock merger with the Company. Mr. Good also informed the board of directors that he had received a telephone call from the executive chairman of Party A during which the executive chairman of Party A indicated his desire to make an offer to acquire the Company. The board of directors evaluated the relative merits of continuing discussions with Party A and Party C. The board of directors concluded that the general expression of interest from Party A without specific terms was not yet actionable but determined that the inquiry from Party C was sufficiently specific to authorize Mr. Good to continue discussions with Party C.

Also on May 7, 2020, Matt McGraner of NexPoint contacted Mr. Good by telephone to inform him that NexPoint had been evaluating a potential all-cash acquisition of the Company and intended to deliver a written proposal in the next few days. During this discussion, Mr. McGraner provided no indication of value or a range of potential offer prices. Mr. Good subsequently consulted with representatives of King & Spalding and Jefferies regarding his conversation with Mr. McGraner and determined to update the Company’s board of directors of NexPoint’s overture the following week after the Company’s earnings call on May 8, 2020.

On May 8, 2020, Mr. Good participated in a telephonic meeting with senior executives of Party C to further discuss a potential strategic transaction. During the call, a Party C representative reiterated Party C’s interest in pursuing a strategic stock-for-stock merger transaction with the Company and requested non-public information regarding the Company and its assets in order to evaluate potential synergies in connection with the potential transaction. Mr. Good informed the Party C representatives that he would communicate Party C’s request to the Company’s board of directors and that, if the board of directors supported further discussions, the Company would expect Party C to execute a mutual non-disclosure agreement before receiving any non-public information.

Following this conversation, on May 9, the chief executive officer of Party C sent Mr. Good a draft mutual non-disclosure agreement for the Company’s consideration.

On May 11, 2020, Mr. Good received a non-binding letter of intent from NexPoint with a proposal to acquire 100% of the Company’s outstanding common stock and operating company units in an all cash merger transaction with a purchase price range of $17 to $18 per share. The non-binding proposal included a description of the potential financing sources, which included the contribution of affiliates of NexPoint’s existing equity stake, capital from NexPoint’s three managed accounts, contributions from certain institutional investors with whom NexPoint has relationships, the assumption of existing debt and third-party financing. The non-binding proposal included a draft exclusivity agreement pursuant to which the parties would negotiate exclusively regarding a potential transaction for 45 days.

On May 12, 2020, the board of directors held a special telephonic meeting during which it discussed, among other matters, the decline in the share price of the Company and other companies in the real estate industry and the expected scope and duration of the impacts of COVID-19 on the Company’s operations and go-forward business plan. During the meeting, Mr. Good reviewed the Company’s business plan and recent financial and operating performance and presented certain projections of future financial performance prepared in connection with the Company’s regular planning process. In addition, representatives of Jefferies reviewed the potential outlook for the industry generally, and the Company in particular. The representatives of Jefferies also reviewed with the board of directors potential strategic alternatives available to the Company, which included, among other things, a sale of the Company to a private acquiror, a merger involving another public company, and remaining as a standalone public company. As part of this review, the representatives of Jefferies presented preliminary valuation analyses

of the Company and discussed certain considerations relating to precedent transactions and potential transaction counterparties. In addition, representatives of King & Spalding reviewed with the directors their duties in connection with their consideration of potential strategic alternatives. Given that NexPoint had submitted a proposal and its affiliate, as the Series A Preferred stockholder, had elected a director to the Company’s board (James Dondero), the board of directors, cognizant of avoiding any potential conflict of interest, unanimously approved the formation of a transaction committee of all the members of the board of directors other than Mr. Dondero, which we refer to as the Transaction Committee. The Transaction Committee, comprised of Mr. Good, Mark Decker, Howard Silver, Harry Thie and Rebecca Owen, was authorized to consider whether to pursue a strategic transaction with NexPoint or other potential parties and to report its recommendation concerning any potential transaction to the Company’s board of directors for approval.

On May 14, 2020, the Company and Party C entered into a non-disclosure agreement, and Party C and its legal and financial advisors subsequently received access to the Company’s virtual data room and commenced their diligence investigation.

On May 14, 2020, Mr. Good called the executive chairman of Party A and informed him that the Company would be willing to enter into a mutual non-disclosure agreement with Party A in order to facilitate further discussions regarding a potential transaction between the parties, after which Mr. Good delivered to the executive chairman of Party A a draft mutual non-disclosure agreement.

On May 15, 2020, NexPoint delivered a liquidity analysis reflecting its ability to finance an acquisition of the Company on the terms outlined in NexPoint’s written proposal submitted May 11, 2020. Later that day, the Company delivered to NexPoint a draft non-disclosure agreement.

On May 20, 2020, the Transaction Committee met telephonically to receive an update from advisors and Mr. Good on the status of discussions with NexPoint, Party A and Party C.

On May 21, 2020, the Company and Party A executed a non-disclosure agreement, and Party A and its legal and financial advisors received access to the virtual data room.

On May 27, 2020, the Company and NexPoint entered into a non-disclosure agreement, and NexPoint and its legal and financial advisors received access to the virtual data room. Mr. Good subsequently received a call from Mr. McGraner of NexPoint during which Mr. McGraner emphasized both NexPoint’s desire to acquire the Company’s platform as outlined in NexPoint’s non-binding letter of intent, and its plans to expand the platform. Mr. McGraner stated that NexPoint would endeavor to complete due diligence expeditiously and would have an updated financing proposal by the following week.

Also on May 27, 2020, Mr. Good spoke with senior management of Party C by telephone to discuss matters relating to Party C’s ongoing due diligence. During the call, a representative of Party C reiterated that Party C was interested in a stock-for-stock merger with the Company and outlined Party C’s plan in connection with such a merger to contribute a substantial number of the Company’s assets to a joint venture with a financial partner. The representative of Party C informed Mr. Good that Party C had discussed the outlined joint venture proposal with representatives of the financial partner and that the financial partner was interested in exploring the potential joint venture transaction. The parties also discussed potential G&A savings resulting from the proposed transactions. Later that day, representatives of the Company and Party C and their respective financial advisors participated in a separate telephone conference related to Party C’s ongoing financial due diligence. The parties discussed, among other things, the Company’s development investment program and the Company’s acquisitions of developer interests.

On May 28, 2020, Mr. Good spoke with senior executives of Party C. During the call, the Party C representatives disclosed to Mr. Good the maximum exchange ratio per share of the Company common stock that Party C was willing to consider in connection with the potential merger. In addition, after indicating that Party C was aware that the Company was engaged in discussions with multiple interested parties, the Party C representatives stated their concern over participating in a broad competitive process and their hesitancy to continue their due diligence investigation in that context. In response, Mr. Good acknowledged that the Company was evaluating all potential strategic alternatives and had made no determination regarding which, if any, potential strategic alternative the Company would pursue. Mr. Good

noted that senior management viewed the Company’s assets as the newest, best located assets in the storage industry and believed they were likely to produce outsized growth in the future and reiterated the potential synergies a potential merger between the Company and Party C could generate. Mr. Good suggested that Party C should continue due diligence efforts expeditiously and submit a merger proposal for the Company’s consideration. Later that day, at the request of the Company, representatives of Jefferies contacted Party C senior executives to inform them that the Company remained interested in a strategic merger with Party C but that Party C should move quickly to agree to a valuation and transaction structure.

On May 29, 2020, the chief executive officer of Party C contacted Mr. Good by telephone to further express Party C’s concern about moving forward in a competitive situation.

On May 31, 2020, Mr. Good spoke with Mr. McGraner of NexPoint by telephone. Mr. McGraner informed Mr. Good that NexPoint had contacted a large commercial bank to discuss the possibility of providing debt financing for a potential acquisition of the Company and that NexPoint had completed its review of all documents provided to the data room. Mr. McGraner again expressed NexPoint’s commitment to pursuing an acquisition of the Company on the terms outlined in the non-binding letter of intent, subject to confirmatory due diligence and further informed Mr. Good that NexPoint expected to receive a term sheet from a financing source the following week.

On June 1, 2020, the Transaction Committee held a telephonic meeting during which it received updates on discussions with interested parties, ongoing due diligence and the anticipated range of valuations and offers. Following the Transaction Committee meeting, Mr. McGraner contacted Mr. Good by telephone to inform him that NexPoint’s proposed equity partner in the transaction had not yet issued a term sheet but was planning to do so in the next several days. In response, Mr. Good indicated that the Transaction Committee had met and was awaiting additional details from NexPoint. Mr. McGraner then inquired as to the status of Mr. Good’s preliminary discussions with Party A and Party C. In response, Mr. Good informed Mr. McGraner that both parties had made substantial progress with respect to their due diligence efforts and advised Mr. McGraner that NexPoint should work expeditiously to complete due diligence in order to provide additional clarity on a proposed price range.

On June 4, 2020, Mr. Good received a telephone call from a representative of Party C’s potential joint venture partner. During the call, the representative relayed to Mr. Good a conversation that the representative had with Party C’s senior executive officers to discuss, among other things, Party C’s preliminary discussions with the Company regarding a potential strategic stock for stock merger. The representative described to Mr. Good the concerns expressed over pursuing a strategic stock-for-stock merger with the Company in a competitive process with competing financial buyers. Mr. Good informed the representative of Party C that the Company was evaluating all possible strategic alternatives with potential counterparties at the time, but reiterated certain potential benefits of a strategic transaction between the Company and Party C and suggested that Party C continue due diligence. The joint venture representative indicated to Mr. Good that the representative would relay Mr. Good’s message to Party C’s chief executive officer.

On June 5, 2020, Mr. Good spoke with Mr. McGraner of NexPoint to discuss NexPoint’s ability to finalize its equity and debt commitments in connection with a proposed transaction. Mr. McGraner stated that NexPoint had received a term sheet for a $200 million equity commitment from an investor and a verbal commitment from a commercial bank for a $485 million credit facility, subject to syndication. Mr. McGraner then indicated that, as NexPoint worked towards syndication, NexPoint would request that the Company agree to exclusively negotiate with NexPoint moving forward.

On June 6, 2020, Mr. Good participated in a call with representatives of Jefferies and King & Spalding during which, among other things, Jefferies provided an update with respect to activity in the virtual data room and its preliminary views of the indicative valuation ranges received from NexPoint and Party C.

Following such discussion, Mr. Good contacted the chief executive officer of Party C to discuss furthering the discussions between Party C and the Company regarding a strategic merger transaction. Mr. Good

informed the chief executive officer of Party C that the Transaction Committee had discussed the potential benefits of a strategic transaction between the Company and Party C and that the Transaction Committee would carefully consider authorizing exclusivity with Party C if Party C provided a compelling exchange ratio.

On June 8, 2020, Mr. McGraner of NexPoint contacted Mr. Good to provide an update on NexPoint’s discussions with its financing sources and expectations as to timing and indicative terms of the potential financing arrangements. Mr. Good informed Mr. McGraner that he would apprise the Transaction Committee of the updated status but also informed Mr. McGraner that the Transaction Committee would require specifics around financing, as well as additional clarity on price range, before the Transaction Committee would be in a position to formally respond to NexPoint’s proposal.

On June 9, 2020, an executive of Party C contacted Mr. Good to inform Mr. Good that Party C had continued discussions with its joint venture partner and that Party C and its joint venture partner had underwriting teams working independently on due diligence of the Company’s assets. The executive of Party C expressed to Mr. Good that Party C and its partner were committed to moving forward with a strategic transaction with the Company, noted that the parties were on track to deliver a written proposal by the end of the month, and requested that the Company enter into an exclusivity agreement with Party C. Mr. Good informed the executive of Party C that Mr. Good would inform the Transaction Committee of Party C’s request for the Transaction Committee’s consideration. Following such discussion, Party C delivered to Mr. Good a draft exclusivity agreement.

On June 10, 2020, Mr. Good participated in a telephonic meeting with the executive chairman of Party A, representatives of his senior management team and representatives of Party A’s financial advisor to discuss financial due diligence and, in particular, the process and pricing dynamics of the Company’s developer buyouts.

Between June 10, 2020 and June 11, 2020, Mr. McGraner and Mr. Dondero contacted Mr. Good separately to request an update on the Company’s consideration of NexPoint’s indication of interest. Mr. Good reiterated that the Company would not formally respond to NexPoint’s proposal until NexPoint provided more definitive information regarding a price range and financing commitments. In response, Mr. McGraner indicated to Mr. Good that NexPoint would submit more definitive information in the next several days.

On June 11, 2020, the chief executive officer of Party B contacted Mr. Good by telephone on an informal basis to inquire about the Company’s performance generally. During the conversation, the parties discussed their respective businesses and the chief executive officer of Party B noted Party B’s continued interest in providing financing to the Company outside of a strategic transaction but the parties did not discuss a potential business combination transaction.

On June 12, 2020, Mr. Good received an unsolicited telephone call from the chief executive officer of a REIT in the self-storage industry, which we refer to as Party E, informing Mr. Good that Party E was aware that the Company had engaged Jefferies as its financial advisor and to inquire whether the Company was running an auction process. Mr. Good responded that the Company had engaged Jefferies as financial advisor and stated that, although the Company was not conducting an open and formal sale process, it was always willing to consider potential strategic transactions that enhance stockholder value. The chief executive officer of Party E expressed to Mr. Good Party E’s respect and admiration for the Company’s unique business model and excellent quality portfolio of self-storage properties but stated that Party E was not likely at that time to pursue a strategic combination with any company holding a large concentration of lease-up assets. Following the conversation, Party E did not subsequently communicate an indication of interest or submit a proposal to acquire the Company, and there were no further communications between the Company or its advisors and Party E with respect to a business transaction.

