AGREEMENT AND PLAN OF MERGER
Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER (this “Agreement”), dated as of October 8, 2010, by and among
U.S. REALTY PARTNERS LIMITED PARTNERSHIP, a Delaware limited partnership (“USRP”), AIMCO USRP
MERGER SUB LLC, a Delaware limited liability company (the “Aimco Subsidiary”), and AIMCO
PROPERTIES, L.P., a Delaware limited partnership (“Aimco OP”).
WHEREAS, U.S. Realty I Corporation, the corporate general partner of USRP (“U.S. Realty I”),
has determined that the Merger (as defined below) of the Aimco Subsidiary with and into USRP, with
USRP as the surviving entity, is advisable and in the best interests of USRP and its partners; and
WHEREAS, Aimco OP, the individual general partner of USRP, has determined that the Merger of
the Aimco Subsidiary with and into USRP, with USRP as the surviving entity, is advisable and in the
best interests of USRP and its partners; and
WHEREAS, Aimco OP, the sole member of the Aimco Subsidiary, has determined that the Merger of
the Aimco Subsidiary with and into USRP, with USRP as the surviving entity, is advisable and in the
best interests of the Aimco Subsidiary and its member; and
WHEREAS the Board of Directors of AIMCO-GP, Inc., the general partner of Aimco OP
(“AIMCO-GP”), has determined that the Merger of the Aimco Subsidiary with and into USRP, with USRP
as the surviving entity, is advisable and in the best interests of Aimco OP and its partners; and
WHEREAS, the parties desire to enter this Agreement to evidence the terms, provisions,
representations, warranties, covenants and conditions upon which the Merger will be consummated.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, and
for other good and valuable consideration, the adequacy, sufficiency, and receipt of which are
hereby acknowledged, USRP, the Aimco Subsidiary and Aimco OP hereby agree as follows:
Section 1. The Merger. Subject to the terms and conditions set forth herein, the
Aimco Subsidiary shall be merged with and into USRP (the “Merger”), and USRP shall be the surviving
entity of the Merger (the “Surviving Entity”). The Merger will have the effects specified in this
Agreement, section 17-211 of the Delaware Revised Uniform Limited Partnership Act, as amended (the
“DRULPA”), and section 18-209 of the Delaware Limited Liability Company Act, as amended (the
“DLLCA”)
Section 2. General Partners. U.S. Realty I will be the corporate general partner of
the Surviving Entity, and Aimco OP will be the individual general partner of the Surviving Entity.
Section 3. Certificate. As soon as practicable after the approval of this Agreement
by a majority in interest of limited
partnership interests of USRP (each a “Unit” and, collectively, the “Units”), USRP shall cause to be
filed a certificate of merger with respect to the Merger (the “Certificate of Merger”) with the
Office of the Secretary of State of the State of Delaware pursuant to section 17-211 of the DRULPA
and section 18-209 of the DLLCA. The Merger shall become effective at such time as the Certificate
of Merger has been accepted for record by the Secretary of State of the State of Delaware (the
“Effective Time”).
Section 4. Limited Partnership Agreement. The agreement of limited partnership of
USRP as in effect immediately prior to the consummation of the Merger (the “Partnership
Agreement”), shall be the agreement of limited partnership of the Surviving Entity until thereafter
amended in accordance with the provisions thereof and applicable law. The general partners and each
limited partner of the Surviving Entity shall have the rights under, be bound by and be subject to
the terms and conditions of, the Partnership Agreement, as a general partner or limited partner, as
applicable.
Section 5. Treatment of Interests in USRP.
(a) Limited Partners’ Interests.
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(i) In connection with the Merger and in accordance with the procedures set forth in Section
5(a)(iii) hereto, each Unit outstanding immediately prior to the Effective Time and held by limited
partners of USRP, except Units held by limited partners who have perfected their appraisal rights
pursuant to Exhibit A hereto, shall be converted into the right to receive, at the election
of the limited partner, either (x) $2.76 in cash (the “Cash Consideration”) or (y) a number of
partnership common units of Aimco OP calculated by dividing $2.76 by the average closing price of
Apartment Investment and Management Company common stock, as reported on the NYSE, over the ten
consecutive trading days ending on the second trading day immediately prior to the Effective Time
(the “OP Unit Consideration” and, together with the Cash Consideration, the “Merger
Consideration”).
(ii) Notwithstanding Section 5(a)(i), if Aimco OP determines that the law of the state or
other jurisdiction in which a limited partner resides would prohibit the issuance of partnership
common units of Aimco OP in that state or jurisdiction (or that the registration in that state or
other jurisdiction would be prohibitively costly), then such limited partner will only be entitled
to receive the Cash Consideration for each Unit.
