-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R0NuPRI6LBoyjiOSbGpTWs8VLRIABP7hL/qYxPx3I3uwT6VyNWXS4+6KuftNY4X+ knSOCbI5zm1Q8/ZSmsMskQ== 0000950134-00-001927.txt : 20000316 0000950134-00-001927.hdr.sgml : 20000316 ACCESSION NUMBER: 0000950134-00-001927 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APARTMENT INVESTMENT & MANAGEMENT CO CENTRAL INDEX KEY: 0000922864 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 841259577 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-13232 FILM NUMBER: 569494 BUSINESS ADDRESS: STREET 1: COLORADO CENTER TOWER TWO STREET 2: 2000 S COLORADO BLVD STE 2-1000 CITY: DENVER STATE: CO ZIP: 80222-4348 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: COLORADO CENTER TOWER TWO STREET 2: 2000 S COLORADO BLVD STE 2-1000 CITY: DENVER STATE: CO ZIP: 80222 10-K 1 FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 1999 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-13232 APARTMENT INVESTMENT AND MANAGEMENT COMPANY (Exact name of registrant as specified in its charter) MARYLAND 84-1259577 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2000 SOUTH COLORADO BOULEVARD, TOWER TWO, SUITE 2-1000, DENVER, CO 80222-7900 (Address of principal executive offices) (Zip Code)
--------------------- Registrant's Telephone Number, Including Area Code: (303) 757-8101 Securities Registered Pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- Class A Common Stock New York Stock Exchange Class C Cumulative Preferred Stock New York Stock Exchange Class D Cumulative Preferred Stock New York Stock Exchange Class G Cumulative Preferred Stock New York Stock Exchange Class H Cumulative Preferred Stock New York Stock Exchange Class K Convertible Cumulative Preferred Stock New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of February 29, 2000, there were 67,096,142 shares of Class A Common Stock outstanding. The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, was approximately $2,482.6 million as of February 29, 2000. --------------------- DOCUMENTS INCORPORATED BY REFERENCE Portions of the proxy statement for the registrant's 2000 annual meeting of stockholders are incorporated by reference into Part III of this Annual Report. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 APARTMENT INVESTMENT AND MANAGEMENT COMPANY TABLE OF CONTENTS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
ITEM PAGE - ---- ---- PART I 1. Business.................................................... 1999 Developments........................................... Financial Information About Industry Segments............... Operating and Financial Strategies.......................... Growth Strategies........................................... Property Management Strategies.............................. Taxation of the Company..................................... Competition................................................. Regulation.................................................. Insurance................................................... Employees................................................... 2. Properties.................................................. 3. Legal Proceedings........................................... 4. Submission of Matters to a Vote of Security Holders......... PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters......................................... 6. Selected Financial Data..................................... 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 7a. Quantitative and Qualitative Disclosures About Market Risk........................................................ 8. Financial Statements and Supplementary Data................. 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................... PART III 10. Directors and Executive Officers of the Registrant.......... 11. Executive Compensation...................................... 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 13. Certain Relationships and Related Transactions.............. PART IV 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K.........................................................
3 PART I ITEM 1. BUSINESS. Apartment Investment and Management Company ("AIMCO"), a Maryland corporation formed on January 10, 1994, is a self-administered and self-managed REIT engaged in the ownership, acquisition, development, expansion and management of multi-family apartment properties. As of December 31, 1999, we owned or managed 363,462 apartment units in 1,942 properties located in 48 states, the District of Columbia and Puerto Rico. Based on apartment unit data compiled by the National Multi Housing Council, we believe that, as of December 31, 1999, we were the largest owner and manager of multifamily apartment properties in the United States. As of December 31, 1999, we: - owned or controlled 106,148 units in 373 apartment properties; - held an equity interest in 133,113 units in 751 apartment properties; and - managed 124,201 units in 818 apartment properties for third party owners and affiliates. We conduct substantially all of our operations through our operating partnership, AIMCO Properties, L.P. Through a wholly-owned subsidiary, we act as the sole general partner of the AIMCO operating partnership. As of December 31, 1999, we owned approximately a 91% interest in the AIMCO operating partnership. We manage apartment properties for third parties and affiliates through unconsolidated subsidiaries that we refer to as the "management companies." Generally, when we refer to "we," "us" or the "Company" in this annual report on Form 10-K, we are referring to AIMCO, the AIMCO operating partnership, the management companies and their respective subsidiaries. We refer to interests in the AIMCO operating partnership that are held by third parties as "OP Units." The Company's principal executive offices are located at 2000 South Colorado Blvd., Tower Two, Suite 2-1000, Denver, Colorado 80222-7900 and its telephone number is (303) 757-8101. 1999 DEVELOPMENTS Individual Property Acquisitions The Company directly acquired 28 apartment communities in unrelated transactions during 1999 (not including those acquired in connection with the merger with Insignia Properties Trust, "IPT"). The aggregate consideration paid by the Company of $495.0 million consisted of $91.5 million in cash, 2.4 million Preferred OP Units, 0.9 million common OP Units and 0.5 million shares of Class A Common Stock with a total recorded value of $116.8 million, assumption of $110.1 million of secured long-term indebtedness, the assumption of $15.2 million of other liabilities, and new financing of $161.4 million of secured long-term indebtedness. The Company has budgeted an additional $23.9 million for initial capital enhancements related to these properties. Tender Offers During 1999, the Company made separate offers to the limited partners of approximately 600 partnerships to acquire their limited partnership interests. The Company paid approximately $271 million in cash and OP Units to acquire limited partnership interests pursuant to the offers. Property Dispositions In 1999, the Company sold 63 properties for an aggregate sales price of approximately $426.0 million. Net cash proceeds to the Company from the sales of $135.8 million were used to repay a portion of the Company's outstanding short-term indebtedness. The results of operations of 55 of these properties were accounted for by the Company under the equity method. 2 4 Debt Assumptions and Financings In August 1999, the Company closed a $300 million revolving credit facility arranged by Bank of America, N.A. BankBoston, N.A. and First Union National Bank and comprised of a total of nine lender participants. The obligations under the new credit facility are secured by certain non-real estate assets of the Company. The existing lines of credit were terminated. The credit facility is used for general corporate purposes and has a two-year term with two one-year extensions. The annual interest rate under the new credit facility is based on either LIBOR or a base rate which is the higher of Bank of America's reference rate or 0.5% over the federal funds rate, plus, in either case, an applicable margin. The margin ranges between 2.05% and 2.55%, in the case of LIBOR-based loans, and between 0.55% and 1.05%, in the case of base rate loans, based upon a fixed charge coverage ratio. The weighted average interest rate at December 31, 1999 was 8.84%. The amount available under the credit facility at December 31, 1999 was $90.8 million. During the year ended December 31, 1999, the Company issued $410.3 million of long-term fixed rate, fully amortizing non-recourse mortgage notes payable with a weighted average interest rate of 7.3%. Each of the notes is individually secured by one of forty properties with no cross-collateralization. The Company used the net proceeds after transaction costs of $373.6 million to repay existing debt. During the year ended December 31, 1999, the Company has also assumed $110.1 million of long-term fixed rate, fully amortizing notes payables with a weighted average interest rate of 7.9% in connection with the acquisition of properties. Each of the notes is individually secured by one of thirteen properties with no cross-collateralization. Equity Offerings In 1999, the Company raised proceeds of $304.6 million in one public offering and two direct placements of equity securities (excluding equity issued in connection with the completion of the IPT merger discussed below and in connection with the purchase of real estate and limited partnership interests). These transactions are summarized below:
NUMBER TOTAL PROCEEDS DIVIDEND OR OF IN DISTRIBUTION TRANSACTION TYPE DATE SHARES MILLIONS RATE - ----------- ---- ---- --------- -------------- ------------ Class K Convertible Cumulative Preferred Stock of AIMCO........... Public Feb. 1999 5,000,000 $125.0 (1) Class L Convertible Cumulative Preferred Stock of AIMCO........... Direct May 1999 5,000,000 125.0 (2) Class A Common Stock of AIMCO........ Direct Sept. 1999 1,382,580 54.6 ------ TOTAL PROCEEDS 1999................................................... $304.6 ======
- --------------- (1) For three years from the date of original issuance, the Class K Preferred Stock dividend will be in an amount per share equal to the greater of (i) $2.00 per year (equivalent to 8% of the liquidation preference), or (ii) the cash dividends payable on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class K Preferred Stock is convertible. Beginning with the third anniversary of the date of original issuance, the Class K Preferred Stock dividend per share will be increased to the greater of (i) $2.50 per year (equivalent to 10% of the liquidation preference), or (ii) the cash dividends payable on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class K Preferred Stock is convertible. (2) For three years from the date of original issuance, the Class L Preferred Stock dividend will be in an amount per share equal to the greater of (i) $2.025 per year (equivalent to 8.1% of the liquidation preference), or (ii) the cash dividends payable on the number of shares of Class A Common Stock into which a share of Class L Preferred Stock is convertible. Beginning with the third anniversary of the date of original issuance, the holder of Class L Preferred Stock will be entitled to receive an amount per share equal to the greater of (i) $2.50 per year (equivalent to 10% of the liquidation preference), or (ii) the cash dividends payable on the number of shares of Class A Common Stock into which a share of Class L Preferred Stock is convertible. 3 5 Insignia Properties Trust Merger As a result of the Insignia merger on October 1, 1998, AIMCO acquired approximately 51% of the outstanding shares of beneficial interest of IPT. On February 26, 1999, IPT was merged into AIMCO. Pursuant to the merger, each of the outstanding shares of IPT that were not held by AIMCO were converted into the right to receive 0.3601 shares of AIMCO Class A Common Stock, resulting in the issuance of approximately 4.3 million shares of AIMCO Class A Common Stock (valued at approximately $158.8 million). Pending Acquisitions In the ordinary course of business, the Company engages in discussions and negotiations regarding the acquisition of apartment properties (including interests in entities that own apartment properties). The Company frequently enters into contracts and non-binding letters of intent with respect to the purchase of properties. These contracts are typically subject to certain conditions and permit the Company to terminate the contract in its sole and absolute discretion if it is not satisfied with the results of its due diligence investigation of the properties. The Company believes that such contracts essentially result in the creation of an option on the subject properties and give the Company greater flexibility in seeking to acquire properties. As of February 29, 2000, the Company had under contract or letter of intent an aggregate of 10 multi-family apartment properties with a maximum aggregate purchase price of $107.6 million, including estimated capital improvements, which, in some cases, may be paid in the form of assumption of existing debt. All such contracts are subject to termination by the Company as described above. No assurance can be given that any of these possible acquisitions will be completed or, if completed, that they will be accretive on a per share basis. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company operates in one industry segment, the ownership and management of real estate properties. See the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K for financial information relating to the Company. OPERATING AND FINANCIAL STRATEGIES The Company strives to meet its objective of providing long-term, predictable funds from operations ("FFO") per share of Class A Common Stock, less an allowance for Capital Replacements of $300 per apartment unit, by implementing its operating and financing strategies which include the following: - Acquisition of Properties at Less Than Replacement Cost. AIMCO attempts to acquire properties at a significant discount to their replacement cost. - Geographic Diversification. AIMCO operates in 48 states, the District of Columbia and Puerto Rico. This geographic diversification insulates the Company, to some degree, from inevitable downturns in any one market. AIMCO's net income before depreciation and interest expense is earned in more than 175 local markets. In 1999, the largest single market contributed 7% to net income before depreciation and interest expense, and the five largest markets contributed 32%. - Market Growth. The Company seeks to operate in markets where population and employment growth are expected to exceed the national average and where it believes it can become a regionally significant owner or manager of properties. For the period from 1997 through 2000, annual population and employment growth rates in AIMCO's five largest regional markets are forecasted to be 2.2% and 3.6%, respectively. - Product Diversification. The Company's portfolio of apartment properties spans a wide range of apartment community types, both within and among markets, including garden and high-rise apartments, as well as corporate and student housing. 4 6 - Capital Replacement. AIMCO believes that the physical condition and amenities of its apartment communities are important factors in its ability to maintain and increase rental rates. The Company allocates approximately $300 annually per owned apartment unit for capital replacements, and reserves unexpended amounts for future capital replacements. - Debt Financing. AIMCO's strategy is generally to incur debt to increase its return on equity while maintaining acceptable interest coverage ratios. AIMCO seeks to maintain a ratio of free cash flow to combined interest expense and preferred stock dividends of between 2:1 and 3:1, and a ratio of earnings before interest, income taxes, depreciation and amortization (with certain adjustments and after a provision of approximately $300 per owned apartment unit) to debt service of at least 2:1, and to match debt maturities to the character of the assets financed. For the year ended December 31, 1999, the Company was within these targets. The Company uses predominantly long-term, fixed-rate and self-amortizing non-recourse debt in order to avoid the refunding or repricing risks of short-term borrowings. The Company uses short-term debt financing to fund acquisitions and generally expects to refinance such borrowings with proceeds from equity offerings or long-term debt financings. As of December 31, 1999, approximately 9% of AIMCO's outstanding debt was short-term debt and 91% was long-term debt. - Dispositions. The Company regularly sells properties that do not meet its return on investment criteria or that are located in areas where AIMCO does not believe that the long-term neighborhood values justify the continued investment in the properties. - Dividend Policy. AIMCO pays dividends on its Class A Common Stock to share its profitability with its stockholders. The Company distributed 61.3%, 65.8% and 66.5% of FFO to holders of Class A Common Stock for the years ended December 31, 1999, 1998 and 1997, respectively. It is the present policy of the Board of Directors to increase the dividend annually in an amount equal to one-half of the projected increase in FFO, adjusted for capital replacements, subject to minimum distribution requirements to maintain its REIT status. GROWTH STRATEGIES The Company seeks growth through two primary sources -- internal expansion and acquisitions. Internal Growth Strategies. The Company pursues internal growth primarily through the following strategies: - Revenue Increases. The Company increases rents where feasible and seeks to improve occupancy rates. - Controlling Expenses. Cost reductions are accomplished by local focus on the regional operating center level and by exploiting economies of scale. As a result of the size of its portfolio and its creation of regional concentrations of properties, the Company has the ability to leverage fixed costs for general and administrative expenditures and certain operating functions, such as insurance, information technology and training, over a large property base. - Redevelopment of Properties. The Company believes redevelopment of selected properties in superior locations provides advantages over development of new properties. AIMCO believes that redevelopment generally allows the Company to maintain rents comparable to new properties and, compared to development of new properties, can be accomplished with relatively lower financial risk, in less time and with reduced delays due to governmental regulation. - Expansion of Properties. The Company believes that expansion within or adjacent to properties already owned or managed by the Company also provides growth opportunities at lower risk than new development. Such expansion can offer cost advantages to the extent common area amenities and on-site management personnel can service the property expansions. AIMCO's current policy is to limit redevelopments and expansions to 10% of total equity market capitalization. 5 7 - Ancillary Services. The Company believes that its ownership and management of properties provides it with unique access to a customer base that allows us to provide additional services and thereby increase occupancy, increase rents and generate incremental revenue. The Company currently provides cable television, telephone services, appliance rental, and carport, garage and storage space rental at certain properties. Acquisition Strategies. The Company believes its acquisition strategies will increase profitability and predictability of earnings by increasing its geographic diversification, economies of scale and opportunities to provide ancillary services to tenants at its properties. Since AIMCO's initial public offering in July 1994, the Company has completed numerous acquisition and management transactions, expanding its portfolio of owned or managed properties from 132 apartment properties with 29,343 units to 1,942 apartment properties with 363,462 units as of December 31, 1999. The Company acquires additional properties primarily in three ways: - Direct Acquisitions. AIMCO may directly, including through mergers and other business combinations, acquire individual properties or portfolios of properties and controlling interests in entities that own or control such properties or portfolios. To date, a significant portion of AIMCO's growth has resulted from the acquisition of other companies that owned or controlled properties. - Acquisition of Managed Properties. AIMCO believes that its property management operations support its acquisition activities. Since AIMCO's initial public offering, the Company has acquired from its managed portfolio 16 properties comprising 5,697 units for total consideration of $189.9 million. - Increasing its Interest in Partnerships. For properties where AIMCO owns a general partnership interest in the property-owning partnership, the Company may seek to acquire, subject to its fiduciary duties, the interests in the partnership held by third parties for cash or, in some cases, in exchange for OP Units. AIMCO has completed tender offers with respect to approximately 1,000 partnerships and has purchased additional interests in such partnerships for cash and for OP Units. PROPERTY MANAGEMENT STRATEGIES AIMCO seeks to improve the operating results from its property management business by, among other methods, combining centralized financial control and uniform operating procedures with localized property management decision-making and market knowledge. AIMCO's management operations are organized into 31 regional operating centers. Each of the regional operating centers is supervised by a Regional Vice-President. TAXATION OF THE COMPANY The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 1994, and the Company intends to continue to operate in such a manner. The Company's current and continuing qualification as a REIT depends on its ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership. If the Company qualifies for taxation as a REIT, it will generally not be subject to U.S. federal corporate income tax on its net income that is currently distributed to stockholders. This treatment substantially eliminates the "double taxation" (at the corporate and stockholder levels) that generally results from investment in a corporation. If the Company fails to qualify as a REIT in any taxable year, its taxable income will be subject to U.S. federal income tax at regular corporate rates (including any applicable alternative minimum tax). Even if the Company qualifies as a REIT, it may be subject to certain state and local income taxes and to U.S. federal income and excise taxes on its undistributed income. If in any taxable year the Company fails to qualify as a REIT and incurs additional tax liability, the Company may need to borrow funds or liquidate certain investments in order to pay the applicable tax and the 6 8 Company would not be compelled to make distributions under the Code. Unless entitled to relief under certain statutory provisions, the Company would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. Although the Company currently intends to operate in a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause the Company to fail to qualify as a REIT or may cause the Board of Directors to revoke the REIT election. The Company and its stockholders may be subject to state or local taxation in various state or local jurisdictions, including those in which it or they transact business or reside. The state and local tax treatment of the Company and its stockholders may not conform to the U.S. federal income tax treatment. COMPETITION There are numerous housing alternatives that compete with the Company's properties in attracting residents. The Company's properties compete directly with other multi-family rental apartments and single family homes that are available for rent or purchase in the markets in which the Company's properties are located. The Company's properties also compete for residents with new and existing and condominiums. The number of competitive properties in a particular area could have a material effect on the Company's ability to lease apartment units at its properties and on the rents charged. The Company competes with numerous real estate companies in acquiring, developing and managing multi-family apartment properties and seeking tenants to occupy its properties. In addition, the Company competes with numerous property management companies in the markets where the properties managed by the Company are located. REGULATION General Multifamily apartment properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, activity centers and other common areas. Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions, as well as changes in laws affecting development, construction and safety requirements, may result in significant unanticipated expenditures, which would adversely affect the Company's cash flows from operating activities. In addition, future enactment of rent control or rent stabilization laws or other laws regulating multi-family housing may reduce rental revenue or increase operating costs in particular markets. Laws Benefiting Disabled Persons Under the Americans with Disabilities Act of 1990, all places of public accommodation are required to meet certain Federal requirements related to access and use by disabled persons. These requirements became effective in 1992. A number of additional Federal, state and local laws may also require modifications to the Company's properties, or restrict certain further renovations of the properties, with respect to access thereto by disabled persons. For example, the Fair Housing Amendments Act of 1988 requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although the Company believes that its properties are substantially in compliance with present requirements, it may incur unanticipated expenses to comply with these laws. Regulation of Affordable Housing As of December 31, 1999, the Company owned or controlled 27 properties and held an equity interest in 434 properties with a combined weighted average ownership percentage of 24%. AIMCO also managed for third parties and affiliates 477 properties that benefit from governmental programs intended to provide housing to people with low or moderate incomes. These programs, which are usually administered by the United States Department of Housing and Urban Development ("HUD") or state housing finance agencies, typically 7 9 provide mortgage insurance, favorable financing terms or rental assistance payments to the property owners. As a condition to the receipt of assistance under these programs, the properties must comply with various requirements, which typically limit rents to pre-approved amounts. If permitted rents on a property are insufficient to cover costs, a sale of the property may become necessary, which could result in a loss of management fee revenue. The Company must obtain the approval of HUD in order to manage, or acquire a significant interest in, a HUD-assisted or HUD-insured property. This approval process is commonly referred to as "2530 Clearance." The Company had three unresolved flags in the 2530 system as of December 31, 1999, which the Company believes will not have a material effect on its ability to receive 2530 approval. The Company can make no assurance, however, that it will always receive such approval. Environmental The Company is subject to various Federal, state and local laws that impose liability on property owners or operators for the costs of removal or remediation of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of the hazardous substances. The presence of, or the failure to properly remediate, hazardous substances may adversely affect occupancy at contaminated apartment communities and our ability to sell or borrow against contaminated properties. In addition to the costs associated with investigation and remediation actions brought by governmental agencies, the presence of hazardous wastes on a property could result in personal injury or similar claims by private plaintiffs. The Company also is subject to various laws that impose liability for the cost of removal or remediation of hazardous substances at a disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous or toxic substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of our properties, we could potentially be liable for environmental liabilities or costs associated with our properties or properties we may acquire or manage in the future. INSURANCE Management believes that the Company's properties are covered by adequate fire, flood and property insurance provided by reputable companies and with commercially reasonable deductibles and limits. EMPLOYEES The Company has a staff of employees performing various acquisition, redevelopment and management functions. The Company, through the AIMCO operating partnership and the management companies, has approximately 12,500 employees, most of whom are employed at the property level. None of the employees are represented by a union, and the Company has never experienced a work stoppage. The Company believes it maintains satisfactory relations with its employees. 8 10 ITEM 2. PROPERTIES. The Company's properties are located in 48 states, Puerto Rico and the District of Columbia. The properties are managed by four Division Vice-Presidents controlling 31 regional operating centers. The following table sets forth information for the regional operating centers as of December 31, 1999:
NUMBER OF NUMBER OF REGIONAL OPERATING CENTER DIVISION PROPERTIES UNITS - ------------------------- -------- ---------- --------- Chicago, IL.......................................... Far West 57 10,761 Denver, CO........................................... Far West 84 14,279 Kansas City, MO...................................... Far West 72 11,094 Los Angeles, CA...................................... Far West 53 9,505 Oakland, CA.......................................... Far West 69 8,013 Phoenix, AZ.......................................... Far West 52 13,008 ----- ------- 387 66,660 ----- ------- Allentown, PA........................................ East 116 9,693 Columbia, SC......................................... East 73 13,767 Greenville, SC....................................... East 86 12,016 Philadelphia, PA..................................... East 62 19,512 Rockville, MD........................................ East 62 16,881 Tarrytown, NY........................................ East 67 9,413 ----- ------- 466 81,282 ----- ------- Atlanta, GA.......................................... Southeast 56 11,066 Boca Raton, FL....................................... Southeast 25 6,083 Miami, FL............................................ Southeast 32 7,400 Mobile, AL........................................... Southeast 60 9,893 Nashville, TN........................................ Southeast 58 10,720 Orlando, FL.......................................... Southeast 48 10,444 Tampa, FL............................................ Southeast 56 12,921 ----- ------- 335 68,527 ----- ------- Austin, TX........................................... West 54 10,202 Columbus, OH......................................... West 62 12,426 Dallas I, TX......................................... West 58 10,989 Dallas II, TX........................................ West 68 13,281 Houston I, TX........................................ West 47 10,290 Houston II, TX....................................... West 48 12,062 Indianapolis, IN..................................... West 51 13,741 ----- ------- 388 82,991 ----- ------- Portfolio: Senior Living Sub ROC 1.............................. Oxford 8 1,637 Affordable Midwest................................... Oxford 42 5,409 Conventional Mideast................................. Oxford 32 8,289 Conventional Midwest................................. Oxford 45 10,725 Conventional South................................... Oxford 38 10,337 ----- ------- 165 36,397 ----- ------- Other................................................ 201 27,605 ----- ------- 1,942 363,462 ===== =======
At December 31, 1999, the Company owned or controlled 373 properties containing 106,148 units. These owned or controlled properties contain, on average, 285 apartment units, with the largest property containing 2,113 apartment units. These properties offer residents a range of amenities, including swimming pools, 9 11 clubhouses, spas, fitness centers, tennis courts and saunas. Many of the apartment units offer design and appliance features such as vaulted ceilings, fireplaces, washer and dryer hook-ups, cable television, balconies and patios. In addition, at December 31, 1999, the Company held an equity interest in 751 properties containing 133,113 units, and managed 818 other properties containing 124,201 units. The Company's total portfolio of 1,942 properties contain, on average, 187 apartment units, with the largest property containing 2,907 apartment units. Substantially all of the properties owned or controlled by the Company are encumbered by mortgage indebtedness or serve as collateral for the Company's indebtedness. At December 31, 1999, the Company had aggregate mortgage indebtedness totaling $2,375.1 million, which was secured by 361 properties with a combined net book value of $4,028.8 million, having an aggregate weighted average interest rate of 6.66%. As of December 31, 1999, approximately 9% of AIMCO's outstanding debt was short-term debt and 91% was long-term debt. See the financial statements included elsewhere in this Annual Report on Form 10-K for additional information about the Company's indebtedness. ITEM 3. LEGAL PROCEEDINGS. General The Company is a party to various legal actions resulting from its operating activities. These actions are routine litigation and administrative proceedings arising in the ordinary course of business, some of which are covered by liability issuance, and none of which are expected to have a material adverse effect on the consolidated financial condition or results of operations of the Company. Limited Partnerships In connection with the Company's offers to purchase interests in limited partnerships that own properties, the Company and its affiliates are sometimes subject to legal actions, including allegations that such activities may involve breaches of fiduciary duties to the limited partners of such partnerships or violations of the relevant partnership agreements. The Company believes it complies with its fiduciary obligations and relevant partnership agreements, and does not expect such legal actions to have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole. The Company may incur costs in connection with the defense or settlement of such litigation, which could adversely affect the Company's desire or ability to complete certain transactions and thereby have a material adverse effect on the Company and its subsidiaries. Pending Investigations of HUD Management Arrangements In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting documents relating to arrangements whereby NHP or any of its affiliates provides compensation to owners of HUD-assisted or HUD-insured multi-family projects in exchange for or in connection with property management of a HUD project. In July 1999, NHP received a grand jury subpoena requesting documents relating to the same subject matter as the HUD IG subpoenas and NHP's operation of a group purchasing program created by NHP, known as Buyers Access. To date, neither the HUD IG nor the grand jury has initiated any action against NHP or AIMCO or, to NHP's or AIMCO's knowledge, any owner of a HUD property managed by NHP. AIMCO believes that NHP's operations and programs are in compliance, in all material respects, with all laws, rules and regulations relating to HUD-assisted or HUD-insured properties. AIMCO is cooperating with the investigations and does not believe that the investigations will result in a material adverse impact on its operations. However, as with any similar investigation, there can be no assurance that these will not result in material fines, penalties or other costs. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 10 12 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. AIMCO's Class A Common Stock has been listed and traded on the NYSE under the symbol "AIV" since July 22, 1994. The following table sets forth the quarterly high and low sales prices of the Class A Common Stock, as reported on the NYSE, and the dividends paid by the Company for the periods indicated.