On June 14, 2020, Mr. Good spoke with a senior executive of Party C by telephone to discuss updates on its due diligence efforts and discussions with its prospective joint venture partner. The Party C executive informed Mr. Good that, although Party C and its advisors were working diligently, it was unlikely that Party C would be in a position to submit a more definitive proposed exchange ratio before the end of

June. The Party C executive acknowledged that the Company would not agree to negotiate exclusively with Party C without further clarity around an exchange ratio and transaction timing but informed Mr. Good that Party C and its joint venture partner would continue their due diligence efforts.

On June 14, 2020, Mr. McGraner contacted Mr. Good to inform him that NexPoint had a received a highly confident letter from a large commercial bank regarding a total facility commitment of approximately $425 million.

On June 15, 2020, NexPoint submitted a revised non-binding letter of intent to acquire for cash all of the Company’s outstanding common stock and operating company units with a purchase price range of $17.00 to $17.50 per share. The non-binding proposal included a letter from a large commercial bank expressing high confidence in providing a $425 million credit facility to NexPoint to finance the transaction. NexPoint subsequently provided a copy of an executed term sheet with a large multinational equity investor to provide up to $200 million of equity financing for the transaction.

On June 16, 2020, the executive chairman of Party A contacted Mr. Good by telephone to discuss Party A’s ongoing diligence efforts. The executive chairman of Party A informed Mr. Good that Party A had held preliminary discussions with a private equity source and a commercial bank regarding financing of the proposed transaction but had not received favorable terms. The executive chairman of Party A further noted that the financing was made more challenging by the fact that none of the Company’s self-storage properties were stabilized and many of those properties had many months to stabilization. The executive chairman of Party A stated that, in light of the remaining period to stabilization of the Company’s assets and the high cost of financing a transaction, the executive chairman of Party A would not be willing to offer more than $14.50 per share of the Company’s common stock. On June 16, 2020, the closing price of the Company’s common stock on the NYSE was $14.75. Mr. Good and the executive chairman of Party A agreed the indicated price level did not warrant further discussion of a proposed transaction between the Company and Party A at that time.

On June 18, 2020, the Transaction Committee held a telephonic meeting with advisors to discuss, among other things, the current status of discussions with potential counterparties as well as the state of the capital markets, the Company’s current valuation and the Company’s opportunities as a standalone REIT. Following extensive discussion, the Transaction Committee authorized Mr. Good to provide a written response to NexPoint’s revised non-binding letter of intent.

On June 19, 2020, the Company delivered to NexPoint a written response to NexPoint’s revised non-binding letter of intent. The written response was limited to questions regarding the status of NexPoint’s due diligence, its proposed timing of negotiations and its potential financing sources, and it was designed to confirm certain aspects of NexPoint’s proposal, including its financing plans.

Also on June 19, 2020, a senior executive of Party C contacted Mr. Good to inform him that Party C and its financial partner had completed their valuation of the Company’s wholly-owned assets. The Party C executive informed Mr. Good that the proposed exchange ratio that Party C was likely to propose would be significantly below the maximum exchange ratio previously disclosed to Mr. Good. Mr. Good responded that any exchange ratio below the maximum level previously indicated by Party C would be unacceptable to the board of directors. Mr. Good and the Party C representative agreed to schedule a call between the parties’ representatives to discuss Party C’s and its financial partner’s financial analysis in greater detail and answer any questions.

Also on June 19, 2020, Mr. Good received an unsolicited call from a representative of Party D to inform Mr. Good that Party D desired to explore a private-investment-in-public-equity (PIPE) transaction with the Company and to inquire whether the Company would provide Party D with non-public information regarding the Company and its assets for Party D’s evaluation. Mr. Good stated that the Company would require Party D to enter into a non-disclosure agreement prior to sharing non-public information and informed the Party D representative that Mr. Good would apprise the Transaction Committee of Party D’s inquiry. Following this conversation, Mr. Good consulted with the Transaction Committee. Given the uncertainty as to whether either NexPoint or Party C would present an actionable business combination or acquisition proposal to the Company and the likelihood that the Company would continue to operate on a standalone public company basis, the Transaction Committee authorized Mr. Good to negotiate a confidentiality agreement between the Company and Party D.

Later that day, on June 19, 2020, Mr. Good received an unsolicited call from the chief executive officer of a REIT operating in the self-storage industry, which we refer to as Party F. The chief executive officer stated that he had been following the market speculation related to the Company, including the Schedule 13D Filing and told Mr. Good that Party F would consider evaluating a strategic merger with the Company or providing capital to the Company for growth. Mr. Good informed the Party F representative that he would apprise the Transaction Committee of Party F’s overture. Mr. Good informed both the Transaction Committee and the Company’s advisors of the conversation with the chief executive officer of Party F. Within the following days, at the request of the Company, representatives of Jefferies contacted Party F’s chief executive officer and chief financial officer by telephone and advised the Party F executives that the Company would welcome a discussion regarding a potential business combination. In response, the Party F executives stated that they would continue to discuss the concept internally and would contact Jefferies if and when the Party F executives were interested in taking that step. There were no further communications between the Company and Party F and their respective representatives until July 30, 2020, as described below.

On June 20, 2020, NexPoint provided a written response to the Company’s June 19, 2020 response letter and provided additional clarity around NexPoint’s financing plans.

On June 22, 2020, Mr. Good and David Corak, the Company’s senior vice president, corporate finance, participated in a telephone conversation with certain representatives of an institutional investor with extensive experience investing in REITs, which we refer to as Party G, to provide a business update and discuss the Company’s capital profile. The representatives of Party G expressed interest in making a significant investment in the Company’s common stock and preferred stock to finance the redemption of the Company’s Series A Preferred Stock and other Company growth initiatives. The representatives noted that any such investment would be conditioned on the holders of the Series A Preferred Stock agreeing to an early redemption. The parties agreed to continue preliminary discussions regarding the potential investment.

Between June 23, 2020 and June 24, 2020, Mr. Good and Mr. McGraner of NexPoint spoke multiple times by telephone to discuss updated timing of NexPoint’s financing commitments and a prospective timeline if the Company and NexPoint were to enter into exclusive negotiations of a merger agreement. Mr. McGraner informed Mr. Good that NexPoint expected to receive both equity and financing commitments in the next three weeks but stated that both commitments were contingent on the Company and NexPoint entering into an exclusivity agreement. Mr. Good noted that the Transaction Committee had not approved of an exclusivity agreement with NexPoint and indicated he would inform the Transaction Committee of their conversation and NexPoint’s updated timeline and request.

On June 24, 2020, the Company and Party D entered into a non-disclosure agreement. The Company and its advisors did not provide Party D with access to the virtual data room at that time due to the Company’s ongoing discussions with Party C and NexPoint and the continued activity by each of Party C, NexPoint and their respective advisors in the virtual data room.

On June 26, 2020, Mr. Good spoke with representatives of Party C who had requested that their underwriting teams re-visit their analysis and indicative valuation of the Company. The representatives informed Mr. Good that their views as to valuation had not meaningfully changed and that Party C was no longer interested in pursuing a transaction at that time.

On June 29, 2020, the Transaction Committee held a telephonic meeting during which it discussed the status of discussions with interested parties regarding a strategic transaction, discussions with Party D and Party G regarding a potential capital investment in the Company, and the strategic options available to the Company, including continuing its business as a standalone public REIT. After thorough deliberation, the Transaction Committee determined to proceed with negotiations with NexPoint and approved granting exclusivity to negotiate a potential transaction with NexPoint within the range of values provided by NexPoint in the revised June 15, 2020 letter of intent. Following the Transaction Committee meeting, at the request of the Company, a representative of Jefferies contacted Mr. McGraner of NexPoint and informed Mr. McGraner that the Company was authorized to enter into exclusive negotiations with NexPoint. On June 30, 2020, the Company and NexPoint executed an exclusivity agreement pursuant to which the parties agreed to negotiate on an exclusive basis until July 30, 2020, provided that the

exclusivity would automatically terminate if NexPoint failed to meet certain hurdles by certain definitive dates during that period, which hurdles included agreeing to maintain its price range of $17.00 to $17.50 per common share throughout the exclusively period, agreeing to a reverse termination construct involving its Series A Preferred Stock economics as collateral, completing its due diligence, and providing executed commitment letters for its equity and debt financing.

Between July 1, 2020 and July 21, 2020, representatives of King & Spalding and NexPoint’s outside legal counsel Winston & Strawn continued to exchange drafts of the merger agreement and related transaction documents and negotiated open terms. Representatives of the Company and NexPoint spoke several times to discuss the progress of the due diligence efforts related to the proposed transaction and various open transaction points, including matters related to the ability of the Company to solicit offers pursuant to a “go-shop” provision following execution of the merger agreement, as well as the amounts and related triggers for payment of a break fee.

On July 21, 2020, NexPoint failed to meet three hurdles required for continued effectiveness of the exclusivity agreement with the Company and exclusivity expired.

On July 22, 2020, Mr. McGraner contacted Mr. Good to inform him that NexPoint was able to narrow its price range to $17.10 to $17.20 per common share.

Later that day, Mr. McGraner informed Mr. Good that NexPoint’s primary equity financing source would require an additional 30 days to issue an equity commitment in connection with the proposed transaction and that Mr. McGraner expected that NexPoint would finalize its debt commitments within 30 days as well. Mr. Good noted he would inform the Transaction Committee of NexPoint’s updated timeline but expressed his view that the delays would not be acceptable to the Transaction Committee, that the Company’s obligation to continue exclusive negotiations with NexPoint had expired and that the Company may decide to cease negotiations and focus on its stand-alone strategy, which could include pursuing additional equity capitalization. Mr. McGraner reiterated that NexPoint was continuing to work hard to secure financing for the potential transaction. Later that day, Mr. McGraner called Mr. Good and indicated that NexPoint intended to request and expected to receive approval from several of NexPoint’s closed-end funds for a full backstop of the equity financing component of the proposed acquisition. That night, Mr. McGraner informed Mr. Good that such approval had been obtained.

Over the course of the next few days, the parties continued the due diligence investigation, King & Spalding and Winston & Strawn continued to negotiate the terms of the merger agreement, and the Transaction Committee received regular updates from Mr. Good and representatives of King & Spalding and Jefferies with respect to the status of negotiations with NexPoint and the status of the draft merger agreement.

On July 29, 2020, Mr. McGraner informed Mr. Good that NexPoint had not yet received the requisite debt financing commitment required under the merger agreement and that such commitments would not be received until mid-August at the earliest, but that Mr. McGraner and Mr. Dondero had discussed seeking financing for the entire transaction from several of NexPoint’s closed-end funds and its affiliate. Mr. Good informed Mr. McGraner that he would not support, and did not believe the Transaction Committee would support, waiting until mid-August for a debt commitment, and requested that Mr. McGraner seek a financing commitment from the NexPoint closed-end funds if NexPoint desired to move forward with the transaction. Later that day, Mr. McGraner informed Mr. Good that NexPoint had requested a commitment from several of NexPoint’s closed-end funds for financing of the entire acquisition price, subject to the Company’s willingness to release the closed-end funds and affiliate from such commitment to the extent it was replaced by alternative financing acceptable to the Company.

On July 30, 2020, Mr. Good participated in a telephonic meeting with representatives of Jefferies and King & Spalding. Mr. Good described his discussions with Mr. McGraner on July 29, 2020. King & Spalding discussed the draft merger agreement, particularly the changes proposed by NexPoint concerning deal protections. Mr. Good directed representatives of Jefferies to propose to representatives of NexPoint an acquisition price of $17.30 per common share. Representatives of Jefferies then communicated that price to representatives of NexPoint.

Later that day, Mr. Good communicated the counter proposal on certain deal protection provisions to Mr. McGraner, which included, among other things, a 45-day “go-shop” period for soliciting competing offers. Shortly following that communication, Mr. McGraner informed Mr. Good that NexPoint would agree to a purchase price of $17.30 per common share provided that the Company would agree to reimburse NexPoint’s expenses up to a cap of $5 million in the event the Company’s stockholders voted against the proposed transaction or in the event the Company breached the merger agreement such that the requisite closing conditions were unable to be satisfied.

On July 31, 2020, the Transaction Committee held a telephonic meeting, together with representatives of Jefferies and King & Spalding, to discuss and review the draft merger agreement and related transaction documents. Representatives of King & Spalding reviewed the duties of the directors and the terms of the draft merger agreement. Representatives of Jefferies reviewed with the board of directors certain preliminary valuation analyses of the consideration proposed in the merger. Following extensive discussions, the Transaction Committee instructed management and the advisors to continue negotiating the terms of a potential transaction.