(iii) Aimco OP shall prepare a form of election (the “Election Form”) describing the Merger
and pursuant to which each limited partner of USRP will have the right to elect to receive either
the Cash Consideration or the OP Unit Consideration (subject to Section 5(a)(ii)). Aimco OP shall
mail or cause to be mailed an Election Form to each limited partner, together with any other
materials that Aimco OP determines to be necessary or prudent, no later than ten (10) days after
the Effective Time. An election to receive the Cash Consideration or the OP Unit Consideration
shall be effective only if a properly executed Election Form is received by Aimco OP or its
designees prior to 5:00 p.m., Eastern Time on the day that is thirty (30) days after the mailing of
such Election Form by Aimco OP. If a limited partner fails to return a duly completed Election Form
within the time period specified in the Election Form, such holder shall be deemed to have elected
to receive the Cash Consideration. In addition, each limited partner that resides in a state or
other jurisdiction that Aimco OP determines would prohibit the issuance of partnership common units
of Aimco OP (or in which registration would be prohibitively costly) will be deemed to have elected
the Cash Consideration. USRP, the Aimco Subsidiary and Aimco OP agree that limited partners shall
have the right to revoke any election made in connection with the Merger at any time prior to the
expiration of the time period stated in the Election Form. Aimco OP and U.S. Realty I, by mutual
agreement, shall have the right to make rules, not inconsistent with the terms of this Agreement,
governing the validity of Election Forms and the issuance and delivery of the Merger Consideration,
as applicable.
(b) General Partners’ Interests. Each general partner interest of USRP outstanding
immediately prior to consummation of the Merger shall remain outstanding and unchanged, with all of
the rights set forth in the Partnership Agreement.
Section 6. Treatment of Interests in Aimco Subsidiary. The entire membership
interest in the Aimco Subsidiary immediately prior to the Effective Time shall be converted into
all of the Units of the Surviving Entity.
Section 7. Appraisal Rights. In connection with the Merger, the holders of Units
immediately prior to the Merger shall have the appraisal rights set forth in Exhibit A
hereto.
Section 8. Covenants. Aimco OP agrees to pay for, or reimburse USRP for, all
expenses incurred by USRP in connection with the Merger. Aimco OP agrees to pay cash or issue and
deliver common units of Aimco OP to the former holders of Units, in accordance with section 5(a) of
this Agreement.
Section 9. Conditions to the Merger.
(a) The Merger shall not occur unless and until the Merger has been approved or consented to
by a majority in interests of Units.
(b) Notwithstanding any provisions of this Agreement to the contrary, none of the parties
hereto shall be required to consummate the transactions contemplated hereby if any third-party
consent, authorization or approval that any of the parties hereto deem necessary or desirable in
connection with this Agreement, or the consummation of the transactions contemplated hereby, has
not been obtained or received.
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Section 10. Tax Treatment. The parties hereto intend and agree that, for Federal
income tax purposes, (i) any payment of cash for Units shall be treated as a sale of such Units by
such holder and a purchase of such Units by Aimco OP for the cash so paid under the terms of this
Agreement in accordance with the guidelines set forth in Treas. Reg. Sections 1.708-1(c)(3) and
1.708-1(c)(4), and (ii) each such holder of Units who receives cash explicitly agrees and consents
to such treatment. Furthermore, the parties hereto intend and agree that, for Federal income tax
purposes, (x) any exchange of Units for partnership common units of Aimco OP under the terms of this
Agreement shall be treated in accordance with Sections 721 and 731 of the Internal Revenue Code of
1986, as amended, and (y) each such holder of Units who accepts partnership common units of Aimco OP
explicitly agrees and consents to such treatment. Any cash and/or partnership common units of Aimco
OP to which a holder of Units is entitled pursuant to this Agreement shall be paid only after the
receipt of a consent from such holder that, for Federal income tax purposes, the receipt of cash
and/or partnership common units of Aimco OP shall be treated as described in this Section 10.
Section 11. Further Assurances. From time to time, as and when required by the
Surviving Entity or by its successors and assigns, there shall be executed and delivered on behalf
of the Aimco Subsidiary such deeds and other instruments, and there shall be taken or caused to be
taken by the Aimco Subsidiary all such further actions, as shall be appropriate or necessary in
order to vest, perfect or confirm, of record or otherwise, in the Surviving Entity the title to and
possession of all property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of the Aimco Subsidiary, and otherwise to carry out the purposes of this Agreement,
and the officers and directors of U.S. Realty I are fully authorized, in the name and on behalf of
the Aimco Subsidiary or otherwise, to take any and all such action and to execute and deliver any
and all such deeds and other instruments.
Section 12. Amendment. Subject to applicable law, this Agreement may be amended,
modified or supplemented by written agreement of the parties hereto at any time prior to the
consummation of the Merger with respect to any of the terms contained herein.