DIVIDENDS PAID QUARTER ENDED HIGH LOW (PER SHARE) - ------------- ---- --- ----------- 1997 March 31, 1997....................................... 30 1/2 25 1/2 0.4625 June 30, 1997........................................ 29 3/4 26 0.4625 September 30, 1997................................... 36 3/16 28 1/8 0.4625 December 31, 1997.................................... 38 32 0.4625 1998 March 31, 1998....................................... 38 9/16 34 1/4 0.5625 June 30, 1998........................................ 39 7/8 36 1/2 0.5625 September 30, 1998................................... 41 31 0.5625 December 31, 1998.................................... 37 3/8 30 0.5625 1999 March 31, 1999....................................... 41 5/8 35 0.625 June 30, 1999........................................ 44 1/16 35 5/16 0.625 September 30, 1999................................... 42 5/8 37 5/16 0.625 December 31, 1999.................................... 40 3/16 34 1/16 0.625 2000 March 31, 2000 (through March 8, 2000)............... 39 11/16 36 5/8 0.70(1)
- --------------- (1) On January 19, 2000, the Company's Board of Directors declared a cash dividend of $0.70 per share of Class A Common Stock, paid on February 11, 2000 to stockholders of record on February 4, 2000. On March 8, 2000, there were 67,109,473 shares of Class A Common Stock outstanding, held by 2,627 stockholders of record. AIMCO, as a REIT, is required to distribute annually to holders of common stock at least 95% of its "real estate investment trust taxable income," which, as defined by the Internal Revenue Code and Treasury regulations, is generally equivalent to net taxable ordinary income. AIMCO measures its economic profitability and intends to pay regular dividends to its stockholders based on FFO during the relevant period. However, the future payment of dividends by AIMCO will be at the discretion of the Board of Directors and will depend on numerous factors including AIMCO's financial condition, its capital requirements, the annual distribution requirements under the provisions of the Internal Revenue Code applicable to REITs and such other factors as the Board of Directors deems relevant. From time to time, AIMCO issues shares of Class A Common Stock in exchange for OP Units tendered to the AIMCO operating partnership for redemption in accordance with the terms and provisions of the agreement of limited partnership of the AIMCO operating partnership. Such shares are issued based on an exchange ratio of one share for each OP Unit. The shares are issued in exchange for OP Units in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(2) thereof. During 1999, a total of 963,951 shares of Class A Common Stock were issued in exchange for OP Units. On September 15, 1999, AIMCO completed a direct placement of 1,382,580 shares of Class A Common Stock at a net price of $39.50 per share to five institutional investors. The net proceeds of approximately $54.6 million were used to repay outstanding indebtedness under the Company's credit facility. 11 13 During 1999, the Company repurchased 205,300 shares of Class A Common Stock at a net price of $8.0 million. ITEM 6. SELECTED FINANCIAL DATA The following historical selected financial data for AIMCO is based on audited financial statements. This information should be read in conjunction with such financial statements, including the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included herein.
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1999 1998 1997 1996 1995 ---------- ---------- ---------- -------- -------- OPERATING DATA: RENTAL PROPERTY OPERATIONS: Rental and other income................................... $ 533,917 $ 377,139 $ 193,006 $100,516 $ 74,947 Property operating expenses............................... (214,693) (147,541) (76,168) (38,400) (30,150) Owned property management expenses........................ (15,429) (11,013) (6,620) (2,746) (2,276) Depreciation.............................................. (131,753) (84,635) (37,741) (19,556) (15,038) ---------- ---------- ---------- -------- -------- Income from property operations........................... 172,042 133,950 72,477 39,814 27,483 ---------- ---------- ---------- -------- -------- SERVICE COMPANY BUSINESS: Management fees and other income.......................... 43,455 24,103 13,937 8,367 8,132 Management and other expenses............................. (25,470) (16,960) (10,961) (6,150) (5,731) ---------- ---------- ---------- -------- -------- Income from service company business...................... 17,985 7,143 2,976 2,217 2,401 ---------- ---------- ---------- -------- -------- General and administrative expenses....................... (13,112) (13,568) (5,396) (1,512) (1,804) Interest expense.......................................... (140,094) (89,424) (51,385) (24,802) (13,322) Interest income........................................... 62,721 29,368 8,676 523 658 Equity in losses of unconsolidated real estate partnerships............................................ (4,467) (4,854) (1,798) -- -- Equity in earnings (losses) of unconsolidated subsidiaries............................................ (2,818) 11,570 4,636 -- -- Minority interest in other entities....................... (900) (468) 1,008 (111) -- Amortization.............................................. (5,860) (8,735) (948) (500) (428) ---------- ---------- ---------- -------- -------- Income from operations.................................... 85,497 64,982 30,246 15,629 14,988 Gain (loss) on disposition of properties.................. (1,785) 4,674 2,720 44 -- ---------- ---------- ---------- -------- -------- Income before extraordinary item and minority interest in operating partnership................................... 83,712 69,656 32,966 15,673 14,988 Extraordinary item -- early extinguishment of debt........ -- -- (269) -- -- ---------- ---------- ---------- -------- -------- Income before minority interest in operating partnership............................................. 83,712 69,656 32,697 15,673 14,988 Minority interest in operating partnership................ (2,753) (5,182) (4,064) (2,689) (1,613) ---------- ---------- ---------- -------- -------- Net income................................................ $ 80,959 $ 64,474 $ 28,633 $ 12,984 $ 13,375 ========== ========== ========== ======== ======== OTHER INFORMATION: Total owned or controlled properties (end of period)...... 373 242 147 94 56 Total owned or controlled apartment units (end of period)................................................. 106,148 63,086 40,039 23,764 14,453 Total equity apartment units (end of period).............. 133,113 170,243 83,431 3,611 6,349 Units under management (end of period).................... 124,201 146,034 69,587 15,434 13,245 Basic earnings per common share........................... $ 0.39 $ 0.84 $ 1.09 $ 1.05 $ 0.86 Diluted earnings per common share......................... $ 0.38 $ 0.80 $ 1.08 $ 1.04 $ 0.86 Dividends paid per common share........................... $ 2.50 $ 2.25 $ 1.85 $ 1.70 $ 1.66 BALANCE SHEET INFORMATION: Real estate, before accumulated depreciation.............. $4,508,535 $2,802,598 $1,657,207 $865,222 $477,162 Real estate, net of accumulated depreciation.............. 4,092,038 2,573,718 1,503,922 745,145 448,425 Total assets...................................... 5,684,951 4,248,800 2,100,510 827,673 480,361 Total indebtedness................................ 2,584,289 1,660,715 808,530 522,146 268,692 Company-obligated mandatory redeemable convertible preferred securities of a subsidiary trust.............. 149,500 149,500 -- -- -- Stockholders' equity...................................... 2,262,828 1,902,564 1,045,300 215,749 169,032
12 14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements in certain circumstances. Certain information included in this Report, the Company's Annual Report to Stockholders and other filings (collectively "SEC Filings") under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (as well as information communicated orally or in writing between the dates of such SEC Filings) contains or may contain information that is forward looking, including, without limitation, statements regarding the effect of acquisitions, the Company's future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward looking statements and will be affected by a variety of risks and factors including, without limitation, national and local economic conditions, the general level of interest rates, terms of governmental regulations that affect the Company and interpretations of those regulations, the competitive environment in which the Company operates, financing risks, including the risk that the Company's cash flows from operations may be insufficient to meet required payments of principal and interest, real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets, acquisition and development risks, including failure of such acquisitions to perform in accordance with projections, and possible environmental liabilities, including costs which may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Company. In addition, the Company's continued qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code. Readers should carefully review the Company's financial statements and the notes thereto, as well as the risk factors described in the SEC Filings. The following discussion and analysis of the results of operations and financial condition of the Company should be read in conjunction with the financial statements incorporated by reference in Item 8 of this Annual Report on Form 10-K. The following discussion of results of operations is based on net income calculated under accounting principles generally accepted in the United States. The Company, however, considers funds from operations, less a reserve for capital replacements, to be a more meaningful measure of economic performance. RESULTS OF OPERATIONS Comparison of the Year Ended December 31, 1999 to the Year Ended December 31, 1998 NET INCOME The Company recognized net income of $81.0 million, and net income attributable to common stockholders of $24.1 million, for the year ended December 31, 1999, compared to net income and net income attributable to common stockholders of $64.5 million and $37.9 million, respectively, for the year ended December 31, 1998. Net income attributable to common stockholders represents net income less dividends on preferred stock. The increase in net income of $16.5 million, or 25.6%, was primarily the result of the following: - the increase in net "same store" property results; - the acquisition of 22,459 units in 82 apartment communities during 1998; - the acquisition of 12,721 units in 28 apartment communities during 1999; - the acquisition of Ambassador Apartments, Inc. in May 1998 which impacted the second half of 1998; - the acquisition of the Insignia Multi-family Business in October 1998 which primarily impacted 1999; - the completion of the Insignia Properties Trust Merger in February 1999; - the purchase of $271 million in limited partnership interests from unaffiliated third parties; and - an increase in interest income on notes receivable from unconsolidated real estate partnerships. 13 15 The effect of the above on net income was partially offset by the sale of eight properties in 1999 and five properties in 1998. These factors are discussed in more detail in the following paragraphs. Rental Property Operations The increases in rental property operations resulted primarily from improved same store sales results, acquisitions of properties in 1998 and 1999, and through the purchase of limited partnership interests from unaffiliated third parties which gave the Company a controlling interest in partnerships owning 125 properties in 1999. Rental and other property revenues from the Company's owned and controlled properties totaled $533.9 million for the year ended December 31, 1999, compared to $377.1 million for the year ended December 31, 1998, an increase of $156.8 million, or 41.6%. Property operating expenses totaled $214.7 million for the year ended December 31, 1999, compared to $147.5 million for the year ended December 31, 1998, an increase of $67.2 million, or 45.6%. Property operating expenses consist of on-site payroll costs, utilities (net of reimbursements received from tenants), contract services, turnover costs, repairs and maintenance, advertising and marketing, property taxes and insurance. Owned property management expenses, representing the costs of managing the Company's owned or controlled properties, totaled $15.4 million for the year ended December 31, 1999, compared to $11.0 million for the year ended December 31, 1998, an increase of $4.4 million, or 40.0%. Service Company Business Income from the service company business was $18.0 million for the year ended December 31, 1999, compared to $7.1 million for the year ended December 31, 1998, an increase of $10.9 million or 153.5%. The increase was primarily due to management contracts acquired in the Insignia and IPT mergers that are held by the Company, as well as the transfer of majority-owned management contracts from the unconsolidated management companies to the AIMCO operating partnership. When the Company owns at least a 40% interest in a real estate partnership, the management contract with that real estate partnership is assigned to the AIMCO operating partnership increasing the amount of revenues recognized by the consolidated service company operations. General and Administrative Expenses General and administrative expenses totaled $13.1 million for the year ended December 31, 1999, compared to $13.6 million for the year ended December 31, 1998, a decrease of $0.5 million, or 3.7%. The decrease in general and administrative expenses is primarily due to efforts to align expenses with the revenues they help generate. The results of these efforts increased the amount of expenses allocated to both consolidated and unconsolidated service company management expenses. Interest Expense Interest expense, which includes the amortization of deferred finance costs, totaled $140.1 million for the year ended December 31, 1999, compared to $89.4 million for the year ended December 31, 1998, an increase of $50.7 million or 56.7%. The increase was primarily due to interest expense incurred in connection with 1999 and 1998 acquisitions, as well as the consolidation of an additional 125 properties when control was obtained. Interest Income Interest income totaled $62.7 million for the year ended December 31, 1999, compared to $29.4 million for the year ended December 31, 1998, an increase of $33.3 million or 113.3%. The Company holds investments in notes receivable which were either extended by the Company and are carried at the face amount plus accrued interest ("par value notes") or were made by predecessors whose positions have been acquired by the Company at a discount and are carried at the acquisition amount using the cost recovery 14 16 method ("discounted notes"). $32.5 million of the increase in interest income is due to the recognition of interest income that had previously been deferred and portions of the related discounts for certain discounted notes. Based upon closed or pending transactions, market conditions, and improved operations of the obligor, the collectibility of such notes is now believed to be probable and the amounts and timing of collections are estimable. The remaining increase is primarily related to other recurring interest earned on both the par value and discounted notes made by the Company to partnerships in which the Company acts as the general partner and interest earned on notes receivable acquired in the mergers with Insignia and IPT. Comparison of the Year Ended December 31, 1998 to the Year Ended December 31, 1997 NET INCOME The Company recognized net income of $64.5 million, and net income attributable to common stockholders of $37.9 million, for the year ended December 31, 1998, compared to net income and net income attributable to common stockholders of $28.6 million and $26.3 million, respectively, for the year ended December 31, 1997. Net income attributable to common stockholders represents net income less dividends on preferred stock. The increase in net income of $35.9 million, or 125.5%, was primarily the result of the following: - the increase in net "same store" property results; - the acquisition of 11,706 units in 44 apartment communities during 1997; - the acquisition of 22,459 units in 82 apartment communities during 1998; - the acquisition of NHP Incorporated ("NHP") in December 1997 which impacted operations in 1998; - the acquisition of Ambassador Apartments, Inc. in May 1998 which impacted the second half of 1998; - the acquisition of the Insignia Multi-family Business in October 1998 which impacted the last quarter of 1998; and - an increase in interest income on notes receivable from unconsolidated real estate partnerships. The effect of the above on net income was partially offset by the sale of five properties in 1998 and five properties in 1997. These factors are discussed in more detail in the following paragraphs. Rental Property Operations The increases in rental property operations resulted primarily from improved same store sale results, acquisitions of properties in 1997 and 1998, and acquisitions of controlling interests in properties through the NHP, Ambassador and Insignia mergers. Rental and other property revenues from the Company's owned and controlled properties totaled $377.1 million for the year ended December 31, 1998, compared to $193.0 million for the year ended December 31, 1997, an increase of $184.1 million, or 95.4%. Property operating expenses totaled $147.5 million for the year ended December 31, 1998, compared to $76.2 million for the year ended December 31, 1997, an increase of $71.3 million, or 93.6%. Property operating expenses consist of on-site payroll costs, utilities (net of reimbursements received from tenants), contract services, turnover costs, repairs and maintenance, advertising and marketing, property taxes and insurance. Owned property management expenses, representing the costs of managing the Company's owned or controlled properties, totaled $11.0 million for the year ended December 31, 1998, compared to $6.6 million for the year ended December 31, 1997, an increase of $4.4 million, or 66.7%. Service Company Business Income from the service company business was $7.1 million for the year ended December 31, 1998, compared to $3.0 million for the year ended December 31, 1997, an increase of $4.1 million or 136.7%. The increase was primarily due to management contracts acquired in the Insignia merger that are held by the 15 17 Company, as well as the transfer of majority-owned management contracts from the management companies to the AIMCO operating partnership. When the Company owns at least a 40% interest in a real estate partnership, the management contract with that real estate partnership is assigned to the AIMCO operating partnership increasing the amount of revenues recognized by the consolidated service company operations. General and Administrative Expenses General and administrative expenses totaled $13.6 million for the year ended December 31, 1998, compared to $5.4 million for the year ended December 31, 1997, an increase of $8.2 million, or 151.9%. The increase in general and administrative expenses is primarily due to additional corporate costs and additional employee salaries associated with the purchase of NHP Real Estate Companies in June 1997 and the mergers with NHP Incorporated in December 1997, Ambassador Apartments, Inc. in May 1998 and Insignia Financial Group, Inc. in October 1998. In addition, due to the growth of the Company, several new departments have been added including legal, tax and Limited Partnership administration, as well as increased levels of personnel in the accounting and finance departments. Interest Expense Interest expense, which includes the amortization of deferred finance costs, totaled $89.4 million for the year ended December 31, 1998, compared to $51.4 million for the year ended December 31, 1997, an increase of $38.0 million or 73.9%. The increase was primarily due to interest expense incurred in connection with the acquisition of interests in Ambassador Apartments, Inc. and Insignia Financial Group, Inc. and interest expense incurred in connection with 1998 and 1997 acquisitions. Interest Income Interest income totaled $29.4 million for the year ended December 31, 1998, compared to $8.7 million for the year ended December 31, 1997. The increase is primarily due to interest earned on the increased average outstanding balances of notes receivable from unconsolidated real estate partnerships and subsidiaries. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1999, the Company had $101.6 million in cash and cash equivalents and $84.6 million of restricted cash, primarily consisting of reserves and impounds held by lenders for capital expenditures, property taxes and insurance. In addition, cash, cash equivalents and restricted cash are held by partnerships and subsidiaries which are not presented on a consolidated basis. The Company's principal demands for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital improvements, acquisitions of and investments in properties, dividends paid to stockholders and distributions paid to limited partners. The Company considers its cash provided by operating activities to be adequate to meet short-term liquidity demands. In August 1999, the Company closed a $300 million revolving credit facility arranged by Bank of America, N.A. BankBoston, N.A. and First Union National Bank and comprised of a total of nine lender participants. The obligations under the credit facility are secured by certain non-real estate assets of the Company. The existing lines of credit were terminated. The credit facility is used for general corporate purposes and has a two-year term with two one-year extensions. The annual interest rate under the credit facility is based on either LIBOR or a base rate which is the higher of Bank of America's reference rate or 0.5% over the federal funds rate, plus, in either case, an applicable margin. The margin ranges between 2.05% and 2.55%, in the case of LIBOR-based loans, and between 0.55% and 1.05%, in the case of base rate loans, based upon a fixed charge coverage ratio. The weighted average interest rate at December 31, 1999 was 8.84%. The amount available under the credit facility at December 31, 1999 was $90.8 million. As of December 31, 1999, 96.8% of the Company's owned or controlled properties and 45.4% of its total assets were encumbered by debt. The Company had total outstanding indebtedness of $2,584.3 million, of which $2,375.1 million was secured by properties. The Company's indebtedness is comprised of $1,954.3 million of secured long-term financing, $420.8 million of secured tax-exempt bond financing and $209.2 in 16 18 unsecured short-term financing. As of December 31, 1999, approximately 9% of the Company's indebtedness bears interest at variable rates. General Motors Acceptance Corporation has made 113 loans (the "GMAC Loans") to property owning partnerships of the Company, each of which is secured by the property owned by such partnership. The 113 GMAC Loans had an aggregate outstanding principal balance of $570.1 million as of December 31, 1999. Certain GMAC Loans are cross-collateralized with certain other GMAC Loans. Other than certain GMAC Loans, none of the Company's debt is subject to cross-collateralization provisions. The weighted average interest rate on the Company's secured, long-term notes payable was 6.66% with a weighted average maturity of 12.8 years as of December 31, 1999. At December 31, 1999, the weighted average interest rate on the Company's unsecured short-term financing was 8.84%. During the year ended December 31, 1999, the Company issued $410.3 million of long-term fixed rate, fully amortizing notes payable with a weighted average interest rate of 7.3%. Each of the notes is individually secured by one of forty properties with no cross-collateralization. The Company used the net proceeds after transaction costs of $373.6 million to repay existing debt. During the year ended December 31, 1999, the Company has also assumed $110.1 million of long-term fixed rate, fully amortizing notes payable with a weighted average interest rate of 7.9% in connection with the acquisition of properties. Each of the notes is individually secured by one of thirteen properties with no cross-collateralization. The Company expects to meet its long-term liquidity requirements, such as refinancing debt and property acquisitions, through long-term borrowings, both secured and unsecured, the issuance of debt or equity securities (including OP Units) and cash generated from operations. In August 1998, AIMCO and the AIMCO operating partnership filed a shelf registration statement with the Securities and Exchange Commission ("SEC") with respect to an aggregate of $1,268 million of debt and equity securities of AIMCO (of which $268 million was carried forward from AIMCO's 1997 shelf registration statement) and $500 million of debt securities of the AIMCO operating partnership. The registration statement was declared effective by the SEC on December 10, 1998. As of December 31, 1999, the Company had $1,088 million available and the AIMCO operating partnership had $500 million available from this registration statement. The Company expects to finance acquisition of real estate interests with cash from operations or the issuance of equity securities and debt. CAPITAL EXPENDITURES For the year ended December 31, 1999, the Company spent a total of $291.7 million for capital expenditures on its portfolio of assets. The Company's share of those expenditures for its conventional assets are as follows: $38.4 million for capital replacements (expenditures for routine maintenance of a property); $54.8 million for Initial Capital Expenditures ("ICE", expenditures at a property that have been identified, at the time the property is acquired, as expenditures to be incurred within one year of the acquisition); and $43.3 million for construction and capital enhancements (amenities that add a material new feature or revenue source at a property). The expenditures for capital replacements in 1999 exceeded the provision of $300 per apartment provided for by the Company by $9.7 million which represents unspent capital replacements and ICE from prior years. These expenditures were funded by net cash provided by operating activities, working capital reserves, and borrowings under the Company's credit facility. ICE and capital enhancements will primarily be funded by cash from operating activities and borrowings under the Company's credit facility. 17 19 The Company's accounting treatment of various capital and maintenance costs is detailed in the following table:
DEPRECIABLE LIFE EXPENDITURE ACCOUNTING TREATMENT IN YEARS - ----------- -------------------- ---------------- Initial capital expenditures........................ capitalize 5 to 15 Capital enhancements................................ capitalize 5 to 30 Capital replacements: Carpet/vinyl replacement............................ capitalize 5 Carpet cleaning..................................... expense N/A Major appliance replacement (refrigerators, stoves, dishwashers, washers/dryers)...................... capitalize 5 Cabinet replacement................................. capitalize 5 Major new landscaping............................... capitalize 5 Seasonal plantings and landscape replacements....... expense N/A Roof replacements................................... capitalize 15 Roof repairs........................................ expense N/A Model furniture..................................... capitalize 5 Office equipment.................................... capitalize 5 Exterior painting, significant...................... capitalize 5 Interior painting................................... expense N/A Parking lot repairs................................. expense N/A Parking lot repaving................................ capitalize 15 Equipment repairs................................... expense N/A General policy for capitalization................... capitalize amounts Various in excess of $ 250
FUNDS FROM OPERATIONS The Company measures its economic profitability based on funds from operations ("FFO"), less a reserve for capital replacements of $300 per apartment unit. The Company's management believes that FFO, less such a reserve, provides investors with an understanding of the Company's ability to incur and service debt and make capital expenditures. The Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss), computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains and losses from debt restructuring and sales of property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. The Company calculates FFO based on the NAREIT definition, as adjusted for minority interest in the AIMCO operating partnership, amortization, the non-cash deferred portion of the income tax provision for unconsolidated subsidiaries and less the payment of dividends on preferred stock. FFO should not be considered an alternative to net income or net cash flows from operating activities, as calculated in accordance with GAAP, as an indication of the Company's performance or as a measure of liquidity. FFO is not necessarily indicative of cash available to fund future cash needs. In addition, there can be no assurance that the Company's basis for computing FFO is comparable with that of other real estate investment trusts. 18 20 For the years ended December 31, 1999, 1998 and 1997, the Company's FFO is calculated as follows (amounts in thousands):
1999 1998 1997 --------- --------- --------- Income before minority interest in operating partnership.................................... $ 83,712 $ 69,656 $ 32,697 Extraordinary item............................... -- -- 269 (Gain) loss on disposition of properties......... 1,785 (4,674) (2,720) Real estate depreciation, net of minority interests...................................... 121,689 80,369 33,751 Real estate depreciation related to unconsolidated entities........................ 104,764 34,840 9,864 Amortization..................................... 36,731 26,177 2,535 Deferred taxes................................... 1,763 9,215 4,894 TOPR's interest expense.......................... 4,858 -- -- Preferred stock dividends........................ (32,905) (20,701) (135) Preferred OP Unit distributions.................. (1,038) (136) -- --------- --------- --------- Funds From Operations (FFO)...................... $ 321,359 $ 194,746 $ 81,155 ========= ========= ========= Weighted average number of common shares, common Share equivalents and OP Units outstanding: Common stock................................... 63,644 45,187 24,055 Common stock equivalents....................... 91 2,437 381 Preferred stock, OP Units, and other securities convertible into common stock............... 8,625 2,463 1,006 OP Units....................................... 6,313 6,732 3,677 --------- --------- --------- 78,673 56,819 29,119 ========= ========= ========= CASH FLOW INFORMATION: Cash flow provided by operating activities....... $ 253,257 $ 148,414 $ 73,032 Cash flow used in investing activities........... (281,106) (328,321) (717,663) Cash flow provided by financing activities....... 58,148 214,124 668,549
CONTRIBUTION TO FREE CASH FLOW The Company seeks to improve funds from operations, less a reserve for capital replacements, on a per share basis. In this regard, in addition to the year-to-year comparative discussion, the Company has provided disclosure (see Footnote 23 in the accompanying Notes to Consolidated Financial Statements) on the contribution (separated between consolidated and unconsolidated activity) to the Company's free cash flow from several components of the Company and a reconciliation of free cash flow to FFO, less a reserve for capital replacements, and to net income for the year ended December 31, 1999. The Company defines free cash flow as FFO, less a reserve for capital replacements, plus interest expense and preferred stock dividends. The contributors to the Company's free cash flow of $528 million were real estate -- $421 million (80%), service businesses -- $51 million (10%), recurring interest income -- $32 million (6%) and transactions (fees and recovery of loan discounts) -- $37 million (7%), less general and administrative expenses -- $13 million (3%). Expenses to arrive at FFO, less a reserve for capital replacements, were interest expense -- $201 million, and preferred stock and preferred OP unit dividends -- $34 million. This results in FFO, less a reserve for capital replacements, of $293 million of which $180 million (62%) is from consolidated activities and $113 million (38%) is from unconsolidated activities. The real estate free cash flow contribution of $443 million before a $22 million minority interest deduction is concentrated in conventional apartment properties, which comprise $389 million or 88% of the real estate free cash flow contribution. Conventional apartments with rents of $500 per month or higher comprise $332 million or 85% of the real estate free cash flow contribution from conventional units. Conventional apartments with rents of $600 per month or higher comprise $222 million or 57% of the real estate free cash flow contribution from conventional units. Overall, the Company has balanced contributions to conventional real estate free cash flow from monthly rents of less than $500 per unit to monthly rents greater than $800 per unit. 19 21 Contributions to conventional real estate free cash flow for 1999 were as follows:
TOTAL CONTR. % -------- -------- Average monthly rent greater than $800 per unit............. $ 78,100 21% Average monthly rent $700 to $800 per unit.................. 57,627 15% Average monthly rent $600 to $700 per unit.................. 86,133 22% Average monthly rent $500 to $600 per unit.................. 110,499 28% Average monthly rent $500 per unit.......................... 56,385 14% -------- --- $388,744 100% ======== ===
The service businesses contributed $51 million (10%) to free cash flow. The service businesses provide management services to properties and partnerships and includes Buyers Access, the nation's largest group purchasing organization serving the apartment industry. Management contracts contribute $47 million (92%) to the service businesses contribution. $36 million (75%) of the management contract contribution is derived from properties the Company controls through economic ownership or its general partner position. $10 million (22%) of the management contract contribution is from long-term management contracts. Less than $1 million is contributed from short-term third party management contracts (30 day cancelable). Buyer's Access contributed $3 million or 6% to the service businesses contribution. The Company received recurring interest income from par value notes and other receivables and interest bearing accounts of $32 million (50% of total interest income in 1999). In addition, the Company has realized interest income from recoveries of notes receivable that were acquired at a discount to actual face value. As the Company improved property operations, some of these notes have become collectible. In 1999, the Company recognized $32 million (50% of total interest income) in recoveries from notes purchased at a discount. Fees contributed $5 million (1%) to free cash flow contribution. Fees are earned in partnership sales and financing transactions. The Company considers fees and interest income from notes purchased at a discount as transactional. Together, the transactional contribution was $37 million (7%) of free cash flows contribution. Footnote 23 in the accompanying Notes to Consolidated Financial Statements provides additional detail on each component of free cash flow. We believe this disclosure is complementary to the previous year-to-year results of operations comparisons. CONTINGENCIES Pending Investigations of HUD Management Arrangements In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting documents relating to arrangements whereby NHP or any of its affiliates provides compensation to owners of HUD-assisted or HUD-insured multi-family projects in exchange for or in connection with property management of a HUD project. In July 1999, NHP received a grand jury subpoena requesting documents relating to the same subject matter as the HUD IG subpoenas and NHP's operation of a group purchasing program created by NHP, known as Buyers Access. To date, neither the HUD IG nor the grand jury has initiated any action against NHP or AIMCO or, to NHP's or AIMCO's knowledge, any owner of a HUD property managed by NHP. AIMCO believes that NHP's operations and programs are in compliance, in all material respects, with all laws, rules and regulations relating to HUD-assisted or HUD-insured properties. AIMCO is cooperating with the investigations and does not believe that the investigations will result in a material adverse impact on its operations. However, as with any similar investigation, there can be no assurance that these will not result in material fines, penalties or other costs. INFLATION Substantially all of the leases at the Company's apartment properties are for a period of twelve months or less, allowing, at the time of renewal, for adjustments in the rental rate and the opportunity to re-lease the apartment unit at the prevailing market rate. The short term nature of these leases generally serves to 20 22 minimize the risk to the Company of the adverse effect of inflation and the Company does not believe that inflation has had a material adverse impact on its revenues. ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary market risk exposure relates to changes in interest rates. The Company is not subject to any foreign currency exchange rate risk or commodity price risk, or any other material market rate or price risks. The Company uses predominantly long-term, fixed-rate and self-amortizing non-recourse mortgage debt in order to avoid the refunding or repricing risks of short-term borrowings. The Company uses short-term debt financing and working capital primarily to fund acquisitions and generally expects to refinance such borrowings with proceeds from operating activities, equity offerings or long-term debt financings. The Company had $240.9 million of variable rate debt outstanding at December 31, 1999, which represents 9% of the Company's total outstanding debt. Based on this level of debt, an increase in interest rates of 1% would result in the Company's income and cash flows being reduced by $2.4 million on an annual basis. At December 31, 1999, the Company had $2,343.4 million of fixed rate debt outstanding. The partnership debt secured by individual properties in an aggregate amount of $51.8 million, $92.7 million, $66.9 million, $139.7 million and $205.7 million will mature in the years 2000, 2001, 2002, 2003 and 2004, respectively. The estimated aggregate fair value of the Company's cash and cash equivalents, receivables, payables and short-term unsecured debt as of December 31, 1999 is assumed to approximate their carrying value due to their relatively short terms. Management further believes that the fair market value of the Company's secured tax-exempt bond debt and secured long-term debt approximates their carrying value, based on market comparisons to similar types of debt instruments having similar maturities. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The independent auditor's reports, consolidated financial statements and schedules listed in the accompanying index are filed as part of this report and incorporated herein by this reference. See "Index to Financial Statements" on page F-1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 21 23 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information regarding the Company's Directors required by this item is presented under the caption "Board of Directors and Officers" in AIMCO's proxy statement for its 2000 annual meeting of stockholders and is incorporated herein by reference. The directors and executive officers of the Company as of February 29, 2000 are:
NAME AGE FIRST ELECTED POSITION - ---- --- ------------- -------- Terry Considine..... 52 July 1994 Chairman of the Board of Directors and Chief Executive Officer Peter K. 55 July 1994 Vice Chairman of the Board of Directors Kompaniez......... and President Thomas W. Toomey.... 39 January 1996 Chief Operating Officer Harry G. Alcock..... 36 July 1996 Executive Vice President and Chief Investment Officer Joel F. Bonder...... 51 December 1997 Executive Vice President, General Counsel and Secretary Patrick J. Foye..... 43 May 1998 Executive Vice President Lance J. Graber..... 38 October 1999 Executive Vice President -- Acquisitions Steven D. Ira....... 49 July 1994 Co-Founder and Executive Vice President -- Property Operations Paul J. McAuliffe... 43 February 1999 Executive Vice President and Chief Financial Officer Richard S. 68 July 1994 Director, Chairman of the Audit Ellwood........... Committee J. Landis Martin.... 54 July 1994 Director, Chairman of the Compensation Committee Thomas L. Rhodes.... 60 July 1994 Director John D. Smith....... 71 November 1994 Director
The following is a biographical summary of the experience of the current directors and executive officers of the Company for the past five years or more. Terry Considine. Mr. Considine has been Chairman of the Board of Directors and Chief Executive Officer of the Company since July 1994. Mr. Considine serves as Chairman and director of Asset Investors Corporation ("Asset Investors") and Commercial Assets, Inc. ("Commercial Assets"), two other public real estate investment trusts. Mr. Considine has been and remains involved as a principal in a variety of other business activities. Peter K. Kompaniez. Mr. Kompaniez has been Vice Chairman of the Board of Directors since July 1994 and was appointed President in July 1997. Mr. Kompaniez has also served as Chief Operating Officer of NHP Incorporated ("NHP"), which was acquired by the Company in December 1997. From 1986 to 1993, he served as President and Chief Executive Officer of Heron Financial Corporation ("HFC"), a United States holding company for Heron International, N.V.'s real estate and related assets. While at HFC, Mr. Kompaniez administered the acquisition, development and disposition of approximately 8,150 apartment units (including 6,217 units that have been acquired by the Company) and 3.1 million square feet of commercial real estate. Thomas W. Toomey. Mr. Toomey served as Senior Vice President-Finance and Administration of the Company from January 1996 to March 1997, when he was promoted to Executive Vice President-Finance and Administration. Mr. Toomey served as Executive Vice President -- Finance and Administration until December 1999, when he was appointed Chief Operating Officer. From 1990 until 1995, Mr. Toomey served in a similar capacity with Lincoln Property Company ("LPC") as Vice President/Senior Controller and 22 24 Director of Administrative Services of Lincoln Property Services where he was responsible for LPC's computer systems, accounting, tax, treasury services and benefits administration. From 1984 to 1990, he was an audit manager with Arthur Andersen & Co. where he served real estate and banking clients. Mr. Toomey received a B.S. in Business Administration/Finance from Oregon State University. Harry G. Alcock. Mr. Alcock served as a Vice President of the Company from July 1996 to October 1997, when he was promoted to Senior Vice President-Acquisitions. Mr. Alcock served as Senior Vice President-Acquisitions until October 1999, when he was promoted to Executive Vice President and Chief Investment Officer. Mr. Alcock has had responsibility for acquisition and financing activities of the Company since July 1994. From June 1992 until July 1994, Mr. Alcock served as Senior Financial Analyst for PDI and HFC. From 1988 to 1992, Mr. Alcock worked for Larwin Development Corp., a Los Angeles-based real estate developer, with responsibility for raising debt and joint venture equity to fund land acquisitions and development. From 1987 to 1988, Mr. Alcock worked for Ford Aerospace Corp. He received his B.S. from San Jose State University. Joel F. Bonder. Mr. Bonder was appointed Executive Vice President, General Counsel and Secretary of the Company effective December 1997. Prior to joining the Company, Mr. Bonder served as Senior Vice President and General Counsel of NHP from April 1994 until December 1997. Mr. Bonder served as Vice President and Deputy General Counsel of NHP from June 1991 to March 1994 and as Associate General Counsel of NHP Incorporated from 1986 to 1991. From 1983 to 1985, Mr. Bonder practiced with the Washington, D.C. law firm of Lane & Edson, P.C. and from 1979 to 1983 practiced with the Chicago law firm of Ross and Hardies. Mr. Bonder received a B.A. from the University of Rochester and a J.D. from Washington University School of Law. Patrick J. Foye. Mr. Foye was appointed Executive Vice President of the Company in May 1998. He is responsible for acquisitions of partnership securities, consolidation of minority interests, and corporate and other acquisitions. Prior to joining the Company, Mr. Foye was a Merger and Acquisitions Partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power Authority and serves as a member of the New York State Privatization Council. He received a B.A. from Fordham College and a J.D. from Fordham Law School and was Associate Editor of the Fordham Law Review. Lance J. Graber. Mr. Graber was appointed Executive Vice President-Acquisitions of the Company in October 1999. His principal business function is acquisitions. Prior to joining the Company, Mr. Graber was an Associate from 1991 through 1992 and then a Vice President from 1992 through 1994 at Credit Suisse First Boston engaged in real estate financial advisory services and principal investing. He was a Director there from 1994 to May 1999, during which time he supervised a staff of seven in the making of principal investments in hotel, multi-family and assisted living properties. Mr. Graber received a B.S. and an M.B.A. from the Wharton School of the University of Pennsylvania. Steven D. Ira. Mr. Ira is a Co-Founder of the Company and has served as Executive Vice President -- Property Operations of the Company since July 1994. From 1987 until July 1994, he served as President of Property Asset Management ("PAM"). Prior to merging his firm with PAM in 1987, Mr. Ira acquired extensive experience in property management. Between 1977 and 1981 he supervised the property management of over 3,000 apartment and mobile home units in Colorado, Michigan, Pennsylvania and Florida, and in 1981 he joined with others to form the property management firm of McDermott, Stein and Ira. Mr. Ira served for several years on the National Apartment Manager Accreditation Board and is a former president of both the National Apartment Association and the Colorado Apartment Association. Mr. Ira is the sixth individual elected to the Hall of Fame of the National Apartment Association in its 54-year history. He holds a Certified Apartment Property Supervisor (CAPS) and a Certified Apartment Manager designation from the National Apartment Association, a Certified Property Manager (CPM) designation from the National Institute of Real Estate Management (IREM) and he is a member of the Boards of Directors of the National Multi-Housing Council, the National Apartment Association and the Apartment Association of Greater Orlando. Mr. Ira received a B.S. from Metropolitan State College in 1975. 23 25 Paul J. McAuliffe. Mr. McAuliffe has been Executive Vice President of the Company since February 1999 and was appointed Chief Financial Officer in October 1999. Prior to joining the Company, Mr. McAuliffe was Senior Managing Director of Secured Capital Corp and prior to that time had been a Managing Director of Smith Barney, Inc. from 1993 to 1996, where he was senior member of the underwriting team that lead AIMCO's initial public offering in 1994. Mr. McAuliffe was also a Managing Director and head of the real estate group at CS First Boston from 1990 to 1993 and he was a Principal in the real estate group at Morgan Stanley & Co., Inc. where he worked from 1983 to 1990. Mr. McAuliffe received a B.A. from Columbia College and an M.B.A. from University of Virginia, Darden School. Richard S. Ellwood. Mr. Ellwood was appointed a director of the Company in July 1994. Mr. Ellwood is currently Chairman of the Audit Committee and a member of the Compensation Committee. Mr. Ellwood is the founder and President of R.S. Ellwood & Co., Incorporated, a real estate investment banking firm. Prior to forming R.S. Ellwood & Co., Incorporated in 1987, Mr. Ellwood had 31 years experience on Wall Street as an investment banker, serving as: Managing Director and senior banker at Merrill Lynch Capital Markets from 1984 to 1987; Managing Director at Warburg Paribas Becker from 1978 to 1984; general partner and then Senior Vice President and a director at White, Weld & Co. from 1968 to 1978; and in various capacities at J.P. Morgan & Co. from 1955 to 1968. Mr. Ellwood currently serves as a director of Felcor Lodging Trust, Incorporated and Florida East Coast Industries, Inc. J. Landis Martin. Mr. Martin was appointed a director of the Company in July 1994 and became Chairman of the Compensation Committee on March 19, 1998. Mr. Martin is a member of the Audit Committee. Mr. Martin has served as President and Chief Executive Officer of NL Industries, Inc., a manufacturer of titanium dioxide since 1987. Mr. Martin has served as Chairman of Tremont Corporation ("Tremont"), a holding company operating through its affiliates Titanium Metals Corporation ("TIMET") and NL Industries, Inc. ("NL"), since 1990 and as Chief Executive Officer and a director of Tremont since 1988. Mr. Martin has served as Chairman of TIMET, an integrated producer of titanium since 1987 and Chief Executive Officer since January, 1995. From 1990 until its acquisition by a predecessor of Halliburton Company ("Halliburton") in 1994, Mr. Martin served as Chairman of the Board and Chief Executive Officer of Baroid Corporation, an oilfield services company. In addition to Tremont, NL and TIMET, Mr. Martin is a director of Halliburton, which is engaged in the petroleum services, hydrocarbon and engineering industries, and Crown Castle International Corporation, a telecommunications company. Thomas L. Rhodes. Mr. Rhodes was appointed a Director of the Company in July 1994 and is currently a member of the Audit and Compensation Committees. Mr. Rhodes has served as the President and Director of National Review magazine since November 1992, where he has also served as a Director since 1988. From 1976 to 1992, he held various positions at Goldman, Sachs & Co. and was elected a General Partner in 1986 and served as a General Partner from 1987 until November 1992. He is currently Co-Chairman of the Board, Co-Chief Executive Officer and a Director of Asset Investors and Commercial Assets. He also serves as a Director of Delphi Financial Group and its subsidiaries, Delphi International Ltd., Oracle Reinsurance Company and The Lynde and Harry Bradley Foundation. John D. Smith. Mr. Smith was appointed a director of the Company in November 1994. Mr. Smith is a member of the Compensation Committee and the Audit Committee. Mr. Smith is Principal and President of John D. Smith Developments. Mr. Smith has been a shopping center developer, owner and consultant for over 8.6 million square feet of shopping center projects including Lenox Square in Atlanta, Georgia. Mr. Smith is a Trustee and former President of the International Council of Shopping Centers and was selected to be a member of the American Society of Real Estate Counselors. Mr. Smith served as a director for Pan-American Properties, Inc. (National Coal Board of Great Britain) formerly known as Continental Illinois Properties. He also serves as a director of American Fidelity Assurance Companies and is retained as an advisor by Shop System Study Society, Tokyo, Japan. Additional information required by this item is presented under the caption "Other Matters -- Section 16(a) Compliance" in the Company's proxy statement for its 2000 annual meeting of stockholders and is incorporated herein by reference. 24 26 ITEM 11. EXECUTIVE COMPENSATION The information required by this item is presented under the captions "Summary Compensation Table," "Option/SAR Grants in Last Fiscal Year" and "Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-end Options/SAR Values" in AIMCO's proxy statement for its 2000 annual meeting of stockholders and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is presented under the caption "Security Ownership of Certain Beneficial Owners and Management" in AIMCO's proxy statement for its 2000 annual meeting of stockholders and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is presented under the caption "Certain Relationships and Transactions" in AIMCO's proxy statement for its 2000 annual meeting of stockholders and is incorporated herein by reference. 25 27 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K (a) (1) The financial statements listed in the Index to Financial Statements on Page F-1 of this report are filed as part of this report and incorporated herein by reference. (a) (2) The financial statement schedule listed in the Index to Financial Statements on Page F-1 of this report is filed as part of this report and incorporated herein by reference. (a) (3) The Exhibit Index is included on page 23 of this report and incorporated herein by reference. (b) Reports on Form 8-K for the quarter ended December 31, 1999: None. INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION ----------- ----------- 2.1 -- Second Amended and Restated Agreement and Plan of Merger, dated as of January 22, 1999, by and between Apartment Investment and Management Company and Insignia Properties Trust (Exhibit 2.2 to the Current Report on Form 8-K of Insignia Properties Trust, dated February 11, 1999, is incorporated herein by this reference) 2.2 -- Amended and Restated Agreement and Plan of Merger, dated as of May 26, 1998, by and among Apartment Investment Management Company, AIMCO Properties, L.P., Insignia Financial Group, Inc., and Insignia/ESG Holdings, Inc. (Exhibit 2.1 to AIMCO's Registration Statement on Form S-4, filed August 5, 1998, is incorporated herein by this reference) 3.1 -- Charter 3.2 -- Bylaws 4.1 -- Amended and Restated Declaration of Trust of IFT Financing I (formerly Insignia Financing I), dated as of November 1, 1996, among Insignia Financial Group, Inc. as Sponsor, First Union National Bank of South Carolina as Property Trustee, First Union Bank of Delaware, as Delaware Trustee and Andrew I. Farkas, John K. Lines and Ronald Uretta as Regular Trustees (Exhibit 4.2 to Form S-3 of Insignia Financial Group, Inc. dated December 10, 1996, is incorporated herein by this reference) 4.2 -- Indenture for the 6.5% Convertible Subordinated Debentures, dated as of November 1, 1996, between Insignia Financial Group, Inc., as Issuer and First Union National Bank of South Carolina, as Trustee (Exhibit 4.2 to Form S-3 of Insignia Financial Group, Inc., dated December 10, 1996, is incorporated herein by this reference) 4.3 -- First Supplemental Indenture, dated as of October 1, 1998, by and among Apartment Investment and Management Company, Insignia Financial Group, Inc., and First Union National Bank (formerly First Union National Bank of South Carolina, as Trustee) (Exhibit 4.3 to AIMCO's Annual Report on Form 10-K for the fiscal year 1998, is incorporated herein by this reference) 10.1 -- Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994 as amended and restated as of October 1, 1998 (Exhibit 10.8 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1998, is incorporated herein by this reference)