On the morning of August 2, 2020, Mr. McGraner informed Mr. Good that the independent directors of several of NexPoint’s affiliated closed-end funds and the board of directors of one of its publicly traded affiliates had approved an equity commitment sufficient to fund the entire proposed merger consideration. After receiving such approvals, on the evening of August 2, 2020, the Transaction Committee held a telephonic meeting, together with representatives of Jefferies and King & Spalding, to discuss and review the draft merger agreement and to consider the proposed transaction. After receiving such approvals, on the evening of August 2, 2020, the Transaction Committee held a telephonic meeting, together with representatives of Jefferies and King & Spalding, to discuss and review the draft merger agreement and to consider the proposed transaction. Representatives of King & Spalding provided a presentation regarding the terms of the draft merger agreement and other transaction documents and reviewed with the directors their duties in connection with their consideration and potential approval of the transaction with NexPoint. Representatives of Jefferies again reviewed with the directors Jefferies’ financial analyses of the consideration proposed in the merger. Following extensive discussion, the Transaction Committee unanimously resolved to recommend the merger agreement and the transactions contemplated by the merger agreement to the board of directors. Immediately following this approval, a telephonic meeting of the full Company board of directors was convened and Mr. Dondero, the Series A Preferred director, joined the meeting along with the Transaction Committee. Representatives of King & Spalding led a discussion on the interests of directors and executive officers in the merger agreement that are different from, or in addition to, Company stockholders generally, including the earn-out consideration payable to executives upon a change in control pursuant to the Internalization. Representatives of Jefferies then delivered to the board of directors an oral opinion, which was subsequently confirmed by delivery of a written opinion, dated August 2, 2020, to the effect that as of such date, and subject to the various assumptions made, procedures followed, matters considered and limitations on the review undertaken set forth in Jefferies’ written opinion, the merger consideration to be received by holders of the Company’s common stock was fair, from a financial point of view, to such holders. Following these presentations and discussions and receipt of the recommendation of the Transaction Committee, the Company board of directors unanimously (a) approved and declared advisable and in the best interests of the Company and the Company’s stockholders the merger, the merger agreement and the other transactions contemplated by the merger agreement, and (b) resolved to recommend that the Company stockholders vote to approve the merger and the other transactions contemplated by the merger agreement.

Between August 2, 2020 and August 3, 2020, the parties completed the transaction documents.

On the morning of August 3, 2020, the parties executed and delivered the merger agreement and other transaction documents, and the Company and NexPoint issued a joint press release publicly announcing the transaction.

In reaching its decision to approve the merger agreement, declare the merger agreement and the transactions contemplated by the merger agreement, including the merger, to be advisable and in the best interests of the Company and our stockholders and to recommend approval of the merger and the other transactions contemplated by the merger agreement to our stockholders, the board of directors consulted with the Company’s senior management team, as well as our financial and legal advisors, and considered a number of factors, including the following material factors which the board viewed as supporting its decision to approve the merger agreement, declare the merger agreement and the transactions contemplated by the merger agreement, including the merger, to be advisable and in the best interests of the Company and our stockholders and to recommend approval of the merger and the other transactions contemplated by the merger agreement to our stockholders:

The board of directors also considered the following potentially negative factors in its consideration of the merger agreement and the merger:

The foregoing discussion of the factors considered by the board of directors is not intended to be exhaustive, but rather includes the material factors considered by the board. In reaching its decision approve the merger agreement, declare the merger agreement and the transactions contemplated by the merger agreement, including the merger, to be advisable and in the best interests of the Company and our stockholders and to recommend approval of the merger and the other transactions contemplated by the merger agreement to our stockholders, the board of directors did not quantify or assign any relative weights to, and did not make specific assessments of, the factors considered, and individual directors may have given different weights to different factors. The board of directors did not reach any specific conclusion with respect to any of the factors or reasons considered.

The above factors are not presented in any order of priority. The explanation of the factors and reasoning set forth above contain forward-looking statements and should be read in conjunction with the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Our board of directors has unanimously approved the merger agreement and declared the merger agreement and the transactions contemplated by the merger agreement, including the merger, to be advisable and in the best interests of the Company and our stockholders. Our board of directors unanimously recommends that you vote “FOR” the proposal to approve the merger and the other transactions contemplated by the merger agreement, “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and “FOR” the proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement.

As a matter of general practice, due to the unpredictability of the underlying assumptions and estimates inherent in preparing financial projections, we do not publicly disclose detailed projections as to our anticipated financial position or results of operations, other than providing, from time to time, estimated ranges for the then- current fiscal year of certain expected financial results and operational metrics in our regular earnings press releases and other investor materials.

However, in connection with the evaluation of a possible transaction, our management prepared and provided to our board of directors certain forward-looking financial information for the Company on a consolidated basis for 2020 through 2024 (which we refer to as the 2020 through 2024 projected financial information), which is summarized below. Such projections were also provided to Jefferies for use in

connection with its financial analyses and fairness opinion as well as to our board of directors. In addition, certain projected financial information for the 2020 fiscal year was provided to NexPoint Advisors in connection with its due diligence review.

These financial projections were not intended for public disclosure, and, accordingly, do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts or generally accepted accounting principles, or GAAP. Neither our independent registered public accounting firm nor any other independent accountants have audited, compiled or performed any procedures with respect to the projections nor expressed an opinion or any form of assurance on the financial projections or their achievability, and they assume no responsibility for, and disclaim any association with, such financial projections. A summary of the financial projections is included in this proxy statement only because the financial projections were made available to our board of directors, Jefferies and NexPoint Advisors as described in this proxy statement. The inclusion of the financial projections in this proxy statement does not constitute an admission or representation by us that the information is material.

In the view of our management, the financial projections were prepared on a reasonable basis reflecting management’s best available estimates and judgments regarding our future financial performance at the time they were prepared. The financial projections have been included only to reflect information made available at the time of certain events and decisions to our board of directors, Jefferies and NexPoint Advisors, are not facts and should not be relied upon as indicative of actual future results, and you are cautioned not to rely on the financial projections. Some or all of the assumptions that have been made in connection with the preparation of the financial projections may have changed since the date the financial projections were prepared. None of the Company, NexPoint Advisors nor any of our or their respective affiliates, advisors or other representatives assumes any responsibility for the validity, reasonableness, accuracy or completeness of the financial projections. None of the Company, NexPoint Advisors nor any of their respective affiliates has or intends to, and each of them disclaims any obligation to, update, revise or correct the financial projections if any or all of them have become or become inaccurate (even in the short term) since the time of their preparation. These considerations should be taken into account in reviewing the financial projections, which were prepared as of an earlier date.

The financial projections do not reflect changes in general business or economic conditions since the time they were prepared, changes in our businesses or prospects since the time they were prepared, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the financial projections were prepared, and the financial projections are not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable than as set forth below and should not be regarded as a representation that the financial forecasts will be achieved. The projections also reflect assumptions as to certain business decisions that are subject to change. In addition, our future financial performance may be affected by our ability to successfully implement a number of initiatives to improve our operations and financial performance and our ability to achieve strategic goals, objectives and targets over the applicable periods.

Because the financial projections reflect subjective judgment in many respects, they are susceptible to multiple interpretations and frequent revisions based on actual experience and business developments. The financial projections also cover multiple years, and such information by its nature becomes less predictive with each succeeding year. The financial projections constitute forward-looking information and are subject to a wide variety of significant risks and uncertainties that could cause the actual results to differ materially from the projected results. For additional information on factors that may cause our future financial results to materially vary from the projected results summarized below, see the section entitled “Cautionary Statement Regarding Forward-Looking Statements,” beginning on page 20. Accordingly, there can be no assurance that the projected results summarized below will be realized or that actual results will not differ materially from the projected results summarized below, and the financial projections cannot be considered a guarantee of future operating results and should not be relied upon as such. Neither we nor our affiliates or advisors or any other person has made any representation to any of our stockholders or any other person regarding our actual performance compared to the results included in the financial projections. We have not made any representation to NexPoint Advisors or its affiliates, in the merger agreement or otherwise, concerning the projections.

The financial projections should be evaluated, if at all, in conjunction with the historical financial statements and other information contained in our public filings with the SEC. The financial projections do not take into account any circumstances or events occurring after the date they were prepared, including the mergers. Further, the financial projections do not take into account the effect of any failure of the mergers to be consummated and should not be viewed as accurate or continuing in that context.

The following table summarizes the financial projections of the Company on a consolidated basis that were provided to our board of directors, Jefferies and NexPoint Advisors in connection with the evaluation of a possible transaction.

Certain of the above financial projections above were not prepared in accordance with GAAP, including Net Operating Income, EBITDA, Unlevered Free Cash Flow, FFO and FFO / Share. We use these non-GAAP financial measures in analyzing our financial results and believe that they enhance investors’ understanding of our financial performance and the comparability of our results to prior periods, as well as against the performance of REITs. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company’s calculation of non-GAAP financial measures may differ from others in the industry and Owned Net Operating Income, EBITDA, Unlevered Free Cash Flow, FFO and FFO / Share are not necessarily comparable with similar titles used by other companies. The GAAP and non-GAAP financial measures used in the financial projections were relied upon by Jefferies for purposes of its fairness opinion and by our board of directors in connection with its consideration of the mergers. Financial measures provided to a financial advisor are excluded from the definition of non-GAAP financial measures and therefore are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Accordingly, we have not provided a reconciliation of the financial measures included in the financial projections above.

Pursuant to an engagement letter, the Company retained Jefferies to provide it with financial advisory services in connection with any possible sale, disposition or other business combination and an opinion as to the fairness, from a financial point of view, of the merger consideration to be received by holders of the Company’s common stock in connection with the mergers. At a meeting of our board of directors held on August 2, 2020, Jefferies rendered its oral opinion, confirmed by delivery of a written opinion dated August 2, 2020 to our board of directors to the effect that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the review undertaken set forth in Jefferies’ opinion, the merger consideration of $17.30 per share in cash to be received by holders of shares of the Company’s common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.

In arriving at its opinion, Jefferies, among other things:

In Jefferies’ review and analysis and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available by the Company or that was publicly available (including, without limitation, the information described above), or that was otherwise reviewed by Jefferies. In its review, Jefferies relied on assurances of the management of the Company that management was not aware of any facts or circumstances that would make such information inaccurate or misleading. In its review, Jefferies did not obtain any independent evaluation or

appraisal of any of the assets or liabilities of, nor did Jefferies conduct a physical inspection of any of the properties or facilities of, the Company. Jefferies did not assume any responsibility to obtain any such evaluations or appraisals.

With respect to the financial forecasts provided to and examined by Jefferies, Jefferies’ opinion noted that projecting future results of any company is inherently subject to uncertainty. The Company informed Jefferies, however, and Jefferies assumed, that such financial forecasts were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of the Company as to the future financial performance of the Company. Jefferies expressed no opinion as to the Company’s financial forecasts or the assumptions on which they were made.

Jefferies’ opinion was based on economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date of its opinion. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting Jefferies’ opinion of which Jefferies became aware after the date of its opinion. The credit, financial and stock markets have experienced and may continue to experience volatility and Jefferies expresses no view or opinion as to any potential effects of such volatility on the Company or the mergers.

Jefferies made no independent investigation of any legal or accounting matters affecting the Company, and Jefferies assumed the correctness in all respects material to Jefferies’ analysis of all legal and accounting advice given to the Company and the board of directors, including, without limitation, advice as to the legal, accounting and tax consequences of the terms of, and transactions contemplated by, the merger agreement to the Company and its stockholders. In addition, in preparing its opinion, Jefferies did not take into account any tax consequences of the mergers to any holder of the Company’s common stock. In rendering its opinion, Jefferies assumed that the final form of the merger agreement would be substantially similar to the last draft reviewed by it. Jefferies also assumed that in the 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 the Company, or the contemplated benefits of the mergers.

Jefferies’ opinion was for the use and benefit of the board of directors in its consideration of the merger, and Jefferies’ opinion did not address the relative merits of the transactions contemplated by the merger agreement as compared to any alternative transaction or opportunity that might be available to the Company, nor did it address the underlying business decision by the Company to engage in the mergers or the terms of the merger agreement or the documents referred to therein. Jefferies’ opinion does not constitute a recommendation as to how any holder of shares of the Company’s common stock should vote on the merger or any matter relating thereto. In addition, Jefferies was not asked to address, and its opinion did not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of the Company, other than holders of shares of the Company’s common stock. Jefferies expressed no opinion as to the price at which the shares of the Company’s common stock will trade at any time. Furthermore, Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable or to be received by any of the Company’s officers, directors or employees, or any class of such persons, in connection with the mergers relative to the merger consideration to be received by holders of shares of the Company’s common stock. Jefferies’ opinion was authorized by the Fairness Committee of Jefferies LLC.

In preparing its opinion, Jefferies performed a variety of financial and comparative analyses. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant quantitative and qualitative methods of financial analysis and the applications of those methods to the particular circumstances and, therefore, is not necessarily susceptible to partial analysis or summary description.

Jefferies believes that its analyses must be considered as a whole. Considering any portion of Jefferies’ analyses or the factors considered by Jefferies, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying the conclusion expressed in Jefferies’ opinion. In addition, Jefferies may have given various analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions, so that the range of

valuations resulting from any particular analysis described below should not be taken to be Jefferies’ view of the Company’s actual value. Accordingly, the conclusions reached by Jefferies are based on all analyses and factors taken as a whole and also on the application of Jefferies’ own experience and judgment.

In performing its analyses, Jefferies made numerous assumptions with respect to industry performance, general business, economic, monetary, regulatory, market and other conditions and other matters, many of which are beyond the Company’s and Jefferies’ control. The analyses performed by Jefferies are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. In addition, analyses relating to the per share value do not purport to be appraisals or to reflect the prices at which shares of the Company’s common stock may actually be sold. The analyses performed were prepared solely as part of Jefferies’ analysis of the fairness, from a financial point of view, of the merger consideration of $17.30 per share in cash to be received by holders of shares of the Company’s common stock pursuant to the merger agreement, and were provided to the board of directors in connection with the delivery of Jefferies’ opinion.