Section 13. Abandonment. At any time prior to consummation of the Merger, this
Agreement may be terminated and the Merger may be abandoned without liability to any party hereto
by any of the Aimco Subsidiary, Aimco OP or USRP, in each case, acting in its sole discretion and
for any reason or for no reason, notwithstanding approval of this Agreement by any of the members
of the Aimco Subsidiary, the partners of USRP or the general partner of Aimco OP.
Section 14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to the conflict of law
provisions thereof.
Section 15. No Third-Party Beneficiaries. No provision of this Agreement is intended
to confer upon any person, entity, or organization other than the parties hereto any rights or
remedies hereunder, other than the appraisal rights given to holders of Units pursuant to Section 7.
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IN WITNESS WHEREOF, USRP, the Aimco Subsidiary and Aimco OP have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above written.
| U.S. REALTY PARTNERS LIMITED PARTNERSHIP |
||||
| By: | U.S. Realty I Corporation | |||
| Its Corporate General Partner | ||||
| By: | /s/ Xxxxx X. XxXxxxxxxx | |||
| Name: | Xxxxx X. XxXxxxxxxx | |||
| Title: | Senior Vice President | |||
| By: | Aimco Properties, L.P. | |||
| Its Individual General Partner | ||||
| By: | AIMCO-GP, Inc. | |||
| its General Partner | ||||
| By: | /s/ Xxxxx X. XxXxxxxxxx | ||||
| Name: | Xxxxx X. XxXxxxxxxx | ||||
| Title: | Senior Vice President | ||||
| AIMCO USRP MERGER SUB LLC |
||||
| By: | Aimco Properties, L.P. | |||
| Its sole Member | ||||
| By: | AIMCO-GP, Inc. | |||
| its General Partner | ||||
| By: | /s/ Xxxx Xxxxxxx | |||
| Name: | Xxxx Xxxxxxx | |||
| Title: | Senior Vice President | |||
| AIMCO PROPERTIES, L.P. |
||||
| By: | AIMCO-GP, Inc., | |||
| its General Partner | ||||
| By: | /s/ Xxxx Xxxxxxx | |||
| Name: | Xxxx Xxxxxxx | |||
| Title | Senior Vice President | |||
[Signature Page — Merger Agreement]
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EXHIBIT A
Appraisal Rights of Limited Partners
Capitalized terms used but not defined herein shall have the respective meanings ascribed
thereto in the Agreement and Plan of Merger, dated as of October 8, 2010 (the “Merger Agreement”),
by and among U.S. Realty Partners Limited Partnership, a Delaware limited partnership (“USRP”),
AIMCO USRP Merger Sub LLC, a Delaware limited liability company (the “Aimco Subsidiary”), and AIMCO
Properties, L.P., a Delaware limited partnership (“Aimco OP”). In connection with the Merger,
limited partners of USRP shall have the following appraisal rights:
(a) Any limited partner who holds Units on the effective date of the Merger who has not
consented to the merger (the “Nonconsenting Limited Partners”) and who has otherwise complied
with paragraph (b) hereof shall be entitled to an appraisal by arbitration of the fair value of
the Nonconsenting Limited Partner’s Units. This arbitration shall be conducted in Denver,
Colorado, in accordance with the Commercial Arbitration Rules of the American Arbitration
Association by a panel of three arbitrators selected by Aimco OP. Any arbitration award shall be
appealable in the Federal District Court located in Denver, Colorado.
(b) Within 10 days after the effective date of the Merger, Aimco OP shall notify each of the
Nonconsenting Limited Partners of the consummation of the Merger, the effective date of the
Merger and that appraisal rights are available for any or all Units held by Nonconsenting Limited
Partners, and shall include in such notice a copy of this Exhibit. Such notice shall include an
Election Form pursuant to which Nonconsenting Limited Partners may elect an appraisal by
arbitration of the fair value of their Units pursuant to paragraph (a) hereof. Any limited partner
who holds Units on the effective date of the Merger and who has not consented to the Merger shall
be entitled to receive such notice and may, within 30 days after the date of mailing of such
notice (such 30th day being the “Election Deadline”), demand from Aimco OP the appraisal of his
or her Units by making the appropriate election in the Election Form in accordance with the
instructions thereto. Each completed Election Form must be delivered to the address, and within
the time period, specified in the instructions to the Election Form. If a Nonconsenting Limited
Partner fails to properly complete an Election Form or return it to the correct address within
the specified time period, such Nonconsenting Limited Partner shall be deemed to have elected not
to seek an appraisal of his or her Units, and will be deemed to have elected the Cash
Consideration.
(c) At any time prior to the Election Deadline, any Nonconsenting Limited Partner who has
made a demand for appraisal of his or her Units shall have the right to withdraw his or her demand
for appraisal and to accept the Cash Consideration payable pursuant to the Merger Agreement.