26 28
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.2 -- First Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of November 6, 1998 (Exhibit 10.9 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1998, is incorporated herein by this reference) 10.3 -- Second Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 30, 1998 (Exhibit 10.1 to Amendment No. 1 to AIMCO's Current Report on Form 8-K/A, filed February 11, 1999, is incorporated herein by this reference) 10.4 -- Third Amendment to Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of February 18, 1999 (Exhibit 10.12 to AIMCO's Annual Report on Form 10-K for the fiscal year 1998, is incorporated herein by this reference) 10.5 -- Fourth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of March 25, 1999 (Exhibit 10.2 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending March 31, 1999, is incorporated herein by this reference) 10.6 -- Fifth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of March 26, 1999 (Exhibit 10.3 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending March 31, 1999, is incorporated herein by this reference) 10.7 -- Sixth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of March 26, 1999 (Exhibit 10.1 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending June 30, 1999, is incorporated herein by this reference) 10.8 -- Seventh Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of September 27, 1999 (Exhibit 10.1 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1999, is incorporated herein by this reference) 10.9 -- Eighth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 14, 1999 10.10 -- Ninth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 21, 1999 10.11 -- Tenth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 21, 1999 10.12 -- Eleventh Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of January 13, 2000 10.13 -- Shareholders Agreement, dated October 1, 1998, by and among Apartment Investment and Management Company, Andrew L. Farkas, James A. Aston and Frank M. Garrison (Exhibit 10.4 to AIMCO's Schedule 13D filed on October 15, 1998, is incorporated herein by this reference) 10.14 -- Common Stock Purchase Agreement made as of August 26, 1997, by and between Apartment Investment and Management Company and ABKB/LaSalle Securities Limited Partnership (Exhibit 99.1 to AIMCO's Current Report on Form 8-K, dated August 26, 1997, is incorporated herein by this reference) 10.15 -- Amended and Restated Assignment and Assumption Agreement, dated as of December 7, 1998, by and among Insignia Properties, L.P. and AIMCO Properties, L.P. (Exhibit 10.1 to the Current Report on Form 8-K of Insignia Properties Trust, dated February 11, 1999, is incorporated herein by this reference)
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EXHIBIT NO. DESCRIPTION ----------- ----------- 10.16 -- Amended and Restated Indemnification Agreement, dated as of May 26, 1998, by and between Apartment Investment and Management Company and Insignia/ESG Holdings, Inc. (Exhibit 2.2 to AIMCO's Registration Statement on Form S-4, filed August 5, 1998, is incorporated herein by this reference) 10.17 -- Credit Agreement (Secured Revolving Credit Facility), dated as of August 16, 1999, among AIMCO Properties, L.P., Bank of America, BankBoston, N.A., and First Union National Bank (Exhibit 10.1 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated as of August 16, 1999, is incorporated herein by this reference) 10.18 -- Borrower Pledge Agreement, dated August 16, 1999 between AIMCO Properties, L.P. and Bank of America (Exhibit 10.2 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated August 16, 1999 is incorporated herein by this reference) 10.19 -- Form of Committed Loan Note, issued by AIMCO Properties, L.P. to Bank of America, BankBoston, N.A., and First Union National Bank (Exhibit 10.3 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated August 16, 1999, is incorporated herein by this reference) 10.20 -- Form of Swing Line Note, issued by AIMCO Properties, L.P. to Bank of America, BankBoston, N.A., and First Union National Bank (Exhibit 10.4 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated August 16, 1999, is incorporated herein by this reference) 10.21 -- Form of Payment Guaranty, by Apartment Investment and Management Company, AIMCO/NHP Holdings, Inc., NHP A&R Services, Inc., and NHP Management Company (Exhibit 10.5 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated August 16, 1999, is incorporated herein by this reference) 10.22 -- Employment Contract, executed on July 29, 1994, by and between AIMCO Properties, L.P., and Peter Kompaniez (Exhibit 10.44A to AIMCO's Annual Report on Form 10-K for the fiscal year 1994, is incorporated herein by this reference)* 10.23 -- Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and Terry Considine (Exhibit 10.44C to AIMCO's Annual Report on Form 10-K for the fiscal year 1994, is incorporated herein by this reference)* 10.24 -- Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and Steven D. Ira (Exhibit 10.44D to AIMCO's Annual Report on Form 10-K for fiscal year 1994, is incorporated herein by this reference)* 10.25 -- Apartment Investment and Management Company 1998 Incentive Compensation Plan (Annex B to AIMCO's Proxy Statement for Annual Meeting of Stockholders to be held on May 8, 1998, is incorporated herein by this reference)* 10.26 -- Apartment Investment and Management Company 1997 Stock Award and Incentive Plan (October 1999)* 10.27 -- Form of Restricted Stock Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.11 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1997, is incorporated herein by this reference)* 10.28 -- Form of Incentive Stock Option Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.42 to AIMCO's Annual Report on Form 10-K for the fiscal year 1998, is incorporated herein by this reference)*
28 30
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.29 -- Apartment Investment and Management Company Non-Qualified Employee Stock Option Plan, adopted August 29, 1996 (Exhibit 10.8 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1996, is incorporated herein by this reference)* 10.30 -- Amended and Restated Apartment Investment and Management Company Non-Qualified Employee Stock Option Plan (Annex B to AIMCO's Proxy Statement for the Annual Meeting of Stockholders to be held on April 24, 1997, is incorporated herein by this reference)* 10.31 -- The 1994 Stock Incentive Plan for Officers, Directors and Key Employees of Ambassador Apartments, Inc., Ambassador Apartments, L.P., and Subsidiaries (Exhibit 10.40 to Ambassador Apartments, Inc. Annual Report on Form 10-K for the fiscal year 1997, is incorporated herein by this reference)* 10.32 -- Amendment to the 1994 Stock Incentive Plan for Officers, Directors and Key Employees of Ambassador Apartments, Inc., Ambassador Apartments, L.P. and Subsidiaries (Exhibit 10.41 to Ambassador Apartments, Inc. Annual Report on Form 10-K for the fiscal year 1997, is incorporated herein by this reference)* 10.33 -- The 1996 Stock Incentive Plan for Officers, Directors and Key Employees of Ambassador Apartments, Inc., Ambassador Apartments, L.P., and Subsidiaries, as amended March 20, 1997 (Exhibit 10.42 to Ambassador Apartments, Inc. Annual Report on Form 10-K for the fiscal year 1997, is incorporated herein by this reference)* 10.34 -- Insignia 1992 Stock Incentive Plan, as amended through March 28, 1994 and November 13, 1995 (Exhibit 10.1 to Insignia Financial Group, Inc. Annual Report on Form 10-K for the fiscal year 1997, is incorporated herein by this reference)* 10.35 -- NHP Incorporated 1990 Stock Option Plan (Exhibit 10.9 to NHP Incorporated Annual Report on Form 10-K for the fiscal year 1995, is incorporated herein by this reference)* 10.36 -- NHP Incorporated 1995 Incentive Stock Option Plan (Exhibit 10.10 to NHP Incorporated Annual Report on Form 10-K for the fiscal year 1995, is incorporated herein by this reference)* 10.37 -- Summary of Agreement for Sale of Stock to Executive Officers (Exhibit 10.104 to AIMCO's Annual Report on Form 10-K for the fiscal year 1996, is incorporated herein by this reference)* 21.1 -- List of Subsidiaries 23.1 -- Consent of Ernst & Young LLP 27.1 -- Financial Data Schedule 99.1 -- Agreement re: disclosure of long-term debt instruments
- --------------- (1) Schedule and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request. * Management contract 29 31 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 13th day of March, 2000. APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ TERRY CONSIDINE ------------------------------------ Terry Considine Chairman of the Board And Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ TERRY CONSIDINE Chairman of the Board and March 13, 2000 - ----------------------------------------------------- Chief Executive Officer Terry Considine /s/ PETER K. KOMPANIEZ Vice Chairman, President and March 13, 2000 - ----------------------------------------------------- Director Peter K. Kompaniez /s/ THOMAS W. TOOMEY Chief Operating Officer March 13, 2000 - ----------------------------------------------------- Thomas W. Toomey /s/ PATRICK FOYE Executive Vice President March 13, 2000 - ----------------------------------------------------- Patrick Foye /s/ PAUL MCAULIFFE Executive Vice President and March 13, 2000 - ----------------------------------------------------- Chief Financial Officer Paul McAuliffe /s/ RICHARD S. ELLWOOD Director March 13, 2000 - ----------------------------------------------------- Richard S. Ellwood /s/ J. LANDIS MARTIN Director March 13, 2000 - ----------------------------------------------------- J. Landis Martin /s/ THOMAS L. RHODES Director March 13, 2000 - ----------------------------------------------------- Thomas L. Rhodes /s/ JOHN D. SMITH Director March 13, 2000 - ----------------------------------------------------- John D. Smith
30 32 APARTMENT INVESTMENT AND MANAGEMENT COMPANY INDEX TO FINANCIAL STATEMENTS
PAGE ---- FINANCIAL STATEMENTS: Report of Independent Auditors............................ F-2 Consolidated Balance Sheets as of December 31, 1999 and 1998................................................... F-3 Consolidated Statements of Income for the Years Ended December 31, 1999, 1998 and 1997....................... F-4 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1999, 1998 and 1997........... F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997............................................... F-6 Notes to Consolidated Financial Statements................ F-8 FINANCIAL STATEMENT SCHEDULE: Schedule III -- Real Estate and Accumulated Depreciation........................................... F-32 All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto
F-1 33 REPORT OF INDEPENDENT AUDITORS Stockholders and Board of Directors Apartment Investment and Management Company We have audited the accompanying consolidated balance sheets of Apartment Investment and Management Company as of December 31, 1999 and 1998, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the financial statement schedule listed in the Index at Item 14(a)(2). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Apartment Investment and Management Company at December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects the information set forth therein. /s/ ERNST & YOUNG LLP Denver, Colorado January 20, 2000 F-2 34 APARTMENT INVESTMENT AND MANAGEMENT COMPANY CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1999 AND 1998 (IN THOUSANDS, EXCEPT SHARE DATA) ASSETS
1999 1998 ---------- ---------- Real estate, net of accumulated depreciation of $416,497 and $228,880.................................................. $4,092,038 $2,573,718 Property held for sale...................................... 4,162 27,304 Investments in unconsolidated real estate partnerships...... 891,449 945,035 Investments in unconsolidated subsidiaries.................. 44,921 62,244 Notes receivable from unconsolidated real estate partnerships.............................................. 142,828 103,979 Notes receivable from unconsolidated subsidiaries........... 88,754 116,688 Cash and cash equivalents................................... 101,604 71,305 Restricted cash............................................. 84,595 55,826 Other assets................................................ 234,600 292,701 ---------- ---------- $5,684,951 $4,248,800 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Secured notes payable....................................... $1,954,259 $ 843,791 Secured tax-exempt bond financing........................... 420,830 398,602 Unsecured short-term financing.............................. 209,200 310,300 Secured short-term financing................................ -- 108,022 ---------- ---------- Total indebtedness................................ 2,584,289 1,660,715 Accounts payable, accrued and other liabilities............. 271,627 188,815 Resident security deposits and prepaid rents................ 22,793 12,654 ---------- ---------- Total liabilities................................. 2,878,709 1,862,184 ---------- ---------- Commitments and contingencies............................... -- -- Company-obligated mandatorily redeemable convertible preferred securities of a subsidiary trust................ 149,500 149,500 Minority interest in other entities......................... 168,533 185,705 Minority interest in operating partnership.................. 225,381 148,847 Stockholders' equity Preferred Stock........................................... 641,250 792,468 Class A Common Stock, $.01 par value, 474,121,284 shares and 484,027,500 shares authorized, 66,802,886 and 48,451,388 shares issued and outstanding, respectively........................................... 668 485 Additional paid-in capital................................ 1,885,424 1,246,962 Notes receivable on common stock purchases................ (51,619) (49,658) Distributions in excess of earnings....................... (212,895) (87,693) ---------- ---------- Total stockholders' equity........................ 2,262,828 1,902,564 ---------- ---------- $5,684,951 $4,248,800 ========== ==========
See accompanying notes to consolidated financial statements. F-3 35 APARTMENT INVESTMENT AND MANAGEMENT COMPANY CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA)
1999 1998 1997 --------- --------- -------- RENTAL PROPERTY OPERATIONS Rental and other property revenues......................... $ 533,917 $ 377,139 $193,006 Property operating expenses................................ (214,693) (147,541) (76,168) Owned property management expense.......................... (15,429) (11,013) (6,620) Depreciation............................................... (131,753) (84,635) (37,741) --------- --------- -------- Income from property operations............................ 172,042 133,950 72,477 --------- --------- -------- SERVICE COMPANY BUSINESS Management fees and other income........................... 43,455 24,103 13,937 Management and other expenses.............................. (25,470) (16,960) (10,961) --------- --------- -------- Income from service company business....................... 17,985 7,143 2,976 --------- --------- -------- General and administrative expenses........................ (13,112) (13,568) (5,396) Interest expense........................................... (140,094) (89,424) (51,385) Interest income............................................ 62,721 29,368 8,676 Equity in losses of unconsolidated real estate partnerships............................................. (4,467) (4,854) (1,798) Equity in earnings (losses) of unconsolidated subsidiaries............................................. (2,818) 11,570 4,636 Minority interest in other entities........................ (900) (468) 1,008 Amortization............................................... (5,860) (8,735) (948) --------- --------- -------- Income from operations..................................... 85,497 64,982 30,246 Gain (loss) on disposition of properties................... (1,785) 4,674 2,720 --------- --------- -------- Income before extraordinary item and minority interest in operating partnership.................................... 83,712 69,656 32,966 Extraordinary item -- early extinguishment of debt......... -- -- (269) --------- --------- -------- Income before minority interest in operating partnership... 83,712 69,656 32,697 Minority interest in operating partnership................. (2,753) (5,182) (4,064) --------- --------- -------- Net income................................................. 80,959 64,474 28,633 Net income attributable to preferred stockholders.......... 56,885 26,533 2,315 --------- --------- -------- Net income attributable to common stockholders............. $ 24,074 $ 37,941 $ 26,318 ========= ========= ======== Comprehensive Income Net income................................................. $ 80,959 $ 64,474 $ 28,633 Other comprehensive income: Net unrealized gains on investment in securities......... -- -- (1,683) --------- --------- -------- Comprehensive income....................................... $ 80,959 $ 64,474 $ 26,950 ========= ========= ======== Basic earnings per common share............................ $ 0.39 $ 0.84 $ 1.09 ========= ========= ======== Diluted earnings per common share.......................... $ 0.38 $ 0.80 $ 1.08 ========= ========= ======== Weighted average common shares outstanding................. 62,242 45,187 24,055 ========= ========= ======== Weighted average common shares and common share equivalents outstanding.............................................. 63,446 47,624 24,436 ========= ========= ======== Dividends paid per common share............................ $ 2.50 $ 2.25 $ 1.85 ========= ========= ========
See accompanying notes to consolidated financial statements. F-4 36 APARTMENT INVESTMENT AND MANAGEMENT COMPANY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
CLASS A CLASS B PREFERRED STOCK COMMON STOCK COMMON STOCK NOTES ------------------ --------------- --------------- ADDITIONAL RECEIVABLE SHARES SHARES SHARES PAID-IN FROM ISSUED AMOUNT ISSUED AMOUNT ISSUED AMOUNT CAPITAL OFFICERS ------ --------- ------ ------ ------ ------ ---------- ---------- BALANCE DECEMBER 31, 1996................. -- $ -- 14,980 $150 325 $ 3 $ 236,791 $ (7,140) Net proceeds from issuance of Class A Common Stock............................. -- -- 16,367 164 -- -- 509,950 -- Net proceeds from issuance of Preferred Stock.................................... 750 75,000 -- -- -- -- -- -- Net proceeds from issuance of Class C Preferred Stock.......................... 2,400 60,000 -- -- -- -- (1,890) -- Repurchase of Class A Common Stock from officer.................................. -- -- -- -- -- -- (67) 67 Conversion of Class B Common Stock to Class A Common Stock..................... -- -- 163 1 (163) (1) -- -- Conversion of operating partnership units to Class A Common Stock.................. -- -- 562 6 -- -- 8,615 -- Purchase of stock by officers............. -- -- 1,149 11 -- -- 34,704 (33,517) Repayment of notes receivable from officers................................. -- -- -- -- -- -- -- 14,540 Stock options and warrants exercised...... -- -- 458 4 -- -- 8,714 (9,045) Class A Common Stock issued as consideration for NHP common stock....... -- -- 6,760 67 -- -- 180,784 -- Net income................................ -- -- -- -- -- -- -- -- Dividends paid -- Class A Common Stock.... -- -- -- -- -- -- -- -- Dividends paid -- Preferred Stock......... -- -- -- -- -- -- -- -- Unrealized loss on investments............ -- -- -- -- -- -- -- -- ------ --------- ------ ---- ---- --- ---------- -------- BALANCE DECEMBER 31, 1997................. 3,150 135,000 40,439 403 162 2 977,601 (35,095) Net proceeds from issuances of Preferred Stock.................................... 11,250 356,250 -- -- -- -- (15,353) -- Repurchase of Class A Common Stock........ -- -- (303) (3) -- -- (11,064) -- Conversion of Class B Common Stock to Class A Common Stock..................... -- -- 162 2 (162) (2) -- -- Conversion of operating partnership units to Class A Common Stock.................. -- -- 275 3 -- -- 5,792 -- Purchase of stock by officers and awards of restricted stock...................... -- -- 640 7 -- -- 23,619 (23,471) Repayment of notes receivable from officers................................. -- -- -- -- -- -- -- 8,908 Stock options and warrants exercised...... -- -- 658 7 -- -- 11,008 -- Class A Common Stock issued as consideration for Ambassador common stock.................................... -- -- 6,580 66 -- -- 251,209 -- Class E Preferred Stock issued as consideration for Insignia common stock.................................... 8,424 301,218 -- -- -- -- -- -- Issuance of warrants to purchase Class A Common Stock............................. -- -- -- -- -- -- 4,150 -- Net income................................ -- -- -- -- -- -- -- -- Dividends paid -- Class A Common Stock.... -- -- -- -- -- -- -- -- Dividends paid -- Preferred Stock......... -- -- -- -- -- -- -- -- Unrealized gain (loss) on investments..... -- -- -- -- -- -- -- -- ------ --------- ------ ---- ---- --- ---------- -------- BALANCE DECEMBER 31, 1998................. 22,824 792,468 48,451 485 -- -- 1,246,962 (49,658) Net proceeds from issuances of Preferred Stock.................................... 10,000 250,000 -- -- -- -- (16,899) -- Repurchase of Class A Common Stock........ -- -- (205) (2) -- -- (8,036) -- Conversion of operating partnership units to Class A Common Stock.................. -- -- 964 10 -- -- 13,756 -- Conversion of Preferred Stock to Class A Common Stock............................. (9,424) (401,218) 10,924 109 -- -- 401,109 -- Purchase of stock by officers and awards of restricted stock...................... -- -- 240 2 -- -- 8,824 (8,202) Repayment of notes receivable from officers................................. -- -- -- -- -- -- -- 6,241 Stock options and warrants exercised...... -- -- 129 1 -- -- 3,201 -- Class A Common Stock issued as consideration for Insignia Property Trust merger................................... -- -- 4,044 40 -- -- 158,753 -- Class A Common Stock issued as consideration for First Union Acquisition.............................. -- -- 530 5 -- -- 21,135 -- Class A Common Stock Offering............. -- -- 1,383 14 -- -- 54,598 -- Warrants exercised........................ -- -- 343 4 -- -- 2,021 -- Net income................................ -- -- -- -- -- -- -- -- Dividends paid -- Class A Common Stock.... -- -- -- -- -- -- -- -- Dividends paid -- Preferred Stock......... -- -- -- -- -- -- -- -- ------ --------- ------ ---- ---- --- ---------- -------- BALANCE DECEMBER 31, 1999................. 23,400 $ 641,250 66,803 $668 -- $-- $1,885,424 $(51,619) ====== ========= ====== ==== ==== === ========== ======== UNREALIZED DISTRIBUTIONS GAIN IN EXCESS (LOSS) ON OF EARNINGS INVESTMENTS TOTAL ------------- ----------- ---------- BALANCE DECEMBER 31, 1996................. $ (14,055) $ -- $ 215,749 Net proceeds from issuance of Class A Common Stock............................. -- -- 510,114 Net proceeds from issuance of Preferred Stock.................................... -- -- 75,000 Net proceeds from issuance of Class C Preferred Stock.......................... -- -- 58,110 Repurchase of Class A Common Stock from officer.................................. -- -- -- Conversion of Class B Common Stock to Class A Common Stock..................... -- -- -- Conversion of operating partnership units to Class A Common Stock.................. -- -- 8,621 Purchase of stock by officers............. -- -- 1,198 Repayment of notes receivable from officers................................. -- -- 14,540 Stock options and warrants exercised...... -- -- (327) Class A Common Stock issued as consideration for NHP common stock....... -- -- 180,851 Net income................................ 28,633 -- 28,633 Dividends paid -- Class A Common Stock.... (44,660) -- (44,660) Dividends paid -- Preferred Stock......... (846) -- (846) Unrealized loss on investments............ -- (1,683) (1,683) --------- ------- ---------- BALANCE DECEMBER 31, 1997................. (30,928) (1,683) 1,045,300 Net proceeds from issuances of Preferred Stock.................................... -- -- 340,897 Repurchase of Class A Common Stock........ -- -- (11,067) Conversion of Class B Common Stock to Class A Common Stock..................... -- -- -- Conversion of operating partnership units to Class A Common Stock.................. -- -- 5,795 Purchase of stock by officers and awards of restricted stock...................... -- -- 155 Repayment of notes receivable from officers................................. -- -- 8,908 Stock options and warrants exercised...... -- -- 11,015 Class A Common Stock issued as consideration for Ambassador common stock.................................... -- -- 251,275 Class E Preferred Stock issued as consideration for Insignia common stock.................................... -- -- 301,218 Issuance of warrants to purchase Class A Common Stock............................. -- -- 4,150 Net income................................ 64,474 -- 64,474 Dividends paid -- Class A Common Stock.... (100,045) -- (100,045) Dividends paid -- Preferred Stock......... (21,194) -- (21,194) Unrealized gain (loss) on investments..... -- 1,683 1,683 --------- ------- ---------- BALANCE DECEMBER 31, 1998................. (87,693) -- 1,902,564 Net proceeds from issuances of Preferred Stock.................................... -- -- 233,101 Repurchase of Class A Common Stock........ -- -- (8,038) Conversion of operating partnership units to Class A Common Stock.................. -- -- 13,766 Conversion of Preferred Stock to Class A Common Stock............................. -- -- -- Purchase of stock by officers and awards of restricted stock...................... -- -- 624 Repayment of notes receivable from officers................................. -- -- 6,241 Stock options and warrants exercised...... -- -- 3,202 Class A Common Stock issued as consideration for Insignia Property Trust merger................................... -- -- 158,793 Class A Common Stock issued as consideration for First Union Acquisition.............................. -- -- 21,140 Class A Common Stock Offering............. -- -- 54,612 Warrants exercised........................ -- -- 2,025 Net income................................ 80,959 -- 80,959 Dividends paid -- Class A Common Stock.... (154,654) -- (154,654) Dividends paid -- Preferred Stock......... (51,507) -- (51,507) --------- ------- ---------- BALANCE DECEMBER 31, 1999................. $(212,895) $ -- $2,262,828 ========= ======= ==========