The following is a summary of the material financial and comparative analyses performed by Jefferies in connection with Jefferies’ delivery of its opinion and that were presented to the board of directors at its meeting on August 2, 2020. The financial analyses summarized below include information presented in tabular format. In order to fully understand Jefferies’ financial analyses, 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. Considering the data described 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 Jefferies’ financial analyses. The following summary does not purport to be a complete description of the financial analyses performed by Jefferies. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before August 2, 2020 and is not necessarily indicative of current or future market conditions.

Using publicly available information and information provided by the Company, Jefferies analyzed the trading multiples of the Company and the corresponding trading multiples of the following five public company self-storage REITs in the U.S., which are collectively referred to as the “Selected Companies”:

In its analysis, Jefferies derived and compared multiples for the Company and the Selected Companies, calculated as follows:

This analysis indicated the following:

Using the reference ranges for the benchmarks set forth below and the Company’s estimated EBITDA for calendar year 2022, Jefferies determined implied enterprise values for the Company, Jefferies subtracted

total debt and preferred equity and added cash and cash equivalents to the implied enterprise value for the Company to determine implied equity value. In addition, using the reference ranges for the benchmarks set forth below and the Company’s estimated FFO for calendar year 2022, Jefferies determined implied equity value for the Company. After accounting for the vesting of stock awards, these analyses indicated the ranges of implied values per share set forth opposite the relevant benchmarks below, compared, in each case, to the merger consideration of $17.30 per share of the Company’s common stock:

No company utilized in the selected public company analysis is identical to the Company. In evaluating the Selected Companies, Jefferies made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the Company’s and Jefferies’ control.

Using publicly available information, Jefferies examined the following sixteen company or portfolio transactions over the last nine years that Jefferies considered generally relevant for the purposes of analysis, collectively referred to as the “selected transactions”. The selected transactions considered and the month and year each transaction was announced are as follows:

Jefferies reviewed the price per square foot based on the consideration paid or proposed to be paid in the selected transactions. The analysis indicated that the high and low price per square foot of the selected transactions was $350 and $96 respectively and the weighted average price per square foot of the selected transactions was $183, and based on the results of this analysis, Jefferies applied a price per square foot range of $175 to $200 to the projected owned net rentable square feet as of December 31, 2024 and determined the implied gross value of the real estate of the Company. To determine the implied net value of the real estate of the Company, Jefferies subtracted from the gross real estate value the total expected funding costs, preferred equity, net debt and other non-debt liabilities (including dividends payable) and added total expected repayments on investments and other non-cash assets. After

accounting for the vesting of stock awards, this analysis indicated a range of implied values per share of approximately $12.65 to $17.17, compared to the merger consideration of $17.30 per share of the Company’s common stock.

Jefferies performed a net asset value analysis. Using the Company’s financial projections Jefferies reviewed the cash flow for owned properties and development investments, and projected fair value of development investments, to estimate the gross value of real estate and development investments. The terminal value of owned real estate was estimated by applying a range of exit capitalization rates of 5.1% to 5.5% for the Company’s owned and acquired real estate assets to the Company’s estimated net operating income attributable to such real estate assets for fiscal year ending December 31, 2024, which range was selected by Jefferies in its professional judgment, which, when added to the present value of the fair market value of development investments held as of December 31, 2024 and added to the present value of net cash flows from wholly-owned real estate and development investments through December 31, 2024 discounted at a rate of 9.5% to 10.8%, resulted in a range of implied gross values for the Company’s real estate and development investments of approximately $814 million to $912 million. For reference, the median capitalization rate of the Selected Companies was 5.3%. These values were then adjusted to add other non-cash assets of approximately $16 million, and to subtract net debt, preferred equity and other liabilities of approximately $448 million to determine implied net asset value of the Company’s real estate and development investments. After accounting for the vesting of stock awards, this analysis indicated a range of implied values per share of approximately $14.44 to $18.16, compared to the merger consideration of $17.30 per share of the Company’s common stock.

Jefferies performed a discounted cash flow analysis to estimate the present value of the unlevered free cash flows of the Company through the fiscal year ending December 31, 2024 using the Company’s financial projections, discount rates ranging from 9.5% to 10.8%, which range was selected by Jefferies in its professional judgment based on a weighted average cost of capital analysis of the Company and the Selected Companies, and EBITDA terminal value multiples ranging from 19.0x to 21.0x, derived for the Selected Companies described above. To determine the implied total equity value for the Company, Jefferies subtracted total debt and preferred equity and added cash and cash equivalents to the implied enterprise value for the Company. After accounting for the vesting of restricted stock awards, this analysis indicated a range of implied values per share of approximately $10.61 to $14.76, compared to the merger consideration of $17.30 per share of the Company’s common stock.

For reference purposes only, using publicly available information, Jefferies analyzed the premiums offered in 37 selected U.S. public company REIT sector transactions announced since April 10, 2015. For each of these transactions, Jefferies calculated the premium represented by the offer price over the seller company’s closing share price one day prior to the transaction’s announcement. This analysis indicated the following premiums for those time periods prior to announcement:

Using a reference range based on the 25th percentile and the 75th percentile, Jefferies performed a premiums paid analysis using the closing prices per share of the Company’s common stock one business day prior to August 2, 2014, the last trading day prior to NexPoint publicly disclosing an offer to purchase the Company. After accounting for the vesting of stock awards, this analysis indicated a range of implied values per share of approximately $15.66 to $16.83, compared to the merger consideration of $17.30 per share of the Company’s common stock.

Jefferies’ opinion was one of many factors taken into consideration by our board of directors in making its determination to approve the mergers and should not be considered determinative of the views of the

board of directors or management with respect to the mergers or the merger consideration. Jefferies was selected by the board of directors based on Jefferies’ qualifications, expertise and reputation. Jefferies is an internationally recognized investment banking and advisory firm. Jefferies, as part of its investment banking business, is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, financial restructurings and other financial services.

In connection with Jefferies’ services as the Company’s financial advisor, the Company has agreed to pay Jefferies an aggregate fee estimated as of the date of this proxy statement to be in the amount of approximately $6.3 million, $1.5 million of which was payable upon delivery of Jefferies’ opinion and the remainder of which is payable contingent upon consummation of the merger. The Company also has agreed to reimburse Jefferies for its reasonable expenses, including reasonable fees and expenses of its legal counsel, and to indemnify Jefferies and related parties against certain liabilities arising out of or in connection with its engagement. Jefferies has, in the past, provided financial advisory and financing services to the Company and has received fees for the rendering of such services. In the two years prior to the date of its opinion, Jefferies has received fees in the aggregate amount of approximately $2.4 million for the rendering of financial advisory or advisory services to NexPoint. In addition, Jefferies has, in the past, provided financial advisory and financing services to a certain affiliate of NexPoint and has received $0.4 million in fees for the rendering of such services. In the ordinary course of business, Jefferies and its affiliates may trade or hold securities of the Company, NexPoint and/or their respective affiliates for its own account and for the accounts of its customers and, accordingly, may at any time hold long or short positions in those securities. In addition, Jefferies may seek to, in the future, provide financial advisory and financing services to the Company, NexPoint or entities that are affiliated with the Company or NexPoint, for which it would expect to receive compensation.

Jefferies was selected as the Company’s financial advisor in connection with the mergers because, among other things, Jefferies is an internationally recognized investment banking firm with substantial experience in merger and acquisition transactions and based on its familiarity with the Company’s business and industry. Jefferies is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities and private placements.

In connection with the closing of the mergers, Parent will cause an aggregate of approximately $445 million to be paid to the holders of our common shares, including holders of Company equity awards (assuming that PSUs are accelerated on the basis of maximum performance), and the holders of Operating Company Units. In connection with the merger consideration payable to our preferred shares as described under “The Merger Agreement—Treatment of Common Shares, Preferred Shares and Equity Awards,” Parent will cause approximately $39 million to be paid to the holders of our Series B Preferred Shares. In addition, Parent has informed us that in connection with the closing of the mergers, Parent expects to cause all of our outstanding term loans and all of outstanding indebtedness under our revolving credit facility to be prepaid in full at the closing, unless the lenders under one or more of these arrangements consent to such debt remaining outstanding, or the Company refinances one or more of these arrangements in connection with the closing of the mergers. As of June 30, 2020, we had approximately $271.2 million in aggregate principal amount of consolidated indebtedness under our term loans and revolving credit facility.

Parent has informed us that it has received an equity commitment letter from the NexPoint Entities, providing for equity financing in connection with the mergers in an aggregate amount not to exceed $769.6 million and that it may seek to obtain additional debt and equity financing in connection with the mergers. The equity commitments contemplated by the equity commitment letter may be reduced on a pro rata, dollar-for-dollar basis in the event:

The merger agreement does not contain a financing condition or a “market MAC” condition to the closing of the mergers. For more information, see “The Merger Agreement—Financing Cooperation” and “The Merger Agreement—Conditions to the Mergers.”

In considering the recommendation of our board of directors to approve the merger and the other transactions contemplated by the merger agreement, our stockholders should be aware that our directors and executive officers have certain interests, including financial interests, in the mergers that are different from, or in addition to, the interests of our stockholders generally including (1) the consideration that they would receive with respect to their Company restricted share awards and PSU awards in connection with the mergers, (2) the consideration that certain executive officers would receive upon acceleration of Operating Company Units received as Earn-Out Consideration in the internalization in February 2020, (3) certain severance payments and benefits that may become payable upon a qualifying termination following the closing of the mergers and (4) potential conflicts of interest resulting from Mr. Dondero’s status as an affiliate of Parent and Parent OP. These interests may create potential conflicts of interest. Our board of directors was aware of these interests, which are described below, and considered them, among other matters, in reaching its decision to approve the merger and the other transactions contemplated by the merger agreement.

Following the completion of the mergers, Mr. Good, the current Chief Executive Officer of the Company, will serve as the Chief Executive Officer of the Surviving Company. In addition, it is expected that certain other executive officers of the Company will continue employment with the Surviving Company following completion of the mergers. Mr. Good and the other executive officers of the Surviving Company will be compensated for their service with the combined company. The compensation and benefits programs applicable to the executive officers of the Surviving Company may differ from those currently applicable to the Company’s executive officers; however, no merger-related adjustments to such compensation and benefits programs have been determined as of the date of this proxy statement.

Restricted Share Awards. Pursuant to the merger agreement, immediately prior to the company merger effective time, all outstanding issuance and forfeiture conditions on each award of restricted Company common shares granted under a Company equity plan that is outstanding immediately prior to the company merger effective time (we refer to each as a Company restricted share award) will be deemed satisfied in full, subject to and conditioned upon the occurrence of the company merger, and at the company merger effective time such Company common shares will automatically be converted into the right to receive an amount in cash equal to the merger consideration, less any applicable withholding taxes, subject to and conditioned upon the occurrence of the company merger.

Performance Awards Units. Pursuant to the merger agreement, each PSU covering Company shares outstanding immediately prior to the company merger effective time will be cancelled in exchange for a number of Company shares equal to the number of PSUs that would vest based on the Company’s relative TSR performance (as defined in the applicable agreement governing such PSU), calculated as of the date of the company merger effective time (and with the last day of the applicable performance period

being deemed to be the date of the company merger effective time), and such Company shares will automatically be converted into the right to receive the per Company share merger consideration, less any applicable withholding taxes subject to and conditioned upon the occurrence of the closing of the company merger.

Value of Payments. For an estimate of the value of the payments and benefits described above that would become payable to each of our executive officers in respect of their unvested equity awards, see “—Quantification of Potential Payments to Our Executive Officers in Connection with the Mergers” below. All of the outstanding Company share awards held by our non-employee directors are fully vested. The non-employee directors may receive compensation in the ordinary course of business consistent with past practice through the effective time of the mergers.

Arrangements. We are party to employment agreements with each of John A. Good and Jonathan Perry that provide for the severance benefits described below upon a severance-qualifying termination of employment. In addition, the compensation committee of our board of directors approved the Jernigan Capital, Inc. Executive Severance Plan under which employees of the Company selected by the compensation committee, including Kelly P. Luttrell are eligible to receive certain benefits upon a severance-qualifying termination of employment. The severance benefits payable to each of Messrs. Good and Perry and Ms. Luttrell will be subject to the executive officer’s execution and non-revocation of a release of claims against the Company.

Messrs. Good and Perry. If the employment of Mr. Good or Mr. Perry is terminated by us without cause or if Mr. Good or Mr. Perry resigns with good reason, in either case during the 12 months following the effective time of the mergers, such executive officer would be entitled to receive (1) a cash severance payment equal to a multiple of 3 times the sum of his base salary, plus the average annual bonus earned by him in the two calendar years preceding the year of termination (or, in the case of Mr. Good, if the termination occurs in 2020, his 2020 Target Annual Bonus, and if the termination occurs in 2021, the average of his 2021 Target Annual Bonus and the annual bonus actually earned by him in 2020, annualized), which shall be payable in a lump sum within 60 days after termination, (2) an amount equal to the executive’s target bonus for the year of termination, prorated for the number of days in such calendar year ending on the executive’s termination date and payable in a lump sum within 60 days after termination, and (3) Company-subsidized COBRA continuation coverage (based on cost sharing levels in effect at termination) for up to 18 months, or, if he is not eligible for COBRA or if the coverage cannot be provided under the Company’s group health plan, a taxable monthly cash payment equal to the amount of the monthly contribution the Company would have made in respect of such COBRA coverage for a period of up to 18 months, in each case, subject to such executive’s delivery of a release of claims in favor of the Company.