Nonconsenting Limited Partners who wish to withdraw their demands must do so in writing delivered
to Aimco Properties, L.P., c/o Eagle Rock Proxy Advisors, LLC, by mail at 00 Xxxxxxxx Xxxxx,
Xxxxxxxx, Xxx Xxxxxx, 00000, or by fax at (000) 000-0000. At any time prior to 20 days after the
Election Deadline, any Nonconsenting Limited Partner who has complied with the requirements of
subsections (a) and (b) hereof, upon written request, shall be entitled to receive from Aimco OP
a statement setting forth the aggregate number of Units with respect to which Nonconsenting
Limited Partners have made demands for appraisal and the aggregate number of holders of such
Units. Such written statement shall be mailed to the Nonconsenting Limited Partner within 10 days
after such Nonconsenting Limited Partner’s written request for such a statement is received by
Aimco OP or within 20 days after the Election Deadline, whichever is later.
(d) Upon the submission of any such demand by a Nonconsenting Limited Partner, Aimco OP
shall, within 40 days after the Election Deadline, submit to the arbitration panel a duly
verified list containing the names and addresses of all Nonconsenting Limited Partners who have
demanded payment for their Units and with whom agreements as to the value of their Units have not
been reached with Aimco OP. The arbitration panel shall give notice of the time and place fixed
for the hearing of such demand by registered or certified mail to Aimco OP and to the
Nonconsenting Limited Partners shown on the list at the addresses therein stated. The forms of
the notices shall be approved by the panel, and the costs thereof shall be borne by Aimco OP.
(e) At the hearing on such demand, the panel shall determine the Nonconsenting Limited
Partners who have become entitled to appraisal rights hereunder.
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(f) After determining the Nonconsenting Limited Partners entitled to an appraisal, the panel
shall appraise the Units, determining their fair value exclusive of any element of value arising
from the accomplishment or expectation of the Merger, together with interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair value, the panel shall
take into account all relevant factors. Unless the panel in its discretion determines otherwise
for good cause shown, interest from the effective date of the Merger through the date of payment
of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve
discount rate (including any surcharge), as established from time to time during the period
between the effective date of the Merger and the date of payment of the judgment. Upon
application by Aimco OP or by any Nonconsenting Limited Partner entitled to participate in the
appraisal proceeding, the panel may, in its discretion, proceed with the appraisal prior to the
final determination of the Nonconsenting Limited Partners entitled to an appraisal. Any
Nonconsenting Limited Partner whose name appears on the list submitted by Aimco OP pursuant to
paragraph (d) hereof may participate fully in all proceedings until it is finally determined that
such Nonconsenting Limited Partner is not entitled to appraisal rights hereunder.
(g) The panel shall direct the payment of the fair value of the Units, together with
interest, if any, by Aimco OP to the Nonconsenting Limited Partners entitled thereto. Payment
shall be so made to each such Nonconsenting Limited Partner upon the receipt by Aimco OP of the
written consent from such Nonconsenting Limited Partner that, for federal income tax purposes,
the issuance of cash for the Units shall be treated as a sale of the Units by the owner and a
purchase of such Units by Aimco OP for the cash consideration so paid under the terms of the
Merger Agreement in accordance with the guidelines set forth in Treas. Reg. Sections
1.708-1(c)(3) and 1.708-1(c)(4).
(h) The costs of the proceeding may be determined by the panel and taxed upon the parties as
the panel deems equitable in the circumstances. Upon application of a Nonconsenting Limited
Partner, the panel may order all or a portion of the expenses incurred by any Nonconsenting
Limited Partner in connection with the appraisal proceeding, including, without limitation,
reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against
the value of all the interests entitled to an appraisal.
(i) From and after the effective date of the Merger, no Nonconsenting Limited Partner who
has demanded appraisal rights as provided in paragraph (b) hereof shall be entitled to vote such
Units for any purpose or to receive payment of distributions on such interests (except
distributions payable as of a record date prior to the effective date of the Merger); provided,
however, that if such Nonconsenting Limited Partner shall deliver to Aimco Properties, L.P., c/o
Eagle Rock Proxy Advisors, LLC, by mail at 00 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx, 00000, or by
fax at (000) 000-0000, a written withdrawal of such Nonconsenting Limited Partner’s demand for an
appraisal and an acceptance of the Cash Consideration payable pursuant to the Merger Agreement,
either as provided in paragraph (c) hereof or thereafter with the written approval of Aimco OP,
then the right of such Nonconsenting Limited Partner to an appraisal shall cease. Notwithstanding
the foregoing, no appraisal proceeding before the panel shall be dismissed as to any
Nonconsenting Limited Partner without the approval of the panel, and such approval may be
conditioned upon such terms as the panel deems just.
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