See accompanying notes to consolidated financial statements. F-5 37 APARTMENT INVESTMENT AND MANAGEMENT COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
1999 1998 1997 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income................................................ $ 80,959 $ 64,474 $ 28,633 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................... 151,166 101,610 43,520 Gain (loss) on disposition of properties................ 1,785 (4,674) (2,720) Minority interest in operating partnership.............. 2,753 5,182 4,064 Minority interests in other entities.................... 900 468 (1,008) Equity in losses of unconsolidated real estate partnerships........................................... 4,467 4,854 1,798 Equity in earnings (losses) of unconsolidated subsidiaries........................................... 2,818 (11,570) (4,636) Extraordinary loss on early extinguishment of debt...... -- -- 269 Changes in operating assets and operating liabilities... 8,409 (11,930) 3,112 --------- --------- --------- Total adjustments................................... 172,298 83,940 44,399 --------- --------- --------- Net cash provided by operating activities........... 253,257 148,414 73,032 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of real estate................................... (103,354) (155,456) (376,315) Additions to real estate.................................. (114,026) (79,675) (26,966) Proceeds from sale of property held for sale.............. 49,023 36,468 22,095 Purchase of common stock, notes receivable, general and limited partnership interests and other assets.......... (233,640) (56,760) (199,146) Purchase of/additions to notes receivable................. (103,943) (81,587) (60,575) Advances to unconsolidated real estate partnerships....... -- -- (42,879) Proceeds from sale of notes receivable.................... 17,788 -- -- Proceeds from repayment of notes receivable............... 61,407 29,290 -- Cash from newly consolidated properties................... 68,127 -- -- Cash received in connection with acquisitions............. -- 60,777 -- Cash paid for merger related costs........................ (19,347) (78,568) -- Distributions received from investments in real estate partnerships............................................ 87,284 15,673 -- Distributions received from (contributions to) unconsolidated subsidiaries............................. 9,575 (13,032) (13,996) Purchase of investments held for sale..................... -- (4,935) (19,881) Redemption of OP Units.................................... -- (516) -- --------- --------- --------- Net cash used in investing activities............... (281,106) (328,321) (717,663) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from secured notes payable borrowings............ 297,536 102,115 225,436 Principal repayments on secured notes payable............. (53,572) (93,469) (12,512) Proceeds from secured tax-exempt bond financing........... 20,731 210,720 -- Principal repayments on secured tax-exempt bond financing............................................... (41,894) (224,395) (1,487) Payoff of unsecured short-term financing.................. -- -- (12,579) Proceeds from secured short-term financing................ -- 57,140 19,050 Repayments on secured short-term financing................ (4,522) (34,333) -- Net paydowns on the revolving credit facilities........... (151,100) (46,262) (162,008) Payment of loan costs, including proceeds and costs from interest rate hedges.................................... (16,070) (7,407) (6,387) Proceeds from issuance of common and preferred stock, exercise of options/warrants............................ 293,225 386,912 644,095 Principal repayments received on notes due from officers on Class A Common Stock purchases....................... 6,241 8,951 25,957 Repurchase of common stock................................ (8,038) (11,066) Payment of common stock dividends......................... (154,654) (100,045) (44,660) Payment of distributions to minority interest............. (32,898) (15,531) (5,510) Payment of preferred stock dividends...................... (96,837) (21,194) (846) Proceeds from issuance of High Performance Units.......... -- 1,988 -- --------- --------- --------- Net cash provided by financing activities........... 58,148 214,124 668,549 --------- --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS................... 30,299 34,217 23,918 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 71,305 37,088 13,170 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 101,604 $ 71,305 $ 37,088 ========= ========= =========
See accompanying notes to consolidated financial statements. F-6 38 APARTMENT INVESTMENT AND MANAGEMENT COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
1999 1998 1997 ---------- -------- -------- SUPPLEMENTAL CASH INFORMATION: Interest paid............................................. $ 140,410 $ 91,795 $ 51,076 Non Cash Transactions Associated with the Acquisition of Properties: Secured debt assumed in connection with purchase of real estate................................................ 110,101 115,151 150,051 Real estate, assets acquired............................ 230,194 43,756 55,906 Assumption of operating liabilities..................... 15,233 857 -- Accrual of contingent consideration..................... (4,500) 4,500 -- OP Units issued......................................... 83,810 -- -- Class A Common Stock issued............................. 21,140 -- -- Non Cash Transactions Associated with Acquisition of Limited Partnership Interests and Interests in the Unconsolidated Subsidiaries: Issuance of OP Units for interests in unconsolidated real estate partnerships.............................. 15,085 4,045 7,469 Issuance of OP Units and assumption of liabilities for interests in unconsolidated subsidiaries.............. 4,762 -- -- Non Cash Transactions Associated with Mergers: Real estate............................................. 6,012 773,189 638,944 Investments in and notes receivable from unconsolidated real estate partnerships.............................. 97,708 801,467 -- Investments in and notes receivable from unconsolidated subsidiaries.......................................... (13,137) 68,168 -- Restricted cash......................................... -- 38,210 -- Other assets............................................ -- 110,969 -- Secured debt............................................ -- 764,543 71,055 Unsecured debt.......................................... -- 2,513 -- Accounts payable, accrued and other liabilities......... 30,183 181,158 239,699 Mandatorily redeemable convertible preferred securities of a subsidiary trust................................. -- 149,500 -- Minority interest in other entities..................... (98,353) 117,922 -- Class A Common Stock issued............................. 158,753 552,492 185,061 Non Cash Transactions Associated with Consolidation of Assets: Real estate............................................. 1,016,343 22,089 Investments in and notes receivable from unconsolidated real estate partnerships.............................. (380,359) (16,683) -- Restricted cash......................................... 43,605 -- -- Secured debt............................................ 561,129 4,679 -- Accounts payable, accrued and other liabilities......... 44,361 727 -- Minority interest in other entities..................... 77,774 -- -- Non Cash Transfer of Assets to an Unconsolidated Subsidiary: Real estate............................................. (32,091) -- -- Notes receivable........................................ 6,245 -- -- Secured debt............................................ (25,620) -- -- Other: Redemption of OP Units.................................. 13,766 5,650 8,621 Receipt of notes payable from officers.................. 8,202 23,471 42,562 Conversion of Preferred Stock into Class A Common Stock................................................. 401,218 -- -- Tenders payable for purchase of limited partner interest.............................................. 77,380 -- --
See accompanying notes to consolidated financial statements. F-7 39 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998, AND 1997 NOTE 1 ORGANIZATION Apartment Investment and Management Company ("AIMCO" or the "Company"), a Maryland corporation formed on January 10, 1994, is a self-administered and self-managed REIT engaged in the ownership, acquisition, development, expansion and management of multi-family apartment properties. As of December 31, 1999, the Company owned or managed 363,462 apartment units in 1,942 properties located in 48 states, the District of Columbia and Puerto Rico. Based on apartment unit data compiled by the National Multi-Housing Council, we believe that, as of December 31, 1999, AIMCO was the largest owner and manager of multi-family apartment properties in the United States. As of December 31, 1999, AIMCO: - owned or controlled 106,148 units in 373 apartment properties; - held an equity interest in 133,113 units in 751 apartment properties; and - managed 124,201 units in 818 apartment properties for third party owners and affiliates. AIMCO conducts substantially all of its operations through its operating partnership, AIMCO Properties, L.P. (the "AIMCO operating partnership"). Through a wholly owned subsidiary, AIMCO acts as the sole general partner of the AIMCO operating partnership. As of December 31, 1999, AIMCO owned approximately a 91% interest in the AIMCO operating partnership. AIMCO manages apartment properties for third parties and affiliates through unconsolidated subsidiaries referred to as the "management companies". At December 31, 1999, AIMCO had 66,802,886 shares of Class A Common Stock outstanding and the AIMCO operating partnership had 6,440,932 common units outstanding, for a combined total of 73,243,818 shares and units. NOTE 2 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of AIMCO, the AIMCO operating partnership, majority owned subsidiaries and controlled real estate partnerships. Interests held by limited partners in real estate partnerships controlled by the Company and interests held by the minority shareholders of Insignia Properties Trust (through February 26, 1999) are reflected as Minority Interest in Other Entities. Significant intercompany balances and transactions have been eliminated in consolidation. Interests in the AIMCO operating partnership held by limited partners other than AIMCO are referred to as "OP Units". The AIMCO operating partnership's income is allocated to holders of OP Units based on the weighted average number of OP Units outstanding during the period. The AIMCO operating partnership records the issuance of OP Units and the assets acquired in purchase transactions based on the market price of the Company's Class A Common Stock at the date of execution of the purchase contract. The holders of the OP Units receive distributions, prorated from the date of issuance, in an amount equivalent to the dividends paid to holders of Class A Common Stock. During 1999, 1998 and 1997, the weighted average ownership interest in the AIMCO operating partnership held by the OP Unit holders was 9%, 12% and 13%, respectively. After holding the OP Units for one year, the limited partners generally have the right to redeem their OP Units for cash. Notwithstanding that right, the AIMCO operating partnership may elect to acquire some or all of the OP Units tendered for redemption in exchange for shares of Class A Common Stock in lieu of cash. F-8 40 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Real Estate and Depreciation Real estate is recorded at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of a property may be impaired, the Company will make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate future cash flows, the Company would recognize an impairment loss to the extent the carrying amount exceeds the fair value of the property. As of December 31, 1999, management believes that no impairments exist based on periodic reviews. No impairment losses were recognized for the years ended December 31, 1999, 1998 and 1997. Direct costs associated with the acquisition of ownership or control of properties are capitalized as a cost of the assets acquired, and are depreciated over the estimated useful lives of the related assets. Expenditures for ordinary repairs, maintenance and apartment turnover costs are expensed as incurred. Initial Capital Expenditures ("ICE") are those costs considered necessary by the Company in its investment decision to correct deferred maintenance or improve a property. Capital enhancements are costs incurred that add a material new feature or increase the revenue potential of a property. ICE and capital enhancement costs are capitalized and depreciated over the estimated useful lives of the related assets. Expenditures in excess of $250 that maintain an existing asset which has a useful life of more than one year are capitalized as capital replacement expenditures and depreciated over the estimated useful life of the asset. Depreciation is calculated on the straight-line method based on a fifteen to thirty year life for buildings and improvements and five years for furniture, fixtures and equipment. Property Held For Sale Property held for sale is recorded at the lower of carrying amount or fair value less costs to sell. Redevelopment The Company capitalizes direct and indirect costs (including interest, taxes and other costs) in connection with the redevelopment of its owned or controlled properties and land under development. Interest of $6.6 million, $2.8 million and $1.3 million was capitalized for the years ended December 31, 1999, 1998 and 1997, respectively. Investments in Unconsolidated Real Estate Partnerships The Company owns general and limited partnership interests in numerous partnerships that own multi-family apartment properties. Investments in real estate partnerships in which the Company has significant influence but does not have control are accounted for under the equity method. Under the equity method, the Company's pro-rata share of the earnings or losses of the entity for the periods being presented is included in earnings (losses) from unconsolidated partnerships (see Note 5). Investments in Unconsolidated Subsidiaries The Company has investments in numerous subsidiaries. Investments in entities in which the Company has significant influence but does not have control are accounted for under the equity method. Under the equity method, the Company's pro-rata share of the earnings or losses of the entity for the periods being presented is included in earnings (losses) from unconsolidated subsidiaries (see Note 6). F-9 41 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Notes Receivable from Unconsolidated Real Estate Partnerships and Subsidiaries The Company has investments in numerous notes receivable, which were either extended by the Company or were made by predecessors whose positions have been acquired by the Company. Interest income is recognized on these investments based upon whether the collectibility of such amounts is both probable and estimable (see Note 7). Cash Equivalents The Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted Cash Restricted cash includes capital replacement reserves, completion repair reserves, bond sinking fund amounts and tax and insurance impound accounts held by lenders. Other Assets Fees and costs incurred in obtaining financing are capitalized and are included in other assets. Such costs are amortized over the terms of the related loan agreements and are charged to interest expense. Certain intangible assets are included in other assets and consist of costs associated with the purchase of property management businesses, including property management contracts, legal and other acquisition costs. These costs are amortized on a straight-line basis over terms ranging from five to twenty years. Revenue Recognition The Company's properties have operating leases with apartment residents with terms generally of six months or less. Rental revenues and property management and asset management fees are recognized when earned. Income Taxes AIMCO has elected to be taxed as a real estate investment trust ("REIT"), as defined under the Internal Revenue Code of 1986, as amended. In order for AIMCO to qualify as a REIT, at least 95% of AIMCO's gross income in any year must be derived from qualifying sources. The activities of unconsolidated subsidiaries engaged in the service company business are not qualifying sources. As a REIT, AIMCO generally will not be subject to U.S. Federal income taxes at the corporate level if it distributes at least 95% of its REIT taxable income to its stockholders. REITs are also subject to a number of other organizational and operational requirements. If AIMCO fails to qualify as a REIT in any taxable year, its taxable income will be subject to U.S. Federal income tax at regular corporate rates (including any applicable alternative minimum tax). Even if AIMCO qualifies as a REIT, it may be subject to certain state and local income taxes and to U.S. Federal income and excise taxes on its undistributed income. Earnings and profits, which determine the taxability of dividends to stockholders, differ from net income reported for financial reporting purposes due to differences for U.S. Federal tax purposes in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in F-10 42 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) properties, among other things. The following table reconciles the Company's net income to REIT taxable income for the year ended December 31, 1999: Net income............................................... $ 80,959 Losses from unconsolidated subsidiaries.................. 2,559 Depreciation and amortization expenses not deductible for tax.................................................... 70,733 Gain on disposition of properties........................ 17,359 Interest income, not taxable............................. (6,583) Depreciation timing differences on real estate........... 13,881 Dividends on officer stock, not deductible for tax....... 2,435 Transaction and project costs, deductible for tax........ (7,349) -------- REIT taxable income...................................... $173,994 ========
For income tax purposes, distributions paid to common stockholders consist of ordinary income, capital gains, return of capital or a combination thereof. For the years ended December 31, 1999, 1998 and 1997, distributions paid per share were taxable as follows:
1999 1998 1997 ------------------- ------------------- ------------------- AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE ------ ---------- ------ ---------- ------ ---------- Ordinary income..................... $2.04 82% $0.90 40% $1.74 94% Return of capital................... 0.16 6% 1.33 59% -- -- Capital gains....................... 0.12 5% -- -- 0.04 2% Unrecaptured SEC.1250 gain.......... 0.18 7% 0.02 1% 0.07 4% ----- --- ----- --- ----- --- $2.50 100% $2.25 100% $1.85 100% ===== === ===== === ===== ===
Earnings Per Share Earnings per share is calculated based on the weighted average number of shares of common stock, common stock equivalents and dilutive convertible securities outstanding during the period (see Note 18). Fair Value of Financial Instruments The estimated aggregate fair value of the Company's cash and cash equivalents, receivables, payables and short-term unsecured debt as of December 31, 1999 is assumed to approximate their carrying value due to their relatively short terms. Management further believes that the fair market value of the Company's secured tax-exempt bond debt and secured long-term debt approximate their carrying value, based on market comparisons to similar types of debt instruments having similar maturities. Reclassifications Certain items included in the 1998 and 1997 consolidated financial statements have been reclassified to conform with the 1999 presentation. Use of Estimates The preparation of the Company's consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates. F-11 43 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 3 -- REAL ESTATE Real estate at December 31, 1999 and 1998, is as follows (in thousands):
1999 1998 ---------- ---------- Land........................................................ $ 661,502 $ 413,577 Buildings and improvements.................................. 3,847,033 2,389,021 ---------- ---------- 4,508,535 2,802,598 Accumulated depreciation.................................... (416,497) (228,880) ---------- ---------- $4,092,038 $2,573,718 ========== ==========
During the years ended December 31, 1999 and 1998, the Company purchased 28 properties (12,721 units) and 82 properties (22,459 units), respectively, and disposed of eight properties (2,309 units) and five properties (1,468 units), respectively, as described below. The Company directly acquired 28 apartment communities in unrelated transactions during 1999 (not including those acquired in connection with the merger with Insignia Properties Trust (see Note 4)). The aggregate consideration paid by the Company of $495.0 million consisted of $91.5 million in cash, 2.4 million Preferred OP Units, 0.9 million common OP Units and 0.5 million shares of Class A Common Stock with a total recorded value of $116.8 million, the assumption of $110.1 million of secured long-term indebtedness, the assumption of $15.2 million of other liabilities, and new financing of $161.4 million of secured long-term indebtedness. Four of these assets were then contributed to an unconsolidated subsidiary The Company directly acquired 30 apartment communities in unrelated transactions during 1998 (not including those acquired in connection with the mergers with Ambassador Apartments, Inc. and Insignia Financial Group, Inc. (see Note 4)). The aggregate consideration paid by the Company of $316.5 million consisted of $96.0 million in cash, 1.2 million OP Units with a total recorded value of $48.2 million, and the assumption of $172.3 million of secured long-term indebtedness. In addition to the acquisitions described above, in 1999 the Company acquired controlling interests in partnerships owning 125 properties (34,228 units) and began consolidating these entities. Control was obtained through the purchase of limited partnership interests from unaffiliated third parties or other increases in the Company's equity investment in the partnerships. During 1999, the Company sold eight properties containing 2,309 units to unaffiliated third parties. Cash proceeds from the sales of approximately $49.0 million were used to repay a portion of the Company's outstanding indebtedness. The Company recognized a loss of approximately $1.8 million on the disposition of these properties, of which 96% of the loss related to one property. During 1998, the Company sold five apartment properties containing 1,468 units to unaffiliated third parties. Cash proceeds from the sales of approximately $40.1 million were used to repay a portion of the Company's outstanding indebtedness. The Company recognized a gain of approximately $4.7 million on the disposition of these five properties. NOTE 4 -- MERGERS NHP Merger In May and September 1997, the Company acquired an aggregate of approximately 6.9 million shares of common stock ("NHP Common Stock") of NHP. On December 8, 1997, the Company acquired the remaining shares of NHP Common Stock in a merger transaction accounted for as a purchase (the "NHP Merger"). Pursuant to the NHP Merger, each outstanding share of NHP Common Stock was converted into either (i) 0.74766 shares of Class A Common Stock or (ii) at the stockholder's option, 0.37383 shares of F-12 44 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Class A Common Stock and $10.00 in cash. As a result of the NHP Merger, AIMCO issued approximately 6.8 million shares of Class A Common Stock, valued at $180.8 million, and paid $86.5 million in cash. The total cost of the purchase was $349.5 million. Ambassador Merger On May 8, 1998, Ambassador Apartments, Inc. ("Ambassador"), was merged with and into AIMCO, with AIMCO being the surviving corporation. The merger was accounted for as a purchase. The purchase price of $713.6 million was comprised of $90.3 million in cash, $372.0 million of assumed debt and approximately 6.6 million shares of Class A Common Stock valued at $251.3 million. Pursuant to the Ambassador merger agreement, each outstanding share of Ambassador common stock not owned by AIMCO was converted into the right to receive 0.553 shares of Class A Common Stock. Concurrently, all outstanding options to purchase Ambassador common stock were converted into cash or options to purchase Class A Common Stock, at the same conversion ratio. Contemporaneously with the consummation of the Ambassador merger, a subsidiary of the AIMCO operating partnership merged with Ambassador's operating partnership and each outstanding unit of limited partnership interest in the Ambassador operating partnership was converted into the right to receive 0.553 OP Units. Prior to its acquisition by AIMCO, Ambassador was a self-administered and self-managed real estate investment trust engaged in the ownership and management of garden-style apartment properties leased primarily to middle income tenants. Ambassador owned 52 apartment communities with a total of 15,728 units located in Arizona, Colorado, Florida, Georgia, Illinois, Tennessee and Texas, and managed one property containing 252 units for an unrelated third party. Insignia Merger On October 1, 1998, Insignia Financial Group, Inc., a Delaware Corporation, ("Insignia") was merged with and into AIMCO with AIMCO being the surviving corporation. The merger was accounted for as a purchase. The purchase price of $1,125.7 million was comprised of the issuance of up to approximately 8.9 million shares of Class E Cumulative Convertible Preferred Stock (the "Class E Preferred Stock") valued at $301.2 million, $670.1 million in assumed debt and liabilities (including a $50 million special dividend, assumed liabilities of Insignia Properties Trust and transaction costs), $149.5 million in assumed mandatory redeemable convertible preferred securities, and $4.9 million in cash. The Class E Preferred Stock entitled the holders thereof to receive the same cash dividends per share as holders of Class A Common Stock. On January 15, 1999, holders of Class E Preferred Stock received a special dividend in an aggregate amount of approximately $50 million, and all outstanding shares of Class E Preferred Stock automatically converted into an equal number of shares of Class A Common Stock. As a result of the Insignia merger, AIMCO acquired: (i) Insignia's interests in Insignia Properties Trust, ("IPT"), a Maryland REIT, which was a majority owned subsidiary of Insignia; (ii) Insignia's interest in Insignia Properties, L.P., IPT's operating partnership; (iii) 100% of the ownership of the Insignia entities that provide multifamily property management and partnership administrative services; (iv) Insignia's interest in multi-family co-investments; (v) Insignia's ownership of subsidiaries that control multi-family properties not included in IPT; (vi) Insignia's limited partner interests in public and private syndicated real estate limited partnerships; and (vii) assets incidental to the foregoing businesses. Insignia owned or managed in excess of 170,000 apartment units. Insignia Properties Trust Merger As a result of the Insignia merger, AIMCO acquired approximately 51% of the outstanding shares of beneficial interest of IPT. On February 26, 1999, IPT was merged into AIMCO. Pursuant to the merger, each of the outstanding shares of IPT that were not held by AIMCO was converted into the right to receive F-13 45 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 0.3601 shares of Class A Common Stock, resulting in the issuance of approximately 4.3 million shares of Class A Common Stock (with a recorded value of approximately $158.8 million). NOTE 5 -- INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS The Company owns general and limited partner interests in approximately 900 partnerships which it acquired through acquisitions, direct purchases and separate offers to other limited partners. The Company's total ownership interests in these unconsolidated real estate partnerships range from 1% to 99%. However, based on the provisions of the related partnership agreements, which grant varying degrees of control, the Company does not possess control of these partnerships. During 1999 and 1998, the Company made separate offers to the limited partners of approximately 600 and 300 partnerships, respectively, to acquire their limited partnership interests. The Company paid approximately $271 million and $96 million during 1999 and 1998, respectively, in connection with such tender offers. The following table provides selected combined financial information for the Company's unconsolidated real estate partnerships as of and for the years ended December 31, 1999 and 1998 (in thousands):