Ms. Luttrell. If Ms. Luttrell’s employment is terminated by us without cause or she resigns with good reason, in either case, during the 12 months following the effective time of the mergers, Ms. Luttrell would be entitled to receive (1) a cash severance payment equal to a multiple of 2 times the sum of her base salary, plus the average annual bonus earned by her in the two calendar years prior to the year of termination, payable in a lump-sum within 60 days after termination, (2) an amount equal to Ms. Luttrell’s target bonus for the year of termination, prorated for the number of days in such calendar year ending on Ms. Luttrell’s termination date and payable in a lump sum within 60 days after termination, and (3) Company-subsidized COBRA continuation coverage (based on cost sharing levels in effect at termination) for up to 12 months, or, if she is not eligible for COBRA or if the coverage cannot be provided under the Company’s group health plan, a taxable monthly cash payment equal to the amount of the monthly contribution the Company would have made in respect of such COBRA coverage for a period of up to 12 months, in each case, subject to such executive’s delivery of a release of claims in favor of the Company.

Golden Parachute Excise Tax. The employment agreements with each of Messrs. Good and Perry and the severance plan covering Ms. Luttrell provide that if the payments and benefits provided to the executive officer in connection with the mergers would be subject to an excise tax by reason of Sections 4999 and 280G of the Internal Revenue Code, such benefits and payments will be reduced to

the extent necessary to prevent any portion of the executive officer’s merger-related payments and benefits from becoming subject to such excise tax, but only if, by reason of that reduction, the net after-tax benefit received by the executive officer exceeds the net after-tax benefit the executive officer would receive if no reduction was made.

Restrictive Covenants. Pursuant to the terms of the employment agreements with each of Messrs. Good and Perry, Messrs. Good and Perry are subject to post-termination non-competition covenants for 18 months for Mr. Good and 12 months for Mr. Perry, and to a post-termination non-solicitation covenant with respect to employees and customers for 18 months for Mr. Good and 12 months for Mr. Perry, in addition to customary confidentiality and non-disclosure obligations. Pursuant to the severance plan covering Ms. Luttrell, she is subject to a post-termination non-competition covenant for 12 months, and to a post-termination non-solicitation covenant with respect to employees and customers for 12 months, in addition to customary confidentiality and non-disclosure obligations.

Value of Payments. For an estimate of the value of the severance payments and benefits described above that would become payable to each of our executive officers upon a severance-qualifying termination, see “—Quantification of Potential Payments to Our Executive Officers in Connection with the Mergers” below.

Under the terms of the Purchase Agreement, Manager, of which Messrs. Good and Perry are indirect beneficial owners, is entitled to receive 769,231 Operating Company Units, without regard to continued employment through the company merger effective time, having an aggregate value of approximately $13.3 million, assuming a price per Operating Company Unit equal to the merger consideration of $17.30 per Operating Company Unit. Under the terms of the Purchase Agreement, issuance of the Earn-Out Consideration would be triggered, if at all, upon the earlier of: (1) the Company’s common stock trading at or above a daily volume weighted price of $25.00 per share for at least 30 days during any trailing 365-day period prior to December 31, 2024 or (2) a “change of control” of the Company approved by our board of directors and our stockholders that occurs prior to December 31, 2024.

If the Earn-Out Consideration become issuable, Mr. Good will be entitled to 76,923 Operating Company Units, with an aggregate value of approximately, $1.3 million, and Mr. Perry will be entitled to 76,923 Operating Company Units, with an aggregate value of approximately, $1.3 million, in each case, assuming a price per Operating Company Unit equal to the merger consideration of $17.30 per Operating Company Unit.

Mr. Dondero, a member of our board of directors, is the founder and president of NexPoint Advisors, which is the entity that manages the holders of our Series A Preferred Stock, that beneficially owns approximately 439,264 shares of our common stock, and an affiliate of Parent and Parent OP, and Highland Capital Management Fund Advisors, a limited partnership that owns approximately 238,611 shares of our common stock and is an affiliate of Parent and Parent OP. Mr. Dondero was appointed to the board of directors by election of the holders of Series A Preferred Stock pursuant to the terms of the Articles Supplementary of the Company Designating the Rights and Preferences of the Series A Preferred Stock, dated as of July 27, 2016, as amended.

As an affiliate of NexPoint Advisors, Highland Capital Management Fund Advisors, Parent and Parent OP, Mr. Dondero has certain interests, including financial interests, in the mergers that are different from, or in addition to, the interests of our stockholders generally, including potential conflicts of interest. Our board of directors, cognizant to avoid any potential conflicts of interest of Mr. Dondero in connection with the mergers, formed a Transaction Committee consisting of Mr. Good, Mark Decker, Howard Silver, Harry Thie and Rebecca Owen to facilitate the board’s evaluation of potential transactions involving the Company, including the mergers.

The merger agreement provides that from and after the company merger effective time, Parent shall, and shall cause the Surviving Company and the Surviving OC, to the fullest extent permitted by applicable

law, to indemnify, defend and hold harmless each of our and our subsidiaries’ current or former directors or officers and each fiduciary under our or our subsidiaries’ benefit plans (which persons we refer to as the indemnified persons), against all losses, expenses (including reasonable attorneys’ fees and expenses), judgments, fines, claims, actions, suits, damages or liabilities or, subject to certain exceptions, amounts paid in settlement in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of actions or omissions occurring at or prior to the company merger effective time (whether asserted or claimed prior to, at or after the company merger effective time), including in connection with the consideration, negotiation and approval of the merger agreement, to the extent that such actions or omissions are based on or arise out of the fact that such indemnified person is or was a director, officer or fiduciary under benefit plans, including any payment by the Surviving Company or Surviving OC on behalf of or advancement to such indemnified person of any expenses incurred by such indemnified person in connection with enforcing any rights with respect to such indemnification and/or advancement (we refer to the foregoing as the indemnified liabilities). In addition, Parent shall, and shall cause the Surviving Company and the Surviving OC, to the fullest extent permitted by applicable law, to indemnify, defend and hold harmless each indemnified person against all indemnified liabilities to the extent they are based on or arise out of or pertain to the transactions contemplated by the merger agreement (whether asserted or claimed prior to, at or after the company merger effective time).

The parties have agreed not to terminate or modify the obligations described above regarding indemnification of directors, officers and fiduciaries under benefit plans in such a manner as to adversely affect such indemnified persons, and such obligations must be assumed by any successor entity to the Surviving Company as a result of any consolidation, merger, dissolution or transfer of all or substantially all of its properties and assets.

The merger agreement also provides that prior to the company merger effective time, the Company will obtain and fully pay the premium for, and the Surviving Company shall cause to be maintained in full force and effect for at least six years following the company merger effective time, a “tail” prepaid insurance policy or policies on terms and conditions no less advantageous than our officers’ and directors’ liability insurance policies in effect on the date of the merger agreement. This requirement is subject to a maximum cost of 300% of our current annual premium paid for such insurance (which we refer to as the maximum cost). If the cost to maintain or procure such insurance coverage exceeds the maximum cost, Parent and the Surviving Company shall maintain or procure for such six-year period the most advantageous policies as can be reasonably obtained for the maximum cost. Additionally, the Surviving Company and the Surviving OC shall provide to the indemnified persons the same rights to exculpation, indemnification and advancement of expenses that are provided to the indemnified persons under our and our subsidiaries’ organizational documents in effect as of the date of the merger agreement, and the Surviving Company and the Surviving OC shall assume the contractual indemnification rights with any of our or our subsidiaries’ current or former directors, officers or employees pursuant to specified agreements in effect as of the date of the merger agreement.

The compensation committee of our board of directors may grant cash retention bonus awards or adopt a severance plan for non-executive officer employees with an aggregate value of up to $300,000 with approval from Parent. As of the date of this filing, no cash retention bonus awards have been granted to any of our executive officers and no such severance plan has been adopted.

Immediately prior to the date of the effective time of the mergers, the compensation committee of our board of directors will determine (subject to Parent’s consent), the amount of annual bonuses payable to each of our employees (including the executive officers) in respect of the 2020 fiscal year in good faith in accordance with the terms of our annual bonus plans and otherwise in a manner consistent with past practice. Parent will pay those bonuses to our employees, subject to their continued employment through the payment date, at the time bonuses would otherwise be paid in the ordinary course of business consistent with past practice.

The information set forth in the table below is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about certain compensation for each of our named executive officers that is based on or otherwise relates to the mergers. For additional details regarding the terms of the payments described below, see the discussion under the caption “—Interests of Our Directors and Executive Officers in the Mergers” above.

The following table sets forth the amount of payments and benefits that may be paid or become payable to each of the named executive officers in connection with the mergers pursuant to all applicable compensation plans or agreements, assuming that the effective time of the mergers occurred on August 14, 2020, which is the latest practicable date prior to the date of this filing and the assumed date of the effective time of the merger solely for purposes of this merger-related compensation disclosure and that each named executive officer incurs a severance-qualifying termination immediately upon the effective time of the mergers.

We are unaware of any material federal, state or foreign regulatory requirements or approvals that are required for the execution of the merger agreement or the completion of either the merger or the operating company merger, other than the acceptance for record of the articles of merger with respect to the company merger by the SDAT, and the filing of the certificate of merger with respect to the operating company merger with the Secretary of State of the State of Delaware. For further information regarding the timing of the closing of the mergers, see “The Merger Agreement—Effective Times; Closing Date.”

The following is a general discussion of the material U.S. federal income tax consequences of the company merger to U.S. holders and non-U.S. holders (each as defined below) of our common shares and preferred shares whose shares are exchanged for cash pursuant to the company merger. This discussion is based on the provisions of the Code, applicable U.S. Treasury Regulations, judicial opinions and administrative rulings and published positions of the Internal Revenue Service (which we refer to as the IRS), each as in effect as of the date hereof. These authorities are subject to change or differing interpretations, possibly with retroactive effect, and any such change or interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address (1) any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, (2) any withholding considerations under FATCA (defined for this purpose as sections 1471 through 1474 of the Code, the Treasury Regulations and administrative guidance thereunder and the intergovernmental agreements entered into, and laws and regulations promulgated, pursuant thereto or in connection therewith), (3) any tax considerations under state, local or non-U.S. laws or U.S. federal laws other than those pertaining to the U.S. federal income tax, or (4) any tax consequences to holders of our preferred shares whose shares are exchanged for our common shares pursuant to the company merger.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of our common shares or preferred shares that is, for U.S. federal income tax purposes:

For purposes of this discussion, the term “non-U.S. holder” means a beneficial owner of our common shares or preferred shares, other than an entity or arrangement classified as a partnership for U.S. federal income tax purposes, that is not a U.S. holder.

This discussion applies only to holders of our common shares or preferred shares who hold such shares as “capital assets” within the meaning of the Code (generally, property held for investment). Further, this discussion is for general informational purposes only and does not address all aspects of U.S. federal income taxation that may be relevant to specific holders in light of their particular facts and circumstances, and it does not apply to holders subject to special treatment under U.S. federal income tax laws (including, for example, insurance companies, dealers or brokers in securities or foreign currencies, traders in securities who elect to apply the mark-to-market method of accounting, holders subject to the alternative minimum tax, persons who are required to recognize income or gain with respect to the company merger no later than such income or gain is required to be reported on an applicable financial statement, U.S. holders that have a functional currency other than the U.S. dollar, tax-exempt organizations, retirement plans, individual retirement accounts or other tax-deferred or advantaged accounts (or persons holding common shares or preferred shares through such plans or accounts), banks and other financial institutions, certain former citizens or former long-term residents of the United States, “controlled foreign corporations,” “passive foreign investment companies,” partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes or other flow-through entities (and investors therein), S corporations, real estate investment trusts, regulated investment companies, “qualified foreign pension funds” (within the meaning of Section 897(1)(2) of the Code) or entities all of the interests in which are held by a qualified pension fund, “qualified stockholders” (within the meaning of Section 897(k)(3) of the Code) or investors therein, non-U.S. holders who hold, or have held at any time, directly, indirectly, or constructively, more than 10% of our outstanding common shares or more than 10% of our outstanding preferred shares, holders who hold our common shares or preferred shares as part of a hedge, straddle, constructive sale, conversion or other integrated or risk reduction transaction, and holders who acquired our common shares or preferred shares through the exercise of employee stock options or otherwise as compensation).

If a partnership (including any entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds our common shares or preferred shares, the tax treatment of a partner in such partnership will generally depend on the status of the partners and the activities of the partnership. If you are, for U.S. federal income tax purposes, a partner in a partnership holding common shares or preferred shares, you should consult your tax advisor regarding the U.S. federal, state, local and non-U.S. tax consequences of the company merger to you in light of your particular circumstances.

For U.S. federal income tax purposes, the parties will treat the company merger, with respect to holders of our common shares and preferred shares whose shares are exchanged for cash pursuant to the company merger, as if such holders sold all of such common shares or preferred shares, as applicable in exchange for the merger consideration.

The receipt of cash by U.S. holders in exchange for our common shares or preferred shares pursuant to the company merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder of our common shares that receives cash in exchange for such common shares in the company merger will recognize gain or loss in an amount equal to the difference, if any, between (1) the amount of cash received (plus any applicable withholding taxes withheld from such payment) and (2) the U.S. holder’s adjusted tax basis in such shares.

If a U.S. holder acquired different blocks of common shares at different times and different prices, such U.S. holder must determine its adjusted tax basis, gain or loss and holding period separately with respect to each block of common shares. Any such gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if a U.S. holder’s holding period in the common shares surrendered in the

company merger is greater than one year as of the date of the company merger. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations.