1999 1998 ---------- ---------- Real estate, net of accumulated depreciation................ $2,930,748 $3,705,342 Total assets................................................ 3,501,195 4,221,817 Secured notes payable....................................... 2,940,819 3,234,310 Total liabilities........................................... 3,536,646 3,547,859 Partners' capital (deficit)................................. (35,451) 673,958 Rental and other property revenues.......................... 1,120,888 873,531 Property operating expenses................................. (582,523) (524,010) Depreciation expense........................................ (237,066) (151,569) Interest expense............................................ (269,163) (220,134) Net income (loss)........................................... 42,106 (12,468)
NOTE 6 -- INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES In order to satisfy certain requirements of the Internal Revenue Code applicable to AIMCO's status as a REIT, certain assets of the Company are held through corporations in which the AIMCO operating partnership holds non-voting preferred stock and certain officers and/or directors of AIMCO hold, directly or indirectly, all of the voting common stock. Effective January 1, 1999, a portion of the voting common stock was purchased by the Company and was exchanged for non-voting preferred stock, bringing the total voting common stock interests to represent a 1% economic interest and the non-voting preferred stock to represent a 99% economic interest. As a result of the controlling ownership interest in the unconsolidated subsidiaries being held by others, AIMCO accounts for its interest in the unconsolidated subsidiaries using the equity method. As of December 31, 1999, the unconsolidated subsidiaries included AIMCO/NHP Holdings, Inc., AIMCO/NHP Properties, Inc., NHP Management Company, and NHP A&R Services, Inc. F-14 46 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table provides selected combined financial information for the Company's unconsolidated subsidiaries as of and for the years ended December 31, 1999 and 1998 (in thousands):
1999 1998 --------- -------- Management contracts........................................ $ 25,181 $122,291 Total assets................................................ 166,019 236,976 Total liabilities........................................... 128,423 169,560 Stockholders' equity........................................ 37,596 67,416 Service company revenues.................................... 139,667 99,845 Service company expenses.................................... (133,231) (70,771) Interest expense............................................ (7,832) (7,699) Net income (loss)........................................... (2,848) 12,177
NOTE 7 -- INTEREST INCOME RECOGNITION The Company recognizes interest income earned from its investments in notes receivable based upon whether the collectibility of such amounts is both probable and estimable. The notes receivable were either extended by the Company and are carried at the face amount plus accrued interest ("par value notes") or were made by predecessors whose positions have been acquired by the Company at a discount and are carried at the acquisition amount using the cost recovery method ("discounted notes"). As of December 31, 1999 and 1998, the Company held $157.3 million and $212.3 million, respectively, of par value notes, including accrued interest, for which management believes the collectibility of such amounts is both probable and estimable. As such, interest income from the par value notes is generally recognized as it is earned. Interest income from such notes for the year ended December 31, 1999, 1998 and 1997, totaled $12.8 million, $15.3 million, and $0.4 million, respectively. The decrease in the Company's investment in par value notes from December 31, 1998 to December 31, 1999 is primarily due to a reduction in certain notes receivable from the unconsolidated subsidiaries during 1999. As of December 31, 1999 and 1998, the Company held discounted notes, including accrued interest, with a carrying value of $92.5 million and $52.0 million, respectively. The total face value plus accrued interest of these notes was $173.1 million at December 31, 1999. In general, interest income from the discounted notes is not recognized as it is earned because the timing and amounts of cash flows are not probable and estimable. The increase in the Company's investment in discounted notes from December 31, 1998 to December 31, 1999 is primarily due to a purchase of a portfolio of discounted notes for approximately $26.1 million. Under the cost recovery method, the discounted notes are carried at the acquisition amount, less subsequent cash collections, until such time as collectibility is probable and the timing and amounts are estimable. Based upon closed or pending transactions (including sales activity), market conditions, and improved operations of the obligor, among other things, certain notes and the related discounts have been determined to be collectible. Accordingly, interest income that had previously been deferred and portions of the related discounts were recognized as interest income during the period. For the years ended December 31, 1999 and 1998, the Company recognized deferred interest income and discounts of approximately $32.5 million ($0.52 per basic and $0.51 per diluted share), and $1.4 million ($0.03 per basic and diluted share), respectively. There was no recognition of deferred interest income and discounts for the year ended December 31, 1997. NOTE 8 -- SECURED NOTES PAYABLE During 1999, the Company issued $392.5 million of long-term fixed rate, fully amortizing non-recourse notes payable with a weighted average interest rate of 7.3%. Each of the notes is individually secured by one of F-15 47 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) thirty-eight properties with no cross-collateralization. The Company used the net proceeds after transaction costs of $356.3 million to repay existing debt. The following table summarizes the Company's secured notes payable at December 31, 1999 and 1998, all of which are non-recourse to the Company (in thousands):
1999 1998 ---------- -------- Fixed rate, ranging from 5.99% to 10.13%, fully-amortizing notes maturing at various dates through 2034.............. $1,597,772 $659,953 Fixed rate, ranging from 5.00% to 10.63%, non-amortizing notes maturing at various dates through 2029.............. 356,487 178,258 Floating rate, ranging from 5.0% to 7.1%, non-amortizing notes..................................................... -- 5,580 ---------- -------- Total............................................. $1,954,259 $843,791 ========== ========
As of December 31, 1999, the scheduled principal amortization and balloon payments for the Company's secured notes payable are as follows (in thousands): 2000........................................................ $ 30,074 2001........................................................ 78,739 2002........................................................ 57,144 2003........................................................ 129,448 2004........................................................ 178,886 Thereafter.................................................. 1,479,968 ---------- $1,954,259 ==========
NOTE 9 -- SECURED TAX-EXEMPT BOND FINANCING During 1999, the Company issued $17.8 million of long-term fixed rate, fully amortizing non-recourse tax-exempt bonds with a weighted average interest rate of 7.1%. Each of the bonds is individually secured by one of two properties with no cross-collateralization. The Company used the net proceeds after transaction costs of $17.3 million to repay existing debt. In December 1998, the Company completed the refinancing of $222 million in variable rate tax-exempt debt assumed in conjunction with the May 1998 merger with Ambassador Apartments, Inc. The debt was secured by 27 properties located in Texas, Arizona, Tennessee and Illinois. Through the refinancing, the Company converted the previous tax-exempt debt to $204 million in fixed rate, fully amortizing tax-exempt debt secured by 26 properties. The new debt has a weighted average interest rate of 5.8% and matures in 22 years. The Company also incurred $7.1 million of taxable debt secured by three of the properties, repaid $11.4 million of the previous tax-exempt debt, released $21.5 million in cash reserves and impound accounts held by the prior mortgagors, and released two properties that served as additional collateral for the previous debt. F-16 48 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes the Company's secured tax-exempt bond financing at December 31, 1999 and 1998, all of which is non-recourse to the Company (in thousands):
1999 1998 -------- -------- 7.0% fully-amortizing bonds, due July 2016.................. $ 43,889 $ 45,237 6.9% fully-amortizing bonds, due July 2016.................. 8,987 9,267 Fixed rate fully-amortizing bonds, ranging from 5.1% to 5.8%, due 2021............................................ 157,578 159,555 Fixed rate fully-amortizing bonds, ranging from 6.5% to 7.3%, due at various dates through 2028................... 79,866 78,926 Fixed rate non-amortizing bonds, ranging from 5.0% to 8.19%, due at various dates through 2017......................... 50,158 55,747 4.0% interest-only bonds, due December 2020................. 4,453 4,525 Floating rate non-amortizing bonds, due 2001 and 2008....... 31,689 -- Variable rate bonds, ranging from 4.9% to 5.3%, due 2021.... 44,210 45,345 -------- -------- Total............................................. $420,830 $398,602 ======== ========
As of December 31, 1999, the scheduled principal amortization and balloon payments for the Company's secured tax-exempt bonds are as follows (in thousands): 2000........................................................ $ 21,761 2001........................................................ 13,978 2002........................................................ 9,752 2003........................................................ 10,239 2004........................................................ 26,842 Thereafter.................................................. 338,258 -------- $420,830 ========
NOTE 10 -- UNSECURED SHORT-TERM FINANCING In August 1999, the Company closed a $300 million revolving credit facility arranged by Bank of America, N.A., BankBoston, N.A. and First Union National Bank and comprised of a total of nine lender participants. The obligations under the credit facility are secured by certain non-real estate assets of the Company. The existing lines of credit were terminated. The credit facility is used for general corporate purposes and has a two-year term with two one-year extensions. The annual interest rate under the credit facility is based on either LIBOR or a base rate which is the higher of Bank of America's reference rate or 0.5% over the federal funds rate, plus, in either case, an applicable margin. The margin ranges between 2.05% and 2.55%, in the case of LIBOR-based loans, and between 0.55% and 1.05%, in the case of base rate loans, based upon a fixed charge coverage ratio. At December 31, 1999, the weighted average interest rate was 8.84%, the balance was $209.2 million, and the remaining available credit was $90.8 million. NOTE 11 -- SECURED SHORT-TERM FINANCING In February 1999, the Company terminated its $50 million secured credit facility with Washington Mortgage Financial Group, Ltd. and repaid all outstanding borrowings with proceeds from new long-term, fully amortizing notes payable totaling $58.2 million secured by certain properties that previously secured the credit facility. F-17 49 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 12 -- COMMITMENTS AND CONTINGENCIES Legal The Company is a party to various legal actions resulting from its operating activities. These actions are routine litigation and administrative proceedings arising in the ordinary course of business, some of which are covered by liability insurance, and none of which are expected to have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole. Limited Partnerships In connection with the Company's offers to purchase interests in limited partnerships that own properties, the Company and its affiliates are sometimes subject to legal actions, including allegations that such activities may involve breaches of fiduciary duties to the limited partners of such partnerships or violations of the relevant partnership agreements. The Company believes it complies with its fiduciary obligations and relevant partnership agreements, and does not expect such legal actions to have a material adverse effect on the consolidated financial condition or results of operations of the Company and its subsidiaries taken as a whole. Pending Investigations of HUD Management Arrangements In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting documents relating to arrangements whereby NHP or any of its affiliates provides compensation to owners of HUD-assisted or HUD-insured multi-family projects in exchange for or in connection with property management of a HUD project. In July 1999, NHP received a grand jury subpoena requesting documents relating to the same subject matter as the HUD IG subpoenas and NHP's operation of a group purchasing program created by NHP, known as Buyers Access. To date, neither the HUD IG nor the grand jury has initiated any action against NHP or AIMCO or, to NHP's or AIMCO's knowledge, any owner of a HUD property managed by NHP. AIMCO believes that NHP's operations and programs are in compliance, in all material respects, with all laws, rules and regulations relating to HUD-assisted or HUD-insured properties. AIMCO is cooperating with the investigations and does not believe that the investigations will result in a material adverse impact on its operations. However, as with any similar investigation, there can be no assurance that these will not result in material fines, penalties or other costs. Environmental The Company is subject to various Federal, state and local laws that impose liability on property owners or operators for the costs of removal or remediation of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of the hazardous substances. The presence of, or the failure to properly remediate, hazardous substances may adversely affect occupancy at contaminated apartment communities and our ability to sell or borrow against contaminated properties. In addition to the costs associated with investigation and remediation actions brought by governmental agencies, the presence of hazardous wastes on a property could result in personal injury or similar claims by private plaintiffs. The Company is also subject to various laws that impose liability for the cost of removal or remediation of hazardous substances at a disposal or treatment facility. Anyone who arranges for a disposal or treatment of hazardous or toxic substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of our properties, we could potentially be liable for environmental liabilities or costs associated with our properties or properties we may acquire or manage in the future. F-18 50 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Operating Leases The Company is obligated under office space and equipment non-cancelable operating leases. In addition, the Company subleases certain of its office space to tenants under non-cancelable subleases. Approximate minimum annual rentals under operating leases and approximate minimum payments to be received under annual subleases for the five years ending after December 31, 1999 are as follows (in thousands):
OPERATING LEASE SUBLEASE PAYMENTS PAYMENTS --------------- -------- 2000................................................. $11,792 $3,037 2001................................................. 10,429 2,250 2002................................................. 5,295 81 2003................................................. 3,602 -- 2004................................................. 2,936 -- ------- ------ Total................................................ $34,054 $5,368 ======= ======
Under the Company's current operating structure, substantially all of the office space and equipment subject to the operating leases described above are for the use of its regional operating centers, which are operated by certain of the Company's unconsolidated subsidiaries (see Note 6). Rent expense recognized by the unconsolidated subsidiaries totaled $5.8 and $6.2 million in 1999 and 1998, respectively. Rent expense recognized by the Company totaled $0.7 million in 1997. Sublease payments for 1999, 1998 and 1997 were not material. NOTE 13 -- TRUST BASED CONVERTIBLE PREFERRED SECURITIES In connection with the Insignia merger, the Company assumed the obligations under the Trust Based Convertible Preferred Securities (the "Securities") with an aggregate liquidation amount of $149.5 million. The Securities will mature on September 30, 2016 and require distributions at the rate of 6.5% per annum, with quarterly distributions payable in arrears. The Securities are convertible by the holders at any time through September 30, 2016 and may be redeemed by the Company on or after November 1, 1999. Each $50 of liquidation value of the Securities can be converted into Class A Common Stock at a conversion price of $49.61, which equates to 1.007 shares of Class A Common Stock. NOTE 14 -- TRANSACTIONS INVOLVING MINORITY INTEREST IN OPERATING PARTNERSHIP In 1999, the Company completed tender offers for limited partnership interests resulting in the issuance of 1,084,000 Common OP Units, 11,000 Class Two Preferred OP Units, 1,682,000 Class Three Preferred OP Units, and 580,000 Class Four Preferred OP Units. In 1998, the Company acquired Calhoun Beach Club Apartments, a 351 unit, high-rise apartment community and 83,300 square feet of commercial space for approximately $77.1 million, including the issuance of 90,000 Class One Preferred OP Units valued at $9.0 million and approximately 100,300 common OP units valued at $4.1 million. The Company also withheld, as contingent consideration, approximately 109,800 common OP units valued at approximately $4.5 million. In September 1999, the contingent consideration was met and the 109,800 common OP units were issued. F-19 51 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) As of December 31, 1999 and 1998, the following amounts of preferred OP Units are outstanding (in thousands):
1999 1998 ----- ---- Class One Partnership Preferred Units, redeemable to Class A Common Stock in one year, holder to receive dividends at 8% ($2.00 per annum per unit)..................................................... 90 90 Class Two Partnership Preferred Units, redeemable to Class A Common Stock in one year, holders to receive dividends at 8% ($2.00 per annum per unit)..................................................... 11 -- Class Three Partnership Preferred Units, redeemable to Class A Common Stock in one year, holders to receive dividends at 9.5% ($2.375 per annum per unit)........................................... 1,682 -- Class Four Partnership Preferred Units, redeemable to Class A Common Stock in two years, holders to receive dividends at 8% ($2.00 per annum per unit)................................................. 580 -- -- ----- 2,363 90 -- -- =====
On December 14, 1998, the Company sold, in a private placement, 1.4 million Class B partnership preferred units of a subsidiary of the AIMCO operating partnership for $30.85 million. The partnership units may be redeemed at the option of the holders at any time, and at the option of the Company under certain circumstances. Any redemption of the units may be satisfied by delivery of cash, Class A Common Stock or OP Units. NOTE 15 -- REGISTRATION STATEMENTS In August 1998, AIMCO and the AIMCO operating partnership filed a shelf registration statement with the Securities and Exchange Commission with respect to an aggregate of $1,268 million of debt and equity securities of AIMCO (of which $268 million was carried forward from a 1997 shelf registration statement) and $500 million of debt securities of the AIMCO operating partnership. The registration statement was declared effective by the SEC on December 10, 1998. As of December 31, 1999, the Company had $1,088 million available and the AIMCO operating partnership had $500 million available from this registration statement. The Company expects to finance pending acquisitions of real estate interests with the issuance of equity and debt securities under the shelf registration statement. F-20 52 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 16 -- STOCKHOLDERS' EQUITY Preferred Stock At December 31, 1999 and 1998, the Company had the following classes of preferred stock outstanding:
1999 1998 -------- -------- Class B Cumulative Convertible Preferred Stock, $.01 par value, 750,000 shares authorized, 750,000 and 750,000 shares issued and outstanding............................. $ 75,000 $ 75,000 Class C Cumulative Preferred Stock, $.01 par value, 2,400,000 shares authorized, 2,400,000 and 2,400,000 shares issued and outstanding; dividends payable at 9.0%, per annum................................................. 60,000 60,000 Class D Cumulative Preferred Stock, $.01 par value, 4,200,000 shares authorized, 4,200,000 and 4,200,000 shares issued and outstanding; dividends payable at 8.75%, per annum................................................. 105,000 105,000 Class G Cumulative Preferred Stock, $.01 par value, 4,050,000 shares authorized, 4,050,000 and 4,050,000 shares issued and outstanding; dividends payable at 9.375%, per annum......................................... 101,250 101,250 Class H Cumulative Preferred Stock, $.01 par value, 2,000,000 shares authorized, 2,000,000 and 2,000,000 shares issued and outstanding; dividends payable at 9.5%, per annum................................................. 50,000 50,000 Class J Cumulative Convertible Preferred Stock, $.01 par value, 1,250,000 shares authorized, 250,000 and 1,250,000 shares issued and outstanding............................. -- 100,000 Class K Convertible Cumulative Preferred Stock, $.01 par value, 5,000,000 shares authorized, 5,000,000 and no shares issued and outstanding............................. 125,000 -- Class L Convertible Cumulative Preferred Stock, $.01 par value, 5,000,000 shares authorized, 5,000,000 and no shares issued and outstanding............................. 125,000 -- Class E Cumulative Convertible Preferred Stock, $.01 par value, no shares authorized, no shares and 8,423,658 shares issued and outstanding............................. -- 301,218 -------- -------- $641,250 $792,468 ======== ========
All classes of preferred stock are on equal parity and are senior to the Class A Common Stock, except the Class E Preferred Stock, which was junior to all other classes of preferred stock and senior to the Class A Common Stock. The holders of each class of preferred stock are generally not entitled to vote on matters submitted to stockholders. Holders of the Class B Cumulative Convertible Preferred Stock (the "Class B Preferred Stock") are entitled to receive, when, as and if declared by the Board of Directors, quarterly cash dividends per share equal to the greater of $1.78125 or the cash dividends declared on the number of shares of Class A Common Stock into which one share of Class B Preferred Stock is convertible. Each share of Class B Preferred Stock is convertible at the option of the holder, beginning August 1998, into 3.28407 shares of Class A Common Stock, subject to certain anti-dilution adjustments. Holders of the Class J Cumulative Convertible Preferred Stock (the "Class J Preferred Stock") were entitled to receive cash dividends at the rate of 7% per annum of the $100 liquidation preference (equivalent to $7 per annum per share) for the period beginning November 6, 1998 and lasting until November 15, 1998, and 8% per annum of the liquidation preference (equivalent to $8 per annum per share) for the period beginning November 15, 1998 and lasting until November 15, 1999. On May 14, 1999, the Company notified the holders of the Class J Preferred Stock that the defined internal rate of return threshold had been met, and the Company exercised its right to convert all of the Class J Preferred Stock into 2.5 million shares of Class A Common Stock. F-21 53 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Class K Convertible Cumulative Preferred Stock (the "Class K Preferred Stock"), which was issued on February 18, 1999, are entitled to receive cash dividends in an amount per share equal to the greater of (i) $2.00 per year (equivalent to 8% of the liquidation preference), or (ii) the cash dividends payable on the number of shares of Class A Common Stock into which a share of Class K Preferred Stock is convertible. Beginning with the third anniversary of the date of original issuance, holders of Class K Preferred Stock will be entitled to receive an amount per share equal to the greater of (i) $2.50 per year (equivalent to 10% of the liquidation preference), or (ii) the cash dividends payable on the number of Class A Common Stock into which a share of Class K Preferred is convertible. Holder of Class L Convertible Cumulative Preferred Stock (the "Class L Preferred Stock"), which was issued on May 28, 1999, are entitled to receive cash dividends in an amount per share equal to the greater of (i) $2.025 per year (equivalent to 8.1% of the liquidation preference), or (ii) the cash dividends payable on the number of shares of Class A Common Stock into which a share of Class L Preferred Stock is convertible. Beginning with the third anniversary of the date of original issuance, the holder of Class L Preferred Stock will be entitled to receive an amount per share equal to the greater of (i) $2.50 per year (equivalent to 10% of the liquidation preference), or (ii) the cash dividends payable on the number of shares of Class A Common Stock into which a share of Class L Preferred Stock is convertible. The Class E Preferred Stock was issued in connection with the Insignia merger. Holders of Class E Preferred Stock were entitled to receive the same cash dividends per share as holders of Class A Common Stock. In addition, on January 15, 1999, holders of Class E Preferred Stock received a special dividend in an aggregate amount of approximately $50 million. Concurrently with the payment of such special dividend, all outstanding shares of Class E Preferred Stock automatically converted into an equal number of shares of Class A Common Stock. The dividends paid on each class of preferred stock for the years ended December 31, 1999, 1998, and 1997 are as follows (in thousands, except per share data):
1999 1998 1997 -------------------- -------------------- ------------------- AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL CLASS OF PER AMOUNT PER AMOUNT PER AMOUNT PREFERRED STOCK SHARE(1) PAID SHARE(1) PAID SHARE(1) PAID - --------------- -------- ------- -------- ------- -------- ------ Class B........................ $8.21 $ 6,158 $7.39 $ 5,542 $1.13(2) $846 Class C........................ 2.25 5,400 1.89(3) 4,538 -- -- Class D........................ 2.19 9,188 1.40(3) 5,869 -- -- Class E........................ -- -- 0.22(4) 1,892 -- -- Class G........................ 2.34 9,492 0.59(3) 2,373 -- -- Class H........................ 2.38 4,750 0.40(3) 805 -- -- Class J........................ 3.16(5) 3,956 0.14(3) 175 -- -- Class K........................ 1.50(6) 7,500 -- -- -- -- Class L........................ 1.01(6) 5,063 -- -- -- -- ------- ------- ---- $51,507 $21,194 $846 ======= ======= ====
- --------------- (1) Amounts per share are calculated based on number of preferred shares outstanding at the end of each year. (2) For the period from the date of issuance to December 31, 1997. (3) For the period from the date of issuance to December 31, 1998. (4) For the period from the date of issuance to December 31, 1998. The Class E Preferred Stock was converted to Class A Common Stock on January 15, 1999. (5) For the period from January 1, 1999 to the date of conversion to Class A Common Stock. (6) For the period from the date of issuance to December 31, 1999. F-22 54 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Common Stock During 1999 and 1998, the Company issued approximately 215,000 and 600,000 shares, respectively, of Class A Common Stock to certain executive officers (or entities controlled by them) at market prices. In exchange for the shares purchased, the executive officers (or entities controlled by them) executed notes payable totaling $8.2 million and $23.5 million, respectively. Total payments on such notes from officers in 1999 and 1998 were $6.2 million and $8.9 million, respectively. In addition, in 1999 and 1998, the Company issued approximately 37,000 and 40,000 restricted shares of Class A Common Stock, respectively, to certain executive officers. On September 15, 1999, the Company completed a direct placement of 1,382,580 shares of Class A Common Stock at a net price of $39.50 per share to five institutional investors. The net proceeds of approximately $54.6 million were used to repay outstanding indebtedness under the new credit facility. During 1999, the Company repurchased 205,300 shares of Class A Common Stock at an average price of $38.82 per share. NOTE 17 -- STOCK OPTION PLANS AND STOCK WARRANTS The Company has adopted the 1994 Stock Option Plan of Apartment Investment and Management Company (the "1994 Plan"), the Apartment Investment and Management Company 1996 Stock Award and Incentive Plan (the "1996 Plan"), the Apartment Investment and Management Company 1997 Stock Award and Incentive Plan (the "1997 Plan") and the Apartment Investment and Management Company Non- Qualified Employee Stock Option Plan (the "Non-Qualified Plan") to attract and retain officers, key employees and independent directors. The 1994 Plan provides for the granting of a maximum of 150,000 options to purchase common shares. The 1996 Plan provides for the granting of a maximum of 500,000 options to purchase common shares. The 1997 Plan provides for the granting of a maximum of 20,000,000 options to purchase common shares. The Non-Qualified Plan provides for the granting of a maximum of 500,000 options to purchase common shares. The 1994 Plan, the 1996 Plan, the 1997 Plan and the Non-Qualified Plan allow for the grant of incentive and non-qualified stock options, and are administered by the Compensation Committee of the Board of Directors. The 1994 Plan also provides for a formula grant of the non-qualified stock options to the independent directors to be administered by the Board of Directors to the extent necessary. The exercise price of the options granted may not be less than the fair market value of the common stock at the date of grant. The term of the incentive and non-qualified options is ten years from the date of grant. The options vest over a one to five-year period from the date of grant. Terms may be modified at the discretion of the Compensation Committee of the Board of Directors. The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25") and related interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), requires the use of option valuation models that were not developed for use in valuing employee stock options and warrants. Under APB 25, because the exercise price of the Company's employee stock options and warrants equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. Pro forma information regarding net income and earnings per share is required by SFAS 123, which also requires that the information be determined as if the Company had accounted for its employee stock options and warrants granted subsequent to December 31, 1994 under the fair value method. The fair value for these F-23 55 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) options and warrants were estimated at the date of grant using a Black-Scholes valuation model with the following assumptions:
1999 1998 1997 ---------- ---------- ---------- 4.5% to 4.4% to 5.8% to Range of risk free interest rates........... 6.5% 5.6% 6.6% Expected dividend yield..................... 6.6% 6.0% 6.0% Volatility factor of the expected market price of the Company's common stock....... 0.183 0.183 0.175 Weighted average expected life of options... 4.5 years 4.5 years 4.5 years
The Black-Scholes valuation model was developed for use in estimating the fair value of traded options and for warrants which have no vesting restrictions and are fully transferable. In addition, the valuation model requires the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock options and warrants have characteristics significantly different from those of traded options and warrants, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing model does not necessarily provide a reliable single measure of the fair value of its employee stock options and warrants. For purposes of pro forma disclosures, the estimated fair values of the options are amortized over the options' vesting period. The Company's pro forma information for the years ended December 31, 1999, 1998 and 1997 is as follows (in thousands, except per share data):
1999 1998 1997 ------- ------- ------- Pro forma net income attributable to common stockholders.......................................... $17,606 $34,396 $26,096 Pro forma basic earnings per common share............... $ 0.28 $ 0.76 $ 1.00 Pro forma diluted earnings per common share............. $ 0.28 $ 0.75 $ 1.00
The effects of applying SFAS 123 in calculating pro forma income attributable to common stockholders and pro forma basic earnings per share may not necessarily be indicative of the effects of applying SFAS 123 to future years' earnings. F-24 56 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes the option and warrants activity for the years ended December 31, 1999, 1998 and 1997:
1999 1998 1997 -------------------- -------------------- -------------------- WEIGHTED WEIGHTED WEIGHTED OPTIONS AVERAGE OPTIONS AVERAGE OPTIONS AVERAGE AND EXERCISE AND EXERCISE AND EXERCISE WARRANTS PRICE WARRANTS PRICE WARRANTS PRICE --------- -------- --------- -------- --------- -------- Outstanding at beginning of year.... 7,450,000 $36.21 1,684,000 $30.53 505,000 $20.74 Granted................ 1,000,000 37.14 5,811,000 37.78 627,000 38.77 Assumed in connection with acquisitions.... -- -- 671,000 25.99 995,000 24.77 Exercised.............. (490,000) 13.78 (661,000) 25.19 (437,000) 18.11 Forfeited.............. (175,000) 34.68 (55,000) 35.71 (6,000) 18.50 --------- ------ --------- ------ --------- ------ Outstanding at end of year................. 7,785,000 $37.78 7,450,000 $36.21 1,684,000 $30.53 Exercisable at end of year................. 1,643,000 $37.55 1,793,000 $31.69 690,000 $19.95 Weighted-average fair value of options and warrants granted during the year...... $ 3.41 $ 3.70 $ 3.24
At December 31, 1999, exercise prices for outstanding and exercisable options range from $15.21 to $43.85 and warrants range from $36.00 to $51.67, and the remaining weighted-average contractual life of the options and warrants is 9.06 years. On June 3, 1997, AIMCO issued warrants (the "NHP Warrants") exercisable to purchase an aggregate of 399,999 shares of Class A Common Stock at $36 per share at any time prior to June 3, 2002. The NHP Warrants were issued as part of the consideration for the NHP Real Estate Companies. On December 2, 1997, AIMCO issued warrants (the "Oxford Warrants") exercisable to purchase up to an aggregate of 500,000 shares of Class A Common Stock at $41 per share. The Oxford Warrants were issued to affiliates of Oxford Realty Financial Group, Inc., a Maryland corporation ("Oxford"), in connection with the amendment of certain agreements pursuant to which the Company manages properties controlled by Oxford or its affiliates. The actual number of shares of Class A Common Stock for which the Oxford Warrants will be exercisable is based on certain performance criteria with respect to the Company's management arrangements with Oxford for each of the five years ending December 31, 2001. The Oxford Warrants are exercisable for six years after the determination of such criteria for each of the five years. In connection with the Insignia merger, the Company assumed warrants that allowed the holders to purchase shares of Class A Common Stock at prices ranging from approximately $4 to $52 per share. As of December 31, 1999, approximately 15,000 of the Insignia warrants were still outstanding. On December 14, 1998, the Company sold, in a private placement, a warrant to purchase 875,000 shares of Class A Common Stock for $4.15 million. The warrant has an exercise price of $40 per share. The warrant may be exercised at any time, and expires upon a redemption of the Class B partnership preferred units issued by a subsidiary of the AIMCO Operating Partnership (see Note 14). F-25 57 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 18 EARNINGS PER SHARE The following table illustrates the calculation of basic and diluted earnings per share for the years ended December 31, 1999, 1998 and 1997 (in thousands, except per share data):
1999 1998 1997 -------- -------- ------- Numerator: Net income............................................ $ 80,959 $ 64,474 $28,633 Preferred stock dividends............................. (56,885) (26,533) (2,315) -------- -------- ------- Numerator for basic and diluted earnings per share -- income attributable to common stockholders........................................ $ 24,074 $ 37,941 $26,318 ======== ======== ======= Denominator: Denominator for basic earnings per share -- weighted average number of shares of common stock outstanding......................................... 62,242 45,187 24,055 Effect of dilutive securities: Dilutive potential common shares...................... 1,204 2,437 381 -------- -------- ------- Denominator for diluted earnings per share............ 63,446 47,624 24,436 ======== ======== ======= Basic earnings per common share: Operations.......................................... $ 0.42 $ 0.74 $ 0.99 Gain on disposition of properties................... (0.03) 0.10 0.11 Extraordinary item.................................. -- -- (0.01) -------- -------- ------- Total....................................... $ 0.39 $ 0.84 $ 1.09 ======== ======== ======= Diluted earnings per common share: Operations.......................................... $ 0.41 $ 0.70 $ 0.98 Gain on dispositions of properties.................. (0.03) 0.10 0.11 Extraordinary item.................................. -- -- (0.01) -------- -------- ------- Total....................................... $ 0.38 $ 0.80 $ 1.08 ======== ======== =======
The Class B Preferred Stock, the Class J Preferred Stock, the Class K Preferred Stock, and the Class L Preferred Stock are convertible into Class A Common Stock (see Note 16). The Class C Preferred Stock, the Class D Preferred Stock, the Class G Preferred Stock, and the Class H Preferred Stock are not convertible. NOTE 19 RECENT ACCOUNTING DEVELOPMENTS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("Statement 133"). Statement 133 requires recording all derivative instruments as assets or liabilities, measured at fair value. Statement 133 is effective beginning after 2000. The Company has elected not to early adopt the provisions of Statement 133 as of December 31, 1999 and when Statement 133 is adopted, the Company does not expect the Statement to have a significant impact on its financial position and results of operations. NOTE 20 TRANSACTIONS WITH AFFILIATES In January 1998, AIMCO's operating partnership sold an aggregate of 15,000 of its Class I High Performance Partnership Units (the "High Performance Units") to a joint venture of twelve members of AIMCO's senior management and three of its independent directors for $2.1 million in cash. The High Performance Units have nominal value unless the Company's total return, defined as dividend income plus share price appreciation, over the three year period ending December 31, 2000, is at least 30% and exceeds the industry average, as determined by a peer group index, by at least 15% (the "Total Return"). At the F-26 58 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) conclusion of the three year period, if the Company's Total Return satisfies these criteria, the holders of the High Performance Units will receive distributions and allocations of income and loss from the AIMCO operating partnership in the same amounts and at the same times as would holders of a number of OP Units equal to the quotient obtained by dividing the product of (i)(a) 15% of the amount by which the Company's cumulative Total Return over the three year period exceeds the greater of 115% of a peer group index or 30% (such excess being the "Excess Return"), multiplied by (b) the weighted average market value of the Company's outstanding Class A Common Stock and OP Units, by (ii) the market value of one share of Class A Common Stock at the end of the three year period. The three year measurement period will be shortened in the event of a change of control of the Company. Unlike OP Units, the High Performance Units are not redeemable or convertible into Class A Common Stock unless a change of control of the Company occurs. Because there is substantial uncertainty that the High Performance Units will have more than nominal value due to the required Total Return over the three year term, the Company has not recorded any value to the High Performance Units. If the measurement period had ended December 31, 1999, the Excess Return would have been $83.8 million and the value of the High Performance Units would have been $12.6 million. Fees earned based on services provided by the Company, as general partner, to real estate partnerships for customary services including refinancing, construction supervisory and disposition fees for the years ended December 31, 1999 and 1998 were $14.2 million and $6.4 million, respectively. Fees earned by the Company for the year ended December 31, 1997 were not significant. NOTE 21 EMPLOYEE BENEFIT PLANS The Company offers medical, dental, life and short-term and long-term disability benefits to employees of the Company through insurance coverage of Company-sponsored plans. The medical and dental plans are self-funded and are administered by independent third parties. In addition, the Company also participates in a 401(k) defined-contribution employee savings plan. Employees who have completed six months of service are eligible to participate. The Company matches 50%-100% of the participant's contributions to the plan up to a maximum of 6% of the participant's prior year compensation. The Company match percentage is based on employee tenure. NOTE 22 UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION Summarized unaudited consolidated quarterly information for 1999 and 1998 is provided below (amounts in thousands, except per share amounts).
QUARTER ----------------------------------------- YEAR ENDED DECEMBER 31, 1999 FIRST SECOND THIRD FOURTH - ---------------------------- -------- -------- -------- -------- Revenue from property operations................... $112,586 $116,237 $120,398 $184,696 Income from property operations.................... 38,802 39,815 40,456 52,969 Revenue from service company business.............. 8,556 7,536 10,280 17,083 Company's share of income from service company business......................................... (346) 5,150 (4,315) 17,496 Income before minority interest in operating partnership...................................... 15,175 23,993 19,889 24,655 Net income......................................... 13,956 23,117 19,487 24,399 Basic earnings per common share.................... $ 0.01 $ 0.15 $ 0.08 $ 0.15 Diluted earnings per common share.................. $ 0.01 $ 0.14 $ 0.07 $ 0.15 Weighted average common shares outstanding......... 56,468 62,323 64,370 65,805 Weighted average common shares and common share equivalents outstanding.......................... 58,412 63,552 65,451 66,368
F-27 59 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
QUARTER --------------------------------------- YEAR ENDED DECEMBER 31, 1998 FIRST SECOND THIRD FOURTH - ---------------------------- ------- ------- -------- -------- Revenue from property operations..................... $71,336 $89,928 $104,436 $111,439 Income from property operations...................... 28,918 33,701 33,943 37,388 Revenue from service company business................ 4,821 4,741 4,406 10,135 Company's share of income from service company Business........................................... 992 1,183 1,775 1,475 Income before minority interest in operating partnership........................................ 23,930 14,594 17,745 13,387 Net income........................................... 21,642 13,620 16,582 12,630 Basic earnings per common share...................... $ 0.44 $ 0.19 $ 0.19 $ 0.05 Diluted earnings per common share.................... $ 0.43 $ 0.19 $ 0.19 $ 0.05 Weighted average common shares outstanding........... 41,128 45,298 47,062 47,261 Weighted average common shares and common share equivalents outstanding............................ 41,310 45,539 47,403 56,244
NOTE 23 INDUSTRY SEGMENTS The Company owns and operates multi-family apartment communities throughout the United States and Puerto Rico which generate rental and other property related income through the leasing of apartment units to a diverse base of tenants. The Company separately evaluates the performance of each of its apartment communities. However, because each of the apartment communities has similar economic characteristics, facilities, services and tenants, the apartment communities have been aggregated into a single apartment communities segment. All segment disclosures are included in or can be derived from the Company's consolidated financial statements. All revenues are from external customers and no revenues are generated from transactions with other segments. There are no tenants which contributed 10% or more of the Company's total revenues during 1999, 1998 or 1997. Although the Company operates in only one segment, there are different components of the multi-family business for which management considers disclosure to be useful. The following table presents the contribution (separated between consolidated and unconsolidated activity) to the Company's free cash flow for the year ended December 31, 1999, from the components of the Company and a reconciliation of free cash flow to funds from operations, less a reserve for capital replacements, and net income (in thousands, except equivalent units and monthly rents):
CONSOLIDATED UNCONSOLIDATED TOTAL CONTR. % ------------ -------------- --------- -------- REAL ESTATE: Conventional: Average monthly rent greater than $800 per unit (9,008 equivalent units)............ $ 62,428 $ 15,672 $ 78,100 15 % Average monthly rent $700 to $800 per unit (9,310 equivalent units)................. 36,295 21,332 57,627 11 % Average monthly rent $600 to $700 per unit (16,494 equivalent units)................ 58,518 27,615 86,133 16 % Average monthly rent $500 to $600 per unit (29,492 equivalent units)................ 78,163 32,336 110,499 21 % Average monthly rent less than $500 per unit (29,387 equivalent units)........... 36,348 20,037 56,385 11 % --------- --------- --------- --- Subtotal conventional real estate contribution to free cash flow(1)..... 271,752 116,992 388,744 74 % Affordable (9,809 equivalent units)........... 5,131 31,964 37,095 7 %
F-28 60 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATED UNCONSOLIDATED TOTAL CONTR. % ------------ -------------- --------- -------- College housing (average rent of $663 per month) (2,214 equivalent units)............ 3,633 4,553 8,186 2 % Other real estate............................. 1,933 4,956 6,889 1 % Resident services............................. 1,914 436 2,350 -- Minority interest............................. (22,212) -- (22,212) (4)% --------- --------- --------- --- Total real estate contribution to free cash flow(1)........................ 262,151 158,901 421,052 80 % --------- --------- --------- --- SERVICE BUSINESSES: Management contracts (property and asset management) Controlled properties...................... 18,999 16,396 35,395 7 % Third party with terms in excess of one year..................................... -- 10,281 10,281 2 % Third party cancelable in 30 days.......... -- 908 908 -- --------- --------- --------- --- Subtotal management contracts contribution to free cash flow(1)..... 18,999 27,585 46,584 9 % Buyers Access................................. -- 3,314 3,314 1 % Other service businesses...................... 4,068 (2,703) 1,365 -- --------- --------- --------- --- Total service businesses contribution to free cash flow(1)................ 23,067 28,196 51,263 10 % --------- --------- --------- --- INTEREST INCOME: General partner loan interest................. 12,243 -- 12,243 2 % Notes receivable from officers................ 869 -- 869 -- Other notes receivable........................ 8,863 -- 8,863 2 % Money market and interest bearing accounts.... 8,286 1,568 9,854 2 % --------- --------- --------- --- Subtotal interest income................. 30,261 1,568 31,829 6 % Accretion of loan discount(2)................. 32,460 -- 32,460 6 % --------- --------- --------- --- Total interest income contribution to free cash flow(1)................... 62,721 1,568 64,289 12 % --------- --------- --------- --- FEES: Disposition fees.............................. 3,070 801 3,871 1 % Refinancing fees.............................. 283 331 614 -- --------- --------- --------- --- Total fees contribution to free cash flow(1)............................. 3,353 1,132 4,485 1 % --------- --------- --------- --- GENERAL AND ADMINISTRATIVE EXPENSES............. (13,112) -- (13,112) (3)% --------- --------- --------- --- Total contribution to free cash flow from business components(1)......... 338,180 189,797 527,977 100 % --------- --------- --------- --- OTHER EXPENSES: Interest expense: Secured debt Long-term, fixed rate...................... (107,368) (63,112) (170,480) Long-term, variable rate................... (1,314) (2,008) (3,322) Short-term................................. (14,906) (2,846) (17,752) General partner loans and deferred acquisition notes...................................... -- (1,744) (1,744) Lines of credit and other unsecured debt...... (13,378) (384) (13,762) Interest on notes payable to AIMCO............ -- (7,401) (7,401)
F-29 61 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATED UNCONSOLIDATED TOTAL CONTR. % ------------ -------------- --------- -------- Convertible preferred securities.............. (4,858) -- (4,858) Interest capitalized.......................... 6,588 93 6,681 --------- --------- --------- Total interest expense before minority interest............................ (135,236) (77,402) (212,638) Minority interest share of interest expense... 11,248 -- 11,248 --------- --------- --------- Total interest expense after minority interest............................ (123,988) (77,402) (201,390) --------- --------- --------- Funds from operations, less a reserve for capital replacements, before preferred dividends(1)............................... 214,192 112,395 326,587 Preferred Stock and Preferred OP Unit dividends..................................... (33,943) -- (33,943) --------- --------- --------- Funds from operations, less a reserve for capital replacements(1).................... 180,249 112,395 292,644 Capital replacement reserve..................... 19,434 9,281 28,715 Preferred Stock and Preferred OP Unit dividends..................................... 33,943 -- 33,943 Equity in losses of unconsolidated real estate partnerships.................................. (4,467) 4,467 -- Equity in losses of unconsolidated subsidiaries.................................. (2,818) 2,818 -- Additional interest expense on convertible preferred securities.......................... (4,858) -- (4,858) Loss on disposition of properties............... (1,785) -- (1,785) Depreciation.................................... (131,753) (104,764) (236,517) Minority interest in depreciation............... 10,064 -- 10,064 Amortization.................................... (14,297) (22,434) (36,731) Deferred tax provision.......................... -- (1,763) (1,763) Minority interest in operating partnership...... (2,753) -- (2,753) --------- --------- --------- Net income............................ $ 80,959 $ -- $ 80,959 ========= ========= =========