In addition, the IRS has the authority to prescribe, but has not yet prescribed, regulations that would apply a tax rate of 25% to a portion of capital gain realized by a non-corporate stockholder on the sale of REIT shares that would correspond to the REIT’s “unrecaptured Section 1250 gain.”

A U.S. holder who has held our common shares for less than six months at the time of the company merger, taking into account the holding period rules of Sections 246(c)(3) and (4) of the Code, and who recognizes a loss on the exchange of such common shares in the company merger will be treated as recognizing a long-term capital loss to the extent of any capital gain dividends received from us, or such holder’s share of any designated retained capital gains, with respect to such shares.

Subject to the discussion below regarding backup withholding, a non-U.S. holder will generally not be subject to U.S. federal income tax or U.S. federal withholding tax on any gain or loss recognized on the receipt of cash in exchange for our common shares pursuant to the company merger unless: (1) the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States, or, if an applicable income tax treaty applies, the gain is attributable to a permanent establishment maintained by the non-U.S. holder in the United States; (2) the non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year of the company merger and certain other requirements are met; or (3) such shares constitute “United States real property interests” (which we refer to as USRPIs) under of the Foreign Investment in Real Property Tax Act of 1980 (which we refer to as FIRPTA).

A non-U.S. holder whose gain is effectively connected with the conduct of a trade or business in the United States (or, if an applicable income tax treaty applies, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States), generally will be subject to U.S. federal income tax on such gain on a net basis at the regular U.S. graduated rates in the same manner as a U.S. holder. In addition, a corporate non-U.S. holder may also, under certain circumstances, be subject to an additional branch profits tax.

A non-U.S. holder who is an individual present in the United States for 183 days or more in the taxable year of the company merger and who meets certain other requirements will be subject to a flat 30% tax on the gain derived from the company merger, which may be offset by U.S. source capital losses of such non-U.S. holder, if any.

If our common shares constitute a USRPI under FIRPTA, a non-U.S. holder would be subject to U.S. federal income tax on any gain or loss recognized on the receipt of cash in exchange for such common shares in the company merger on a net basis at applicable U.S. graduated rates in the same manner as a U.S. holder, and such cash consideration may also be subject to the U.S. federal withholding tax under FIRPTA at a rate of 15%. A non-U.S. holder’s common shares generally will not constitute a USRPI, and gain recognized by a non-U.S. holder upon receipt of cash in exchange for our common shares pursuant to the company merger generally will not be subject to U.S. federal income or U.S. federal withholding tax under FIRPTA, if: (1) we are a “domestically controlled REIT,” defined generally as a REIT in which, at all times during a specified testing period, less than 50% in value of the shares was held directly or indirectly by non-U.S. persons; or (2) our common shares are “regularly traded” (within the meaning of applicable U.S. Treasury Regulations) on an established securities market at the effective time of the company merger (and the non-U.S. holder holds 10% or less of the total fair market value of such class of shares at all times during the shorter of (x) the five year period ending with the effective date of the company merger and (y) the non-U.S. holder’s holding period for the shares). We believe we are, and we expect to be at the effective time of the company merger, a “domestically controlled REIT,” but no assurances can be given that we are or will remain a domestically controlled REIT. In addition, we believe that our common shares are, and will be at the effective time of the company merger, regularly traded on an established securities market (within the meaning of the applicable Treasury Regulation).

The redemption of our preferred shares for cash will be treated as a taxable transaction. The U.S. federal income tax consequences of the redemption to holders of our preferred shares generally will be the same as the consequences to holders of our common shares described above with respect to the company merger, except that the capital gain or loss recognized by a holder of our preferred shares will be measured by the difference between the amount of cash the holder receives in connection with the redemption of our preferred shares (plus any applicable withholding taxes withheld from such payment) and such holder’s adjusted tax basis in our preferred shares. Non-U.S. holders of our preferred shares should consult their tax advisors regarding withholding tax considerations.

Information reporting and backup withholding (currently, at a rate of 24%) generally will apply to payments of cash made pursuant to the company merger. Backup withholding will not apply, however, to a holder who (1) in the case of a U.S. holder, furnishes a correct taxpayer identification number and certifies that it is not subject to backup withholding on a duly executed IRS Form W-9, (2) in the case of a non-U.S. holder, furnishes a duly executed, applicable IRS Form W-8, or (3) is otherwise exempt from backup withholding and complies with other applicable rules and certification requirements.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be claimed as a refund or a credit against such holder’s U.S. federal income tax liability (if any) provided the required information is furnished to the IRS on a timely basis.

If the merger is completed, our common shares and preferred shares will no longer be traded on the NYSE and will be deregistered under the Exchange Act.

The following summarizes the material provisions of the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. The summary of the material terms of the merger agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A and which we incorporate by reference into this proxy statement. We recommend that you read the merger agreement attached to this proxy statement as Annex A carefully and in its entirety, as the rights and obligations of the parties are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement.

The merger agreement contains representations and warranties made by, and to, us, the Operating Company, Parent and Parent OP These representations and warranties, which are set forth in the copy of the merger agreement attached to this proxy statement as Annex A, were made for the purposes of negotiating and entering into the merger agreement between the parties, or may have been used for the purpose of allocating risk between the parties instead of establishing such matters as facts. In addition, these representations and warranties may be subject to important qualifications and limitations agreed by the parties in connection with negotiating the terms of the merger agreement, were made as of specified dates, and may be subject to standards of materiality different from what may be viewed as material to our stockholders. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the merger agreement and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement. You should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of the Company or its affiliates.

As used in the summary of the material terms of the merger agreement below and elsewhere in this proxy statement, unless the context requires otherwise, references to our “subsidiaries” do not include certain joint venture entities in which we, directly or indirectly through our subsidiaries, own interests.

At the company merger effective time, the Parent will be merged with and into Company, the separate existence of the Parent will cease and the Company will be the surviving entity in the company merger, such that immediately following the company merger. At the company merger effective time, all the properties, rights, privileges, powers and franchises of the Company and Parent will vest in the Surviving Company, and all debts, liabilities, duties and obligations of the Company and Parent will become the debts, liabilities, duties and obligations of the Surviving Company. Following the completion of the company merger, our common shares and preferred shares will no longer be traded on the NYSE and will be deregistered under the Exchange Act.

At the operating company merger effective time, Parent OP will be merged with and into the Operating Company, the separate existence of Parent OP will cease, and the Operating Company will be the surviving company in the operating company merger. At the operating company merger effective time, all the properties, rights, privileges, powers and franchises of the Parent OP and the Operating Company will vest in the Surviving OC, and all debts, liabilities, duties and obligations of the Parent OP and the Operating Company will become the debts, liabilities, duties and obligations of the Surviving OC.

On the closing date, Parent and the Company will file articles of merger with the SDAT. The company merger will become effective upon the later of the acceptance for record of the articles of merger with respect to the company merger by the SDAT or on such other date and time not more than 30 days after acceptance for record by SDAT as may be mutually agreed to by us and Parent and specified in the articles of merger.

On the closing date, the Operating Company and Parent OP will file a certificate of merger with the Secretary of State of the State of Delaware. The operating company merger will become effective at such time as the certificate of merger with respect to the operating company merger has been filed with the Secretary of State of the State of Delaware or on such other date and time as may be mutually agreed to by us and Parent and specified in the operating company merger certificate.

Unless otherwise agreed in writing by the parties to the merger agreement, the company merger effective time and the operating company merger effective time will occur on the closing date, with the operating company merger effective time occurring immediately after the company merger effective time.

In this proxy statement, we refer to the date on which the closing of the mergers occurs as the closing date. The closing of the mergers will take place on the third business day after satisfaction or waiver of the conditions to the mergers described under “—Conditions to the Mergers” (other than those conditions that by their nature are to be satisfied or waived at the closing of the mergers, but subject to the satisfaction or waiver of such conditions) or at such other date as may be mutually agreed to in writing by the parties to the merger agreement.

The charter and bylaws of Parent, as amended and as in effect immediately prior to the company merger effective time, will be the charter and bylaws of the Surviving Company, until further amended in accordance with applicable law. At the operating company merger effective time, the limited liability company agreement of Parent OP, as in effect immediately prior to the operating company merger effective time, will be the limited liability company agreement of the Surviving OC, until further amended in accordance with their respective terms or applicable law.

The officers and directors of the Parent immediately prior to the company merger effective time will be the initial officers and directors of the Surviving Company from and after the company merger effective time. Following the operating company merger effective time, we will be the sole member of the Surviving OC. The officers and authorized signatories of the Parent OP immediately prior to the operating company merger effective time will be the officers and authorized signatories of Surviving OC.

At the company merger effective time, each of our common shares (other than (1) any of our common shares owned by Parent, Parent OP or any subsidiary of the Company immediately prior to the merger effective time (which we refer to as excluded shares), which will automatically be canceled and retired and will cease to exist with no consideration being delivered in exchange therefor, and (2) any of our common shares under a Company restricted share award) issued and outstanding immediately prior to the merger effective time will automatically be converted into the right to receive an amount in cash equal to $17.30, without interest (we refer to such amount as the merger consideration).

At the company merger effective time, each Company Series A Preferred Share will be automatically converted into the right to receive Series A Preferred Merger Consideration, without interest, subject to any applicable withholding tax. All Company Series A Preferred Shares, when so converted, will no longer be outstanding and will automatically be cancelled and retired and will cease to exist, and each holder of Company Series A Preferred Shares will cease to have any rights with respect to such Company Series A Preferred Shares, other than the right to receive the Series A Preferred Merger Consideration.

On August 6, 2020, the Company’s board of directors declared a cash dividend to the holders of Series A Preferred Stock and a distribution payable in kind, if applicable, in a number of shares of common stock or Series A Preferred Stock as determined in accordance with the election of the holders of the Series A Preferred Stock for the quarter ending September 30, 2020. The dividends are payable on October 15, 2020 to holders of Series A Preferred Stock of record on October 1, 2020. The declaration and payment of the dividend was subject to the prior consent of Parent pursuant to the merger agreement.

At the company merger effective time, each Company Series B Preferred Share issued and outstanding immediately prior to the company merger effective time will be automatically converted into the right to receive Series B Preferred Merger Consideration, without interest, subject to any applicable withholding tax. All Company Series B Preferred Shares, when so converted, will no longer be outstanding and will automatically be cancelled and retired and will cease to exist, and each holder of Company Series B Preferred Shares will cease to have any rights with respect to such Company Series B Preferred Shares, other than the right to receive the Series B Preferred Merger Consideration.

On August 6, 2020, the Company’s board of directors declared a cash dividend on the Series B Preferred Stock in the amount of $0.4375 per share for the quarter ending September 30, 2020. The dividends are payable on October 15, 2020 to holders of Series B Preferred Stock of record on October 1, 2020. The declaration and payment of the dividend was subject to the prior consent of Parent pursuant to the merger agreement.

Immediately prior to the company merger effective time, all outstanding issuance and forfeiture conditions on each award of restricted Company common shares granted under a Company equity plan that is outstanding immediately prior to the merger effective time (we refer to each as a Company restricted share award) will be deemed satisfied in full, subject to and conditioned upon the occurrence of the company merger, and at the merger effective time such Company common shares will automatically be converted into the right to receive an amount in cash equal to the merger consideration, less any applicable withholding taxes, subject to and conditioned upon the occurrence of the company merger.

Immediately prior to the company merger effective time, each performance award unit granted under a Company equity plan that is then outstanding (we refer to each as a PSU) will be cancelled in exchange for a number of Company shares equal to the number of PSUs that would vest based on the Company’s relative total stockholder return performance (as defined in the applicable agreement governing such PSU), which we refer to as TSR, calculated as of the date of the company merger effective time (and with the last day of the applicable performance period being deemed to be the date of the company merger effective time), and such Company shares will automatically be converted into the right to receive the merger consideration, less any applicable withholding taxes, subject to and conditioned upon the occurrence of the closing of the company merger.

At the operating company merger effective time, (1) each Operating Company Unit issued and outstanding immediately prior to the operating company merger effective time that is held by the Company or any Company subsidiary will no longer be outstanding and will automatically be retired and will cease to exist, and no payment will be made with respect thereto, and (2) each other Operating Company Unit issued and outstanding immediately prior to the operating company merger effective time will automatically be converted into the right to receive an amount in cash equal to the merger consideration.

All Operating Company Units, when so converted, will no longer be outstanding and will automatically be cancelled and retired and will cease to exist, and each holder of Operating Company Units will cease to have any rights with respect to such Operating Company Units, other than the right to receive the merger consideration.

This proxy statement does not constitute any solicitation of consents in respect of the operating company merger, and does not constitute an offer to exchange or convert the Operating Company Units that you may own.

As promptly as practicable following the company merger effective time, but no later than five business days thereafter, Parent will deposit, or cause to be deposited, with an exchange agent reasonably satisfactory to us, for the benefit of the holders of our common shares, Series B Preferred Shares and the Operating Company Units, the merger consideration as described in “—Treatment of Common Shares, Preferred Shares and Equity Awards” above. As soon as possible after the closing date (but in any event within five business days), the exchange agent will mail to each holder of record of outstanding common shares, Series B Preferred Shares or Operating Company Units, a letter of transmittal and instructions for use in effecting the surrender of such securities in exchange for the applicable merger consideration, to which the holder thereof is entitled. The letter of transmittal and instructions will tell you how to surrender your common shares, Series A Preferred Shares, Series B Preferred Shares or Operating Company Units, as applicable, in exchange for the applicable merger consideration.

Upon surrender of common shares, Series B Preferred Shares or Operating Company Units to the exchange agent, together with a letter of transmittal, duly executed and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably be required by the exchange agent, the holder of such security will be entitled to receive the applicable merger consideration, payable in respect of the shares of our common shares, Series B Preferred Shares or Operating Company Units. The applicable merger consideration may be paid to a person other than the person in whose name the security so surrendered is registered in our and the Operating Company’s transfer records, if any such security is properly endorsed or otherwise in proper form for transfer and the person requesting such payment pays any transfer or other taxes or establishes to the reasonable satisfaction of Parent that such tax has been paid or is not applicable.

No interest will be paid or will accrue on any cash payable upon surrender of any security. The Company, the Surviving Company, the Surviving OC or the exchange agent, as applicable, will be entitled to deduct and withhold from any amounts otherwise payable pursuant to the merger agreement to any person such amounts as it is required to deduct and withhold with respect to the making of such payment (and, with respect to our equity awards, the vesting, cancellation or redemption of such equity awards, as applicable) under the Code, and the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax law, and such amounts deducted or withheld shall be treated as having been paid to the person in respect of which deduction or withholding was made.

On the closing date, the share transfer books of the Company and the unit transfer books of the Operating Company will be closed and thereafter there will be no further registration of transfers of common shares or Operating Company Units.

None of Parent, the Surviving Company, the Operating Company, Parent OP, the Surviving OC, the Company or the exchange agent, or any employee, officer, trustee, director, agent or affiliate thereof, will be liable to any person in respect of any merger consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

Any portion of the applicable merger consideration which remains undistributed to the holders of any common shares, Series A Preferred Shares, Series B Preferred Shares or Operating Company Units held in book-entry for twelve months after the closing date will be delivered to Parent, and any holders of our common shares, Series A Preferred Shares, Series B Preferred Shares or Operating Company Units prior to the company merger effective time or operating company merger effective time, as applicable, who have not theretofore complied with the exchange and payment procedures contained in the merger agreement must look only to the Parent and only as general creditors thereof for payment of the applicable merger consideration

We and the Operating Company, jointly and severally, have made customary representations and warranties in the merger agreement that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement or in the disclosure schedules delivered in connection therewith. These representations and warranties relate to, among other things:

Many of our representations and warranties are qualified by the concept of a “material adverse effect.” Under the terms of the merger agreement, a material adverse effect means any change, event, state of facts or development that has had or would reasonably be expected to have a material adverse effect on (1) the business, financial condition, assets or continuing results of operations of us and our subsidiaries, taken as a whole, or (2) the ability of us or the Operating Company to consummate the mergers before December 31, 2020; provided, however, that in the case of clause (1), no change, event, state of facts or development resulting from any of the following shall be deemed to be or taken into account in determining whether there has been or will be, a “material adverse effect”:

provided, that (1) with respect to the exceptions set forth in the second, fifth, ninth and eleventh bullet points above, such changes, events, state of facts or developments may be taken into account to the extent they disproportionately adversely affect us and our subsidiaries, taken as a whole, compared to other companies operating in the United States in the industries in which we and our subsidiaries operate and (2) part (iii) of the first bullet point above and the tenth bullet point above do not apply to the references to material adverse effect in certain representations and warranties.

The merger agreement also contains customary representations and warranties made, jointly and severally, by Parent and Parent OP that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. These representations and warranties relate to, among other things:

The representations and warranties of each of the parties to the merger agreement will expire upon the closing of the mergers.

Under the merger agreement, we have agreed that, subject to certain exceptions in the merger agreement and the disclosure schedules delivered in connection therewith, between the date of the merger agreement and the earlier of the closing date and the termination of the merger agreement in accordance with its terms (which period we refer to as the interim period), we will, and will cause our subsidiaries to, in all material respects, use commercially reasonable efforts:

We have also agreed that during the interim period, subject to certain exceptions set forth in the merger agreement and the disclosure schedules delivered in connection therewith or unless Parent consents in writing (which consent may not be unreasonably withheld, delayed or conditioned), provided that Parent will be deemed to have consented to any action we request to take in response to a contagion event (including the COVID-19 pandemic) in the event that Parent has not affirmatively declined to such action in writing within 24 hours following such request, we and our subsidiaries will not, among other things:

Under the merger agreement, we are required, as soon as reasonably practicable following the date that this proxy statement is cleared by the SEC for mailing to our common stockholders, to duly call, give notice of, convene and hold a meeting of the holders of our common shares for the purpose of seeking stockholder approval of the merger and the other transactions contemplated by the merger agreement, which we refer to as the special meeting. We are required to (1) through our board of directors, recommend to holders of our common shares that they vote in favor of the merger so that we may obtain the approval the merger and the other transactions contemplated by the merger agreement and (2) use our reasonable best efforts to solicit approval of the merger and the other transactions contemplated by the merger agreement by our common stockholders (including by soliciting proxies from our stockholders), except in each case to the extent that our board of directors has effected an adverse recommendation change, as permitted by and determined in accordance with the provisions described below under “—Restriction on Solicitation of Company Acquisition Proposals.” Unless the merger agreement is terminated in accordance with its terms, we are prohibited from submitting to the vote of our stockholders any company acquisition proposal.

For purposes of the merger agreement, “company acquisition proposal” means any inquiry, offer or proposal from any person or “group” (as defined in Section 13(d)(3) of the Exchange Act) regarding any of the following (other than the mergers) involving any of us, the Operating Company or our respective subsidiaries:

Notwithstanding anything to the contrary contained in the merger agreement, we may adjourn or postpone the special meeting after reasonable consultation with Parent:

Under the merger agreement, we must call, give notice of, convene and hold the special meeting and mail this proxy statement to our stockholders without regard to an adverse recommendation change, unless the merger agreement has been terminated in accordance with its terms.

Subject to the terms and conditions of the merger agreement, each party to the merger agreement has agreed to use its reasonable best efforts to consummate the mergers and to cause to be satisfied all conditions precedent to its obligations under the merger agreement, including, consistent with the foregoing,

Neither we nor our subsidiaries will be permitted to pay or commit to pay to any non-governmental third party any cash or other consideration, make any commitment or incur any liability or other obligation in connection with obtaining any required consent in connection with the transactions contemplated by the merger agreement from any such non-governmental third party unless Parent has provided its prior written consent. In addition, none of Parent or any of its affiliates will be required to pay or commit to pay to such non-governmental third party whose approval or consent is being solicited in connection with the transactions contemplated by the merger agreement any cash or other consideration, make any commitment or incur any liability or other obligations in connection with obtaining any approval or consent from any such non-governmental third party.

In addition, in the event that any party fails to obtain any non-governmental third-party consent, the parties to the merger agreement will use commercially reasonable efforts to minimize any adverse effect upon us and Parent and our and their respective affiliates and businesses resulting, or which would reasonably be expected to result, after the company merger effective time, from the failure to obtain such non-governmental third-party consent.

Each party to the merger agreement has agreed to keep the other parties reasonably informed regarding any lawsuit or other legal proceeding relating to or challenging the merger agreement or the consummation of the mergers unless doing so would, in the reasonable judgment of such party, jeopardize any of our or our subsidiaries’ privilege with respect thereto. We will promptly advise Parent in writing of the initiation of and any material developments regarding, and will reasonably consult with and permit Parent and its representatives to participate in the defense, negotiations or settlement of, any such lawsuit or other such legal proceeding, and we will give consideration to Parent’s advice with respect to such lawsuit or other such legal proceeding. We will not, and will not permit any of our subsidiaries nor any of our or our subsidiaries’ representatives to, compromise or settle any such lawsuit or other legal proceeding or consent thereto unless Parent otherwise consents in writing.

Under the merger agreement, from the date of the merger agreement until the No-Shop Period Start Date, the Company, the Operating Company and the Company’s Subsidiaries and their respective trustees, directors, partners, managers, officers, employees, consultants, advisors, agents and other

representatives, which we refer to as the Representatives, have the right to: (i) solicit, initiate, encourage or facilitate, any inquiry, discussion, offer, request, negotiation or proposal that constitutes, or that could reasonably be expected to lead to, a company acquisition proposal, which we refer to as an Inquiry, including by providing information (including non-public information) relating to the Company or any of its subsidiaries and affording access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company or any of its subsidiaries to any third party (and such third party’s Representatives, including potential financing sources of such third party) pursuant to an Acceptable Confidentiality Agreement; provided, that any non-public information concerning the Company or its subsidiaries that is provided to such third party (or its representatives) will, to the extent not previously provided to Parent, be provided to Parent as promptly as practicable after proving it to such third party (and, in any event, within 24 hours thereafter); and (ii) engage in, enter into, continue or otherwise participate in any discussions or negotiations with any third party (and their respective representatives, including potential financing sources of such third party) with respect to any company acquisition proposals (or any Inquiry) and cooperate with or assist or participate in or facilitate any such Inquiries or any effort or attempt to make any company acquisition proposals (or Inquiries), including granting a waiver, amendment or release under any pre-existing standstill or similar provision to the extent necessary to allow for a company acquisition proposal or amendment to a company acquisition proposal (or inquiry) to be made to the Company or the Company board of directors. As promptly as practicable, and in any event within 24 hours following the No-Shop Period Start Date, the Company shall deliver to Parent a written notice setting forth the identity of each person or group of persons from whom the Company or any of its Representatives has received a company acquisition proposal following the date of the merger agreement and prior to the No-Shop Period Start Date.

For purposes of this proxy statement and the merger agreement, “Acceptable Confidentiality Agreement” means a confidentiality agreement containing terms no less restrictive to the counterparty thereto than the terms of the Confidentiality Agreement binding upon Parent and its affiliates; provided that such confidentiality agreement may not (i) prohibit compliance by the Company with the Company’s non-solicitation obligations under the merger agreement or (ii) provide for an exclusive right to negotiate with the Company.

We have agreed that, from and after the No-Shop Period Start Date until the valid termination of the merger agreement or the company merger effective time, except with respect to any excluded party or as permitted by certain exceptions described below, we will, and will cause each of our subsidiaries and our and our subsidiaries’ officers and directors to, and will direct our and our subsidiaries’ partners, managers, officers, employees, consultants, advisors (including counsel, accountants, investment bankers, experts, consultants and financial advisors), agents and other representatives to, (i) immediately cease any solicitations, discussions, negotiations or communications with any person that may ongoing with respect to any company acquisition proposal that would be prohibited as described below; (ii) request the prompt return or destruction of all non-public information concerning the Company or its subsidiaries previously furnished to any such person with whom a confidentiality agreement was entered into at any time within the one-year period immediately preceding the No-Shop Period Start Date; (iii) cease providing any further information with respect to the Company or its subsidiaries or any company acquisition proposal to any such person or its representatives; and (iv) terminate all access granted to any such person and its representatives to any physical or electronic data room.

We have further agreed that, from and after the No-Shop Period Start Date until the earlier of the company merger effective time and the termination of the merger agreement in accordance with its terms and subject to the provisions described below, we will not, and we will cause our subsidiaries and our and our subsidiaries’ officers and directors not to, and will not authorize and will use commercially reasonable efforts to cause our and our subsidiaries’ partners, managers, officers, employees, consultants, advisors (including counsel, accountants, investment bankers, experts, consultants and financial advisors), agents and other representatives not to, directly or indirectly through another person:

For purposes of the merger agreement and this proxy statement, “superior proposal” means a bona fide written company acquisition proposal (except that each reference to “15%” in the definition of “company acquisition proposal” will be replaced by “50%”) made by a third party on terms that our board of directors determines in good faith, after consultation with our outside legal counsel and financial advisors, (1) would result, if consummated, in a transaction that is more favorable to our stockholders (solely in their capacity as such) from a financial point of view than the merger and (2) is reasonably likely to be consummated, after taking into account the financial, legal, regulatory and any other aspects of such proposal (including any financing conditions or the reliability of debt or equity funding commitments), the likelihood and timing of consummation (as compared to the merger) and any changes to the terms of the merger agreement proposed by Parent and any other information provided by Parent.

Notwithstanding the prohibitions above, from and after the No-Shop Period Start Date, the Company and its subsidiaries and their respective representatives may continue to engage with any excluded party (and its representatives, including potential financing sources of such excluded party), including with respect to any amended or modified company acquisition proposal submitted by any excluded party following the No-Shop Period Start Date, and the no-shop restrictions set above will not apply with respect thereto.

Prior to the approval of the merger and the other transactions contemplated by the merger agreement by our common stockholders and subject to our compliance with the provisions described above under “—Restriction on Solicitation of Company Acquisition Proposals,” if we receive an unsolicited written bona fide company acquisition proposal after the date of the merger agreement by a third party that did not result from a material breach of the obligations described above under “—Restriction on Solicitation of Company Acquisition Proposals,” if our board of directors determines in good faith, after consultation with its independent financial advisors and outside legal counsel, that such company acquisition proposal constitutes or could reasonably be expected to lead to a superior proposal, we or our subsidiaries may:

We are required to notify Parent promptly (but in no event later than 24 hours) after receipt of any company acquisition proposal or any request for non-public information regarding us or any of our

subsidiaries by any third party that informs us that it is considering making, or has made, a company acquisition proposal, or any other inquiry from any person seeking to have discussions or negotiations with us regarding a possible company acquisition proposal. Such notice will be made in writing and shall identify the person making such company acquisition proposal or inquiry and indicate the material terms and conditions of any company acquisition proposals or inquiries, to the extent known (including, if applicable, providing copies of any written company acquisition proposals or inquiries and any proposed agreements related thereto, which may be redacted to the extent necessary to protect confidential information of the business or operations of the person making such company acquisition proposal or inquiry). We will also promptly, and in any event within 24 hours, notify Parent in writing if we enter into discussions or negotiations concerning any company acquisition proposal or provide nonpublic information to any person, notify Parent of any change to the financial and other material terms and conditions of any company acquisition proposal and otherwise keep Parent reasonably informed of the status and terms of any company acquisition proposal or inquiry on a reasonably current basis, including by providing a copy of all written proposals, offers, drafts of proposed agreements or correspondence relating thereto. Neither we nor any of our subsidiaries may, after the date of the merger agreement, enter into any confidentiality or similar agreement that would prohibit us from providing such information to Parent.

In addition, the merger agreement provides that from and after the No-Shop Period Start Date and until the earlier of the company merger effective time and the termination of the merger agreement (except with respect to any excluded party), we may not, nor may we permit any of our subsidiaries to, terminate, waive, amend or modify any provision of any standstill or confidentiality agreement to which we or any of our subsidiaries is a party, except solely to allow the applicable party to make a non-public company acquisition proposal to our board of directors. The merger agreement also provides that neither we nor our board of directors will take any actions to exempt any person from the “Stock Ownership Limit” or establish or increase an “Excepted Holder Limit,” as such terms are defined in our articles of incorporation, unless such actions are taken concurrently with the termination of the merger agreement in accordance with the provisions described in the first bullet point of the section below entitled “—Termination of the Merger Agreement—Termination by the Company.”

Except in the circumstances and pursuant to the procedures described below, neither our board of directors nor any committee thereof will:

We refer to any action described in the first six bullet points above as an “adverse recommendation change.”

Prior to the approval of the merger and the other transactions contemplated by the merger agreement by our common stockholders, our board of directors:

For purposes of the merger agreement, “intervening event” means a material event, development or change in circumstances with respect to us and our subsidiaries, taken as a whole, that occurred or arose

after the date of the merger agreement, which was unknown to our board of directors as of or prior to the date of the merger agreement (or, if known, the consequences of which were not known or reasonably foreseeable to our board of directors as of the date of the merger agreement), and becomes known to or by our board of directors prior to the approval of the merger and the other transactions contemplated by the merger agreement by our common stockholders. Notwithstanding the foregoing, none of the following will constitute, or be considered in determining whether there has been, an intervening event:

Any amendment to the financial terms (including the form, amount and timing of payment of consideration) or any other material amendment of such a superior proposal will require a new notice of change of recommendation, and we will be required to comply again with the requirements described above, except that the notice of change period will be reduced to two business days following receipt by Parent of any such new notice of change of recommendation.

Nothing contained in the merger agreement will prohibit us or our board of directors from taking and disclosing to our stockholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act or from making any disclosure to our stockholders that is required by applicable law or if our board of directors determines, after consultation with outside legal counsel, that the failure to make such disclosure would reasonably be expected to be inconsistent with our directors’ duties under applicable law, provided, however, that neither we nor our board of directors will be permitted to recommend that stockholders tender any securities in connection with any tender offer or exchange offer that is a company acquisition proposal or otherwise effect an adverse recommendation change with respect thereto, except as permitted by the provisions described above.

From and after the company merger effective time and for a period ending on the first anniversary of the company merger effective time (or, if shorter, during any applicable period of employment), each of our and our subsidiaries’ employees who is employed immediately prior to the company merger effective time, each of which we refer to as a company employee, will be entitled to receive (1) a base salary or wage at a rate, as applicable, that is no less favorable than the base salary or wage rate in effect with respect to such company employee immediately prior to the company merger effective time, (2) an annual cash bonus opportunity that is no less favorable than the annual cash bonus opportunity provided to such company employee immediately prior to the company merger effective time, and (3) benefits (excluding equity-based compensation, pension, retiree health and welfare benefits, severance, retention, change in control and long-term incentive compensation) that are substantially comparable, in the aggregate, to the benefits provided to such company employee immediately prior to the company merger effective time. Parent will, or will cause its designated subsidiary to, assume and honor the terms of the employment agreements with Messrs. Good and Perry and the severance policy described below (solely with respect to Ms. Luttrell and Messrs. Corak and Perry), without amendment. Notwithstanding the foregoing, the merger agreement does not require that any company employee remain employed for any period after the closing of the mergers nor that any compensation or benefits be provided after a company employee ceases to be employed (other than vested rights and benefits in effect at the time of such cessation of employment and certain severance benefits). For the employee benefit plans of Parent and its subsidiaries providing any benefits to any company employee after the company merger effective time, each company employee will be credited with his or her years of service with us and our subsidiaries and our and their respective predecessors as if such service were with Parent or an applicable subsidiary, for all purposes, including participation and vesting, provided that the foregoing will not apply for purposes of benefit accrual under defined benefit plans, for purposes of any retiree health plan, or to the extent that its

application would result in a duplication of benefits or to the extent the we did not provide such service credit under any comparable plan, program or benefit.

Parent has agreed to, and to cause its subsidiaries to, use commercially reasonable efforts to waive all limitations as to preexisting conditions, exclusions, actively at work requirements, waiting periods or any other restriction that would prevent immediate or full participation of company employees under Parent’s or any of its subsidiaries’ health and welfare plans, other than limitations, exclusions, actively at work requirements, waiting periods or other restrictions that are already in effect with respect to such company employees and that have not been satisfied as of the closing date under any company employee benefit plan. Parent has agreed to, and to cause its subsidiaries to, use commercially reasonable efforts to waive any and all evidence of insurability requirements with respect to such company employees to the extent such evidence of insurability requirements were not applicable to the company employees under the comparable company benefit plan immediately prior to the closing of the mergers. Parent has agreed to, and to cause its subsidiaries to, use commercially reasonable efforts to provide, each company employee and his or her dependents with full credit for any co-payments and deductibles satisfied prior to the closing date for the plan year within which the company merger effective time occurs in order to satisfy any applicable deductible or out-of-pocket requirements, and for any lifetime maximums, under any welfare plans that such company employees are eligible to participate in after the closing date. Prior to making any material written communications to the company employees pertaining to compensation or benefit matters that are affected by the transactions contemplated by the merger agreement, the Company will provide Parent with a copy of the intended communication, Parent will have a reasonable period of time to review and comment on the communication (provided that Parent will review and comment promptly), and Parent and the Company will cooperate in providing any such mutually agreeable communication.

The merger agreement provides that we may establish a cash retention and severance program, pursuant to which all of our employees below the title of Senior Vice President may be eligible to receive a retention bonus (or severance, as applicable); provided that such retention or severance amounts payable may not exceed $300,000 in aggregate. The merger agreement further provides that we may enter into, adopt, amend or terminate any agreement, arrangement, plan or policy with respect to employees with an annual base salary of less than $100,000.

The consummation of the mergers is not conditioned upon Parent’s receipt of financing. Prior to the company merger effective time, the Company will use commercially reasonable efforts to provide, and will use commercially reasonable efforts to cause its representatives to provide, in each case at Parent’s sole expense, such cooperation as may reasonably be requested by Parent that is customary and necessary in connection with arranging and obtaining equity financing and debt financing and/or additional equity financing (which we refer to as an alternative financing, and, together with the equity financing, the financing), in the case of the alternative financing, as contemplated by a commitment letter related to such alternative financing, including (in each case to the extent that the same is reasonably requested):

Notwithstanding the immediately foregoing sentence, Parent will ensure that such requested cooperation does not unreasonably interfere with the ongoing business or operations of the Company (it being understood and agreed that the Company will not be required to take any action that unreasonably interferes with its ongoing business or operations); and neither the Company nor any of its subsidiaries will be required to commit to take any action that is not contingent upon the closing of the mergers (other than the execution of an amendment, an amendment and restatement, waiver or consent under the Company’s existing credit facility such that the Company’s existing credit facility remains in place and is available upon the closing and upon the consummation of the mergers and transactions contemplated by the merger agreement), would be effective prior to the closing of the mergers, or would encumber any assets of the Company or any of its subsidiaries prior to the closing of the mergers; any information regarding the Company and any of its subsidiaries contained in any materials in connection with the financing shall be subject to the prior review of the Company; and neither the Company, any its subsidiaries nor any of their respective representatives will, in connection with the financing:

Parent will, promptly upon request by the Company, reimburse the Company, any of its subsidiaries and their respective affiliates and representatives for all reasonable and documented costs, including all reasonable and documented fees and expenses of counsel and other advisors, incurred by them or their respective representatives in connection with the cooperation described above. Parent will indemnify and hold harmless the Company, its affiliates and their respective representatives against any and all fees, costs and expenses (including advancing attorneys’ fees and expenses (whether incurred in connection with a claim against Parent or otherwise) in advance of the final disposition of any suit, claim, action, investigation or proceeding), judgments, fines, claims, losses, penalties, damages, interest, awards and liabilities directly or indirectly suffered or incurred by such parties in connection with any financing, including any information provided in connection therewith or the cooperation by the Company with respect thereto.

The merger agreement contains certain other covenants of the parties to the merger agreement relating to, among other things:

The obligations of the parties to complete the mergers are subject to the satisfaction or waiver of the following mutual conditions:

The obligations of Parent and Parent OP to complete the mergers are further subject to the satisfaction or waiver of the following conditions:

Our and the Operating Company’s obligations to complete the mergers are further subject to the satisfaction or waiver of the following conditions:

We and Parent may mutually agree to terminate and abandon the merger agreement at any time prior to the closing date.

In addition, we, on the one hand, or Parent, on the other hand, may terminate and abandon the merger agreement by written notice to the other at any time prior to the closing date, even after we have obtained the requisite vote of our common stockholders to approve the merger and the other transactions contemplated by the merger agreement, if:

We may also terminate and abandon the merger agreement by written notice to Parent at any time prior to the closing date if:

Parent may also terminate and abandon the merger agreement by written notice to us at any time prior to the closing date, even after we have obtained the requisite vote of our common stockholders to approve the merger and the other transactions contemplated by the merger agreement, if:

We have agreed to pay the company termination fee of $25.6 million as directed by Parent if:

However, the company termination fee will equal $16 million if the merger agreement is terminated by us pursuant to the provisions described in the first bullet point under “—Termination of the Merger Agreement—Termination by the Company” in order to enter into a definitive agreement on or before September 22, 2020 with an excluded party providing for the implementation of a superior proposal (or by Parent pursuant to the provisions described in the second bullet point under “—Termination of the Merger Agreement—Termination by the Parent” in the event that the merger agreement is terminated by the Company (or otherwise was attempting to be validly terminated by the Company) pursuant to the provisions described in the first bullet point under “—Termination of the Merger Agreement—Termination by the Company” in order to enter into a definitive agreement with an excluded party providing for the implementation of a superior proposal).

An “excluded party” is a person or group of persons that submitted a written bona fide company acquisition proposal to us after the date of the merger agreement and prior to 12:00 a.m., New York City time, on September 17, 2020 that our board of directors determines, after consultation with outside legal counsel and financial advisors, constitutes, or could reasonably be expected to lead to, a superior proposal.

Parent has agreed to pay to us the parent termination fee of $32 million if we terminate the merger agreement pursuant to the provisions described in the second bullet point or third bullet point under “—Termination of the Merger Agreement—Termination by the Company” provided that in the event that Parent has not paid or caused to be paid such fee within four days of such termination, then the Company may deduct from or offset such fee (i) first, against any dividends owed to Parent or its affiliates that have been paid in-kind with respect to our Series A Preferred Shares, (ii) second, against any dividends payable after the date of the merger agreement owed to Parent or its affiliates in respect to our Series A Preferred Shares and (iii) in the alternative, in the event that any of the Series A Preferred Shares become redeemable, against the consideration owed to holders of such Series A Preferred Shares pursuant to such redemption. Any amounts so offset will be deemed paid (i.e., cash inflow) for purposes of internal rate of return under the Series A Preferred Shares and any offset of any portion of such fees will not affect in a manner adverse to the Company the computation of the Cumulative Cap (within the meaning of the Series A Preferred Shares articles supplementary).

Upon certain circumstances, the Company is required to reimburse Parent’s expenses in connection with the prospective transactions contemplated by the merger agreement up to a maximum amount of $5 million in the event that the Mergers are not consummated. Such circumstances include (i) termination by either party pursuant to the provision described in the second bullet point under “The Merger Agreement—Termination of the Merger Agreement—Termination by either the Company or Parent” or (ii) termination by Parent pursuant to the provision described in the first bullet point under “The Merger Agreement—Termination of the Merger Agreement—Termination by Parent.”

The merger agreement may be amended by action taken by the parties at any time before or after our common stockholders have approved the merger and the other transactions contemplated by the merger agreement but, after such approval, no amendment may be made which requires the approval of any such stockholders under applicable law without obtaining such further approvals. The merger agreement also provides that, at any time prior to the closing date, each party may extend the time for the performance of any of the obligations or other acts of the other parties, waive any breaches or inaccuracies in the representations and warranties of the other parties, or waive compliance by the other parties with any of the agreements or conditions contained in the merger agreement. The merger agreement provides that certain provisions of the merger agreement relating to debt financing sources may not be amended or modified in a manner materially adverse to such applicable debt financing sources, without the consent of such debt financing sources (which consent may not be unreasonably withheld, conditioned or delayed).