- --------------- (1) "Funds from operations" and "free cash flow" are measurement standards used by the Company's management, as follows: - The Company measures its economic profitability based on funds from operations ("FFO"), less a reserve for capital replacements of $300 per apartment unit. The Company's management believes that FFO, less such a reserve (or adjusted funds from operations, "AFFO") provides investors with an understanding of the Company's ability to incur and service debt and make capital expenditures. The Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss), computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains and losses from debt restructuring and sales of property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. The Company calculates FFO based on the NAREIT definition, as adjusted for minority interest in the AIMCO operating partnership, amortization, the non-cash deferred portion of the income tax provision for unconsolidated subsidiaries and less the payment of dividends on preferred stock. FFO should not be considered an alternative to net income or net cash flows from operating activities, as calculated in accordance with GAAP, as an indication of the Company's performance or as a measure of liquidity. FFO is not necessarily indicative of cash available to fund future cash needs. In addition, there can be no assurance that the Company's basis for computing FFO is comparable with that of other real estate investment trusts. - Free cash flow is defined by the Company as AFFO plus interest expense and Preferred Stock dividends. It measures profitability prior to the cost of capital. Free cash flow should not be considered an alternative to net income or net cash flows from operating activities, as calculated in accordance F-30 62 APARTMENT INVESTMENT AND MANAGEMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) with GAAP, as an indication of the Company's performance or as a measure of liquidity. Free cash flow is not necessarily indicative of cash available to fund future cash needs. (2) See Note 7. NOTE 24 SUBSEQUENT EVENTS Dividend Declared On January 19, 2000, the Board of Directors declared a quarterly cash dividend of $0.70 per common share for the quarter ended December 31, 1999, paid on February 11, 2000, to stockholders of record on February 4, 2000. The increased dividend is equivalent to an annualized dividend rate of $2.80 per common share, a 12% increase from the previous annual dividend rate of $2.50. Class M Preferred Stock On January 13, 2000, AIMCO issued 1,200,000 shares of newly created Class M Convertible Cumulative Preferred Stock, par value $.01 per share ("Class M Preferred Stock") in a direct placement. The net proceeds of $30.0 million were used to repay certain indebtedness and for working capital. For three years, holders of the Class M Preferred Stock are entitled to receive, when, as and if declared by the Board of Directors, annual cash dividends in an amount per share equal to the greater of (i) $2.125 per year (equivalent to 8.5% of the liquidation preference), or (ii) the cash dividends (payable quarterly) payable on the number of shares of Class A Common Stock into which a share of Class M Preferred Stock is convertible. Beginning with the third anniversary of the date of original issuance, holders of Class M Preferred Stock will be entitled to receive an amount per share equal to the greater of (i) $2.3125 per year (equivalent to 9.25% of the liquidation preference), or (ii) the cash dividends payable on the number of Class A Common Stock into which a share of Class M Preferred is convertible. The Class M Preferred Stock is senior to the Class A Common Stock as to dividends and liquidation. Upon any liquidation, dissolution or winding up of AIMCO, before payment or distributions by AIMCO shall be made to any holders of Class A Common Stock, the holders of the Class M Preferred Stock shall be entitled to receive a liquidation preference of $25 per share, plus accumulated, accrued and unpaid dividends. F-31 63 SCHEDULE III APARTMENT INVESTMENT AND MANAGEMENT COMPANY REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (IN THOUSANDS EXCEPT UNIT DATA)
INITIAL COST COST ----------------------- CAPITALIZED BUILDINGS SUBSEQUENT DATE YEAR NUMBER AND TO PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION - ------------- -------- ---------------------- --------- -------- -------- ------------ ----------- 100 Forest Place............. Oct-97 OakPark, IL 1986 234 $ 2,498 $ 14,154 $ 3,591 40th North................... Jul-94 Phoenix, AZ 1970 556 2,546 14,437 2,156 Alpine Village............... Oct-98 Birmingham, AL 1972 160 751 3,034 83 Anchorage.................... Nov-96 League City, TX 1985 264 523 9,097 1,994 Arbor Crossing............... May-97 Lithonia, GA 1988 240 1,879 10,647 1,517 Arbor Station................ Apr-98 Montgomery, AL 1987 264 1,627 9,218 702 Arbor Station II............. Apr-99 Montgomery, AL 1988 288 198 1,133 -- Arbors....................... Oct-97 Tempe, AZ 1971 200 1,092 6,189 509 Arbors....................... May-98 Deland, FL 1983 224 1,507 8,537 936 Ashford Plantation........... Dec-95 Atlanta, GA 1975 211 2,770 9,956 1,604 Aspen Hills.................. May-98 Austin, TX 1986 344 2,645 14,989 518 Aspen Point.................. Jul-99 Arvada, CO 1974 120 288 5,935 135 Atriums of Plantation........ Aug-98 Plantation, FL 1980 210 1,807 9,756 799 Baldwin Oaks................. May-97 Parsippany, NJ 1980 251 689 7,226 201 Barcelona.................... Oct-98 Houston, TX 1963 126 852 4,184 275 Bay Club..................... Apr-97 Aventura, FL 1990 702 10,530 60,830 2,523 Baymeadows................... Oct-98 Jacksonville, FL 1972 904 5,308 20,953 163 Beacon Hill.................. Oct-97 Chamblee, GA 1978 120 928 5,261 406 Beech Lake................... May-99 Durham, NC 1986 345 2,284 13,011 -- Bella Vista.................. Jul-99 Miami, FL 1986 352 2,560 14,660 -- Bent Oaks.................... May-98 Austin, TX 1979 146 1,117 6,328 227 Blossomtree.................. Oct-97 Scottsdale, AZ 1970 125 535 3,029 381 Boardwalk.................... Dec-95 Tamarac, FL 1986 291 3,350 8,196 1,283 Boulder Creek (Bluffs)....... Sep-83 Boulder, CO 1971 232 696 7,779 5,657 Bradford Place............... Dec-99 Suitland, MD 1968 214 1,176 6,666 -- Braesview.................... May-98 San Antonio, TX 1982 396 3,135 17,764 392 Brandywine................... Apr-83 St. Petersburg, FL 1971 477 1,423 11,336 2,269 Brant Rock................... Oct-97 Houston, TX 1984 84 337 1,908 330 Brentwood.................... Nov-96 Lake Jackson, TX 1980 104 200 3,092 479 Briarwest.................... Oct-98 Houston, TX 1970 380 2,671 15,362 258 Briarwood.................... Oct-98 Cedar Rapids, IA 1975 73 453 1,831 55 Briarwood.................... Oct-98 Houston, TX 1970 351 2,138 10,159 99 Bridgewater.................. Nov-96 Tomball, TX 1978 206 333 4,033 2,894 Brittany Point............... Oct-98 Hunstville, AL 1978 431 1,627 9,220 207 Broadmoor Apartments......... May-98 Austin, TX 1985 200 1,370 7,765 1,035 Brookdale Lakes.............. May-98 Naperville, IL 1990 200 2,709 15,350 269 Brookside Village............ Apr-96 Tustin, CA 1970 628 2,498 14,180 21,605 Burke Shire Commons.......... May-97 Burke, VA 1986 360 2,785 23,320 145 Calhoun Beach................ Dec-98 Minneapolis, MN 1928/1998 351 11,567 65,546 4,177 Cambridge Heights............ May-97 Natchez, MS 1979 94 249 1,413 825 Canterbury Green............. Dec-99 Fort Wayne, IN 1979 2,007 13,929 73,975 -- DECEMBER 31, 1999 --------------------------------------------------------------------------------- TOTAL COST BUILDINGS NET OF AND ACCUMULATED ACCUMULATED PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES - ------------- -------- ------------ ---------- ------------ ------------ ------------ 100 Forest Place............. $ 759 $ 19,484 $ 20,243 $ 5,165 $ 15,078 $ 15,080 40th North................... 2,546 16,592 19,139 3,783 15,356 10,202 Alpine Village............... 751 3,117 3,868 410 3,459 2,100 Anchorage.................... 615 10,999 11,614 3,660 7,954 4,708 Arbor Crossing............... 740 13,303 14,043 2,168 11,875 4,956 Arbor Station................ 1,627 9,920 11,547 653 10,894 7,385 Arbor Station II............. 198 1,133 1,331 54 1,277 776 Arbors....................... 1,092 6,698 7,790 647 7,143 3,715 Arbors....................... 1,507 9,474 10,980 700 10,280 7,605 Ashford Plantation........... 2,770 11,560 14,330 1,994 12,335 7,100 Aspen Hills.................. 2,645 15,507 18,152 1,102 17,050 9,570 Aspen Point.................. 288 6,070 6,358 1,647 4,711 -- Atriums of Plantation........ 1,807 10,555 12,362 617 11,745 7,629 Baldwin Oaks................. 689 7,427 8,116 718 7,399 7,384 Barcelona.................... 852 4,459 5,312 171 5,141 2,371 Bay Club..................... 10,533 63,350 73,883 6,330 67,552 49,000 Baymeadows................... 5,308 21,115 26,423 2,256 24,167 13,657 Beacon Hill.................. 929 5,666 6,595 534 6,060 3,496 Beech Lake................... 2,284 13,011 15,294 543 14,751 11,783 Bella Vista.................. 2,560 14,660 17,220 365 16,856 12,765 Bent Oaks.................... 1,117 6,555 7,672 458 7,214 4,300 Blossomtree.................. 535 3,411 3,945 322 3,623 2,037 Boardwalk.................... 3,350 9,479 12,829 1,702 11,128 8,987 Boulder Creek (Bluffs)....... 755 13,378 14,132 5,059 9,074 -- Bradford Place............... 1,176 6,666 7,842 -- 7,842 5,218 Braesview.................... 3,135 18,155 21,290 1,284 20,006 13,690 Brandywine................... 1,437 13,591 15,028 6,089 8,939 6,216 Brant Rock................... 337 2,238 2,575 208 2,367 1,178 Brentwood.................... -- 3,771 3,771 409 3,362 1,725 Briarwest.................... 2,671 15,619 18,290 596 17,694 6,992 Briarwood.................... 453 1,886 2,339 184 2,156 1,562 Briarwood.................... 2,138 10,258 12,397 454 11,943 4,949 Bridgewater.................. 398 6,863 7,260 1,389 5,871 4,055 Brittany Point............... 1,658 9,396 11,054 -- 11,054 9,159 Broadmoor Apartments......... 1,370 8,800 10,170 637 9,533 6,000 Brookdale Lakes.............. 2,709 15,619 18,328 1,089 17,239 13,280 Brookside Village............ 7,263 31,021 38,283 4,286 33,998 26,492 Burke Shire Commons.......... 2,785 23,465 26,250 906 25,344 22,055 Calhoun Beach................ 11,821 69,469 81,290 3,378 77,912 52,763 Cambridge Heights............ 90 2,397 2,487 1,018 1,469 1,520 Canterbury Green............. 13,929 73,975 87,904 87,904 52,804
F-32 64
INITIAL COST COST ----------------------- CAPITALIZED BUILDINGS SUBSEQUENT DATE YEAR NUMBER AND TO PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION - ------------- -------- ---------------------- --------- -------- -------- ------------ ----------- Cape Cod..................... May-98 San Antonio, TX 1985 244 1,582 8,946 234 Captiva Club................. Dec-96 Tampa, FL 1975 357 1,500 7,085 9,147 Carlin Manor................. Oct-98 Columbus, OH 1966 278 1,353 3,883 114 Carriage House............... Oct-98 Gastonia, NC 1970 102 486 2,059 99 Casa Anita................... Mar-98 Phoenix, AZ 1986 224 1,125 6,404 386 Cedar Creek.................. May-98 San Antonio, TX 1979 392 1,788 10,131 1,753 Center Square................ May-97 Doylestown, PA 1975 352 372 5,347 14 Chambers Ridge............... Oct-98 Harrisburg, PA 1973 324 1,469 6,135 1,690 Chapel NDP................... May-97 Baltimore, MD 1974 175 131 3,354 113 Chatham Harbor............... Oct-99 Altamonte Springs, FL 1985 324 2,288 12,999 -- Chesapeake................... Dec-96 Houston, TX 1983 320 775 7,317 778 Chestnut Hill Village........ May-97 Middletown, CT 1985 314 6,300 15,328 35 Citrus Grove................. Jun-98 Redlands, CA 1985 198 1,118 6,333 235 Citrus Sunset................ Mar-98 Vista, CA 1985 96 663 3,758 208 Cobble Creek................. Mar-98 Tucson, AZ 1980 301 1,299 7,395 575 Colonade Gardens (Ferntree).................. Oct-97 Phoenix, AZ 1973 196 765 4,337 411 Colonial Crest............... Dec-99 Bloomington, IN 1965 208 938 4,488 -- Colony....................... Sep-98 Bradenton, FL 1986 166 1,121 6,350 316 Colony At Kenilworth......... Oct-98 Towson, MD 1966 383 2,600 11,255 437 Colony House................. Oct-98 Murfreesboro, TN 1973 194 898 3,336 208 Copper Chase................. Dec-96 Katy, TX 1982 316 1,354 7,672 1,348 Copperfield.................. Nov-96 Houston, TX 1983 196 702 7,003 1,158 Coral Cove................... May-98 Tampa, FL 1985 200 727 4,119 3,431 Coral Gardens................ Apr-93 Las Vegas, NV 1983 670 3,190 12,745 2,530 Country Club Villas.......... Jul-94 Amarillo, TX 1984 282 1,049 5,951 993 Country Club West............ May-98 Greeley, CO 1986 288 2,848 16,138 614 Country Wood................. Oct-98 Raleigh, NC 1972 384 2,652 8,816 130 Courtney Park................ May-98 Fort Collins, CO 1986 248 2,726 15,450 400 Coventry Square.............. Nov-96 Houston, TX 1983 270 975 6,355 1,722 Crossbridge.................. Oct-98 Dallas, TX 1980 160 490 3,994 19 Crossings at Belle........... Jan-98 Amarillo, TX 1976 160 483 2,737 1,256 Crossings of Bellevue........ May-98 Nashville, TN 1985 300 2,588 14,667 680 Crossroads................... May-98 Phoenix, AZ 1982 316 2,180 12,353 410 Crows Nest................... Nov-96 League City, TX 1984 176 795 5,400 1,090 Cypress Landing.............. Dec-96 Savannah, GA 1984 200 915 5,188 603 Cypress Ridge................ May-98 Houston, TX 1979 268 870 4,931 1,204 Debaliviere I................ May-97 St. Louis, MO 1979 146 188 2,795 80 Dolphins Landing............. Dec-96 Corpus Christi, TX 1980 218 1,740 5,589 806 Douglaston Villas and Townhomes (Cameron Villas).. Aug-99 Altamonte Springs, FL 1979 234 1,721 9,835 242 Dunwoody Park................ Jul-94 Dunwoody, GA 1980 318 1,838 10,538 1,484 Eagle's Nest................. May-98 San Antonio, TX 1973 226 1,053 5,966 294 Eaglewood(s)................. Jun-98 Memphis, TN 1983 584 750 16,544 4,285 Easton Village............... Nov-96 Houston, TX 1983 146 440 6,584 1,957 Eden Crossing................ Nov-94 Pensacola, FL 1985 200 1,111 6,332 895 Elm Creek.................... May-97 Elmhurst, IL 1986 372 5,339 30,253 6,958 Emerald Ridge................ Feb-98 Tyler, TX 1984 484 1,469 8,324 926 Essex Park................... Oct-98 Columbia, SC 1971 323 1,570 5,554 141 Evanston Place............... May-97 Evanston, IL 1988 190 1,503 19,960 6,858 Fairway View I............... Oct-98 Baton Rouge, LA 1972 242 1,456 5,992 126 Fairway View II.............. Oct-98 Baton Rouge, LA 1981 204 1,428 5,899 94 DECEMBER 31, 1999 --------------------------------------------------------------------------------- TOTAL COST BUILDINGS NET OF AND ACCUMULATED ACCUMULATED PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES - ------------- -------- ------------ ---------- ------------ ------------ ------------ Cape Cod..................... 1,582 9,180 10,762 625 10,137 6,640 Captiva Club................. 1,752 15,980 17,732 816 16,916 8,950 Carlin Manor................. 1,353 3,997 5,350 520 4,830 2,500 Carriage House............... 486 2,158 2,643 229 2,414 1,892 Casa Anita................... 1,125 6,790 7,915 491 7,424 4,050 Cedar Creek.................. 1,788 11,884 13,671 768 12,903 4,609 Center Square................ 372 5,360 5,733 316 5,416 5,619 Chambers Ridge............... 1,469 7,825 9,294 901 8,393 5,396 Chapel NDP................... 131 3,467 3,598 142 3,456 3,269 Chatham Harbor............... 2,288 12,999 15,287 68 15,219 -- Chesapeake................... 775 8,095 8,870 1,015 7,854 7,199 Chestnut Hill Village........ 6,300 15,363 21,663 1,324 20,340 16,070 Citrus Grove................. 1,118 6,569 7,686 435 7,251 5,056 Citrus Sunset................ 663 3,966 4,629 256 4,373 3,561 Cobble Creek................. 1,299 7,970 9,269 669 8,600 6,924 Colonade Gardens (Ferntree).................. 766 4,747 5,513 452 5,061 2,752 Colonial Crest............... 938 4,488 5,426 -- 5,426 1,789 Colony....................... 1,121 6,666 7,787 392 7,395 3,277 Colony At Kenilworth......... 2,600 11,692 14,292 1,474 12,818 7,985 Colony House................. 898 3,544 4,442 381 4,061 2,249 Copper Chase................. 1,354 9,020 10,374 750 9,624 5,289 Copperfield.................. 646 8,217 8,863 1,589 7,274 3,367 Coral Cove................... 1,381 6,896 8,277 882 7,395 3,928 Coral Gardens................ 3,190 15,275 18,465 4,627 13,838 10,661 Country Club Villas.......... 1,049 6,944 7,993 1,489 6,504 3,837 Country Club West............ 2,848 16,752 19,600 1,228 18,372 11,158 Country Wood................. 2,652 8,946 11,598 1,004 10,593 4,267 Courtney Park................ 2,726 15,850 18,577 1,117 17,460 9,895 Coventry Square.............. 1,054 7,997 9,052 2,982 6,070 2,928 Crossbridge.................. 490 4,013 4,504 420 4,083 1,700 Crossings at Belle........... 483 3,993 4,476 306 4,171 2,388 Crossings of Bellevue........ 2,588 15,348 17,936 1,109 16,826 8,325 Crossroads................... 2,180 12,763 14,943 912 14,031 6,853 Crows Nest................... 856 6,429 7,285 1,923 5,362 2,784 Cypress Landing.............. 915 5,791 6,706 750 5,957 4,165 Cypress Ridge................ 870 6,135 7,005 461 6,545 4,250 Debaliviere I................ 188 2,874 3,062 233 2,830 2,534 Dolphins Landing............. 1,740 6,395 8,135 887 7,248 4,431 Douglaston Villas and Townhomes (Cameron Villas).. 1,721 10,077 11,798 245 11,554 -- Dunwoody Park................ 1,838 12,022 13,860 2,681 11,179 7,114 Eagle's Nest................. 1,053 6,260 7,313 461 6,851 4,685 Eaglewood(s)................. 945 20,634 21,579 8,101 13,478 -- Easton Village............... 565 8,416 8,981 1,890 7,091 2,789 Eden Crossing................ 1,111 7,227 8,338 1,547 6,791 5,603 Elm Creek.................... 5,421 37,130 42,550 10,348 32,202 23,508 Emerald Ridge................ 1,469 9,249 10,719 755 9,964 6,089 Essex Park................... 1,570 5,694 7,264 638 6,626 3,017 Evanston Place............... 2,101 26,220 28,321 5,697 22,624 18,425 Fairway View I............... 1,456 6,118 7,574 516 7,058 4,000 Fairway View II.............. 1,428 5,993 7,421 669 6,753 4,200
F-33 65
INITIAL COST COST ----------------------- CAPITALIZED BUILDINGS SUBSEQUENT DATE YEAR NUMBER AND TO PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION - ------------- -------- ---------------------- --------- -------- -------- ------------ ----------- Fairways..................... Jul-94 Chandler, AZ 1986 352 1,830 10,403 15,999 Ferntree Apartments.......... Oct-98 Phoenix, AZ 1970 219 1,243 12,818 404 Fieldcrest................... Oct-98 Jacksonville, FL 1982 240 1,331 7,544 315 Fishermans Landing........... Sep-98 Temple Terrace, FL 1986 256 1,643 9,311 603 Fishermans Landing........... Dec-97 Bradenton, FL 1984 200 1,275 7,225 767 Fishermans Wharf............. Nov-96 Clute, TX 1981 360 830 9,969 1,478 Foothills.................... Oct-97 Tucson, AZ 1982 270 1,203 6,817 351 Forest River................. Oct-98 Gadsden, AL 1979 248 795 3,499 204 Foxchase..................... May-97 Alexandria, VA 1947 2,113 39,390 93,181 7,949 Foxfire...................... Oct-98 Doraville, GA 1971 266 1,691 8,568 264 Foxfire-Barcelona/Durham..... Oct-98 Durham, NC 1972 354 2,357 7,898 134 Foxtree...................... Oct-97 Tempe, AZ 1976 487 2,505 14,194 1,191 Frankford Place.............. Jul-94 Carrollton, TX 1982 274 1,125 6,382 844 Franklin Oaks................ May-98 Franklin, TN 1987 468 4,031 22,842 1,087 Freedom Place Club........... Oct-97 Jacksonville, FL 1988 352 2,289 12,970 867 Gateway Gardens.............. Oct-98 Cedar Rapids, IA 1969 328 1,857 7,522 178 Georgetown................... Oct-98 Columbus, OH 1962 150 1,004 3,827 175 Glen Hollow.................. Dec-99 Charlotte, NC 1972 336 2,133 10,174 -- Grand Flamingo (Morton Towers)..................... Sep-97 Miami Beach, FL 1960 1,277 8,736 49,774 51,840 Greens of Naperville......... May-97 Naperville, IL 1986 400 3,756 21,284 624 Greentree.................... Dec-96 Carrollton, TX 1983 365 1,955 11,098 761 Hampton Hill................. Nov-96 Houston, TX 1984 332 1,574 8,408 4,824 Harbor Cove.................. May-98 San Antonio, TX 1980 256 1,446 8,193 353 Hastings Place............... Nov-96 Houston, TX 1984 176 734 3,382 1,830 Haverhill Commons............ May-98 W. Palm Beach, FL 1986 222 1,656 9,386 1,149 Hazeltree.................... Oct-97 Phoenix, AZ 1970 310 997 5,650 1,118 Heather Ridge................ Dec-96 Arlington, TX 1983 180 614 3,478 272 Heather Ridge................ May-98 Phoenix, AZ 1983 252 1,609 9,119 244 Heritage Pointe.............. Oct-98 Rome, GA 1976 149 510 1,985 71 Heritage Village............. Dec-97 Temple Terrace, FL 1967 252 713 10,678 2,441 Hidden Lake.................. May-98 Tampa, FL 1983 267 1,361 7,715 287 Hiddentree................... Oct-97 East Lansing, MI 1966 261 1,470 8,330 1,134 Highland Park................ Dec-96 Fort Worth, TX 1985 500 1,823 10,330 5,193 Hillmeade.................... Nov-94 Nashville, TN 1985 288 2,872 16,066 2,999 Hunt Club.................... Oct-98 Indianapolis, IN 1972 200 689 4,045 -- Hunters Creek................ May-99 Cincinnati, OH 1981 146 661 3,832 -- Hunters Glen................. Apr-98 Austell, GA 1983 72 301 1,704 112 Hunters Glen IV.............. Oct-98 Plainsboro, NJ 1976 264 2,488 9,738 149 Hunters Glen V............... Oct-98 Plainsboro, NJ 1977 304 2,997 10,912 279 Hunters Glen VI.............. Oct-98 Plainsboro, NJ 1977 328 3,120 11,376 300 Huntington Athletic Club..... Oct-98 Morrisville, NC 1986 212 1,830 8,535 52 Indian Creek Village......... Oct-98 Overland Park, KS 1972 273 1,959 3,033 159 Islandtree................... Oct-97 Savannah, GA 1985 216 1,267 7,181 645 Jefferson Place.............. Nov-94 Baton Rouge, LA 1985 234 2,696 15,115 1,493 La Colina.................... Oct-98 Denton, TX 1984 264 1,599 5,034 130 La Jolla de San Antonio...... May-98 San Antonio, TX 1975 300 2,071 11,733 378 La Jolla de Tucson........... May-98 Tucson, AZ 1978 223 1,342 7,603 441 Lake Castleton Arms.......... Oct-98 Indianapolis, IN 1997 1,265 5,188 33,504 147 Lake Crossing................ May-97 Austell, GA 1988 300 1,683 9,538 1,756 Lake Johnson Mews............ Oct-98 Raleigh, NC 1972 201 1,683 5,803 181 DECEMBER 31, 1999 --------------------------------------------------------------------------------- TOTAL COST BUILDINGS NET OF AND ACCUMULATED ACCUMULATED PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES - ------------- -------- ------------ ---------- ------------ ------------ ------------ Fairways..................... 4,133 24,099 28,232 2,822 25,410 6,040 Ferntree Apartments.......... 1,242 13,223 14,465 478 13,987 5,191 Fieldcrest................... 1,331 7,859 9,190 411 8,779 5,705 Fishermans Landing........... 1,643 9,915 11,557 573 10,984 5,554 Fishermans Landing........... 1,276 7,990 9,267 691 8,575 4,687 Fishermans Wharf............. 933 11,344 12,277 4,640 7,637 3,407 Foothills.................... 1,203 7,168 8,371 668 7,703 3,734 Forest River................. 795 3,702 4,498 405 4,093 3,266 Foxchase..................... 16,028 124,492 140,520 8,527 131,993 63,015 Foxfire...................... 1,691 8,832 10,522 776 9,746 7,187 Foxfire-Barcelona/Durham..... 2,357 8,032 10,389 896 9,493 5,355 Foxtree...................... 2,505 15,385 17,890 1,542 16,348 8,613 Frankford Place.............. 1,125 7,226 8,351 1,778 6,573 3,779 Franklin Oaks................ 4,031 23,929 27,960 1,719 26,241 17,255 Freedom Place Club........... 2,289 13,838 16,126 1,271 14,856 6,753 Gateway Gardens.............. 1,857 7,700 9,557 847 8,709 6,295 Georgetown................... 1,004 4,002 5,006 183 4,823 3,646 Glen Hollow.................. 2,133 10,174 12,307 -- 12,307 7,690 Grand Flamingo (Morton Towers)..................... 13,182 97,168 110,350 4,936 105,414 26,299 Greens of Naperville......... 1,995 23,669 25,664 6,138 19,526 12,181 Greentree.................... 1,955 11,859 13,814 1,199 12,615 7,169 Hampton Hill................. 2,227 12,580 14,806 4,569 10,238 3,991 Harbor Cove.................. 1,446 8,545 9,991 605 9,386 5,755 Hastings Place............... 799 5,147 5,946 1,333 4,613 2,558 Haverhill Commons............ 1,656 10,534 12,191 771 11,420 9,045 Hazeltree.................... 997 6,768 7,765 618 7,147 3,928 Heather Ridge................ 614 3,751 4,364 436 3,929 2,573 Heather Ridge................ 1,609 9,362 10,972 662 10,310 5,850 Heritage Pointe.............. 510 2,056 2,566 251 2,315 1,400 Heritage Village............. 1,022 12,810 13,832 4,008 9,824 5,180 Hidden Lake.................. 1,361 8,002 9,363 583 8,780 5,347 Hiddentree................... 1,470 9,464 10,934 939 9,995 4,227 Highland Park................ 2,098 15,249 17,347 1,459 15,888 9,030 Hillmeade.................... 2,872 19,065 21,937 3,903 18,034 10,458 Hunt Club.................... 689 4,045 4,734 502 4,232 3,637 Hunters Creek................ 661 3,832 4,493 160 4,333 2,684 Hunters Glen................. 301 1,816 2,117 126 1,991 1,063 Hunters Glen IV.............. 2,488 9,887 12,375 1,038 11,337 8,181 Hunters Glen V............... 2,997 11,191 14,188 1,189 12,999 8,813 Hunters Glen VI.............. 3,120 11,676 14,796 1,268 13,527 9,173 Huntington Athletic Club..... 1,830 8,587 10,418 745 9,673 3,386 Indian Creek Village......... 1,959 3,192 5,152 782 4,369 4,485 Islandtree................... 1,267 7,825 9,093 731 8,362 4,080 Jefferson Place.............. 2,697 16,607 19,304 3,545 15,759 8,998 La Colina.................... 1,599 5,165 6,763 121 6,643 5,064 La Jolla de San Antonio...... 2,071 12,111 14,182 841 13,341 8,645 La Jolla de Tucson........... 1,342 8,044 9,386 575 8,811 5,880 Lake Castleton Arms.......... 5,188 33,650 38,838 260 38,578 28,748 Lake Crossing................ 1,123 11,854 12,977 2,977 10,000 9,541 Lake Johnson Mews............ 1,683 5,983 7,666 735 6,931 4,350
F-34 66
INITIAL COST COST ----------------------- CAPITALIZED BUILDINGS SUBSEQUENT DATE YEAR NUMBER AND TO PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION - ------------- -------- ---------------------- --------- -------- -------- ------------ ----------- Lakehaven I.................. May-97 Carol Stream, IL 1984 144 701 3,974 (796) Lakehaven II................. May-97 Carol Stream, IL 1985 348 1,673 9,482 (119) Lakeland East................ May-97 Jackson, MS 1984 144 426 3,435 12 Lakeside..................... Oct-98 Lisle, IL 1972 568 4,866 20,380 137 Lakeside Place............... Oct-98 Houston, TX 1976 734 6,186 22,681 112 Landmark..................... May-98 Albuquerque, NM 1965 101 780 4,455 326 Las Brisas................... Jul-94 Casa Grande, AZ 1985 132 573 3,260 305 Las Brisas................... Dec-95 San Antonio, TX 1983 176 1,100 5,454 501 Lebanon Station.............. Oct-98 Columbus, OH 1974 387 1,790 8,671 71 Legend Oaks (The Woodlands).. May-98 Tampa, FL 1983 416 2,304 13,058 507 Lexington.................... Jul-94 San Antonio, TX 1981 72 311 1,764 161 Lexington Green.............. Oct-98 Sarasota, FL 1974 267 1,726 6,204 376 Los Arboles.................. Sep-97 Chandler, AZ 1985 232 1,662 9,418 746 Madera Point................. May-98 Phoenix, AZ 1986 256 2,103 11,916 986 Magnolia Trace............... Oct-98 Baton Rouge, LA 1973 246 1,205 37 200 Maple Bay.................... Dec-99 Virginia Beach, VA 1971 414 2,598 14,719 1,223 Marbella Club................ Jul-99 Miami, FL 1988 504 2,815 16,193 -- Meadow Creek................. Apr-85 Boulder, CO 1972 332 1,387 10,027 1,517 Meadows...................... Dec-96 Austin, TX 1983 100 579 3,283 280 Mesa Ridge................... May-98 San Antonio, TX 1986 200 1,209 6,852 222 Michigan Meadows............. Dec-99 Indianapolis, IN 1965 253 582 3,539 -- Millhopper Village........... Oct-98 Gainesville, FL 1969 136 988 3,497 50 Mills........................ May-98 Houston, TX 1979 708 3,936 22,306 1,309 Montecito.................... Jul-94 Austin, TX 1985 268 1,268 7,194 1,933 Mountain Run................. Jul-99 Lakewood, CO 1970 96 240 7,391 135 Mountain View................ May-98 Colorado Springs, CO 1985 252 2,536 14,371 480 Newberry Park................ May-97 Chicago, IL 1985 84 181 1,027 1,989 Newport...................... Jul-94 Avondale, AZ 1986 204 800 4,554 713 North River Village.......... Oct-98 Atlanta, GA 1970 133 931 3,488 21 Northview Harbor............. Dec-99 Grand Rapids, MI 1982 360 2,016 10,696 -- Northwoods Apartments........ Oct-98 Pensacola, FL 1979 320 1,784 6,615 166 Nottingham Square............ Oct-98 Urbandale, IA 1974 442 1,772 8,010 48 Oak Falls.................... Nov-96 Spring, TX 1983 144 514 3,585 1,937 Oakbrook..................... Dec-99 Battle Creek, MI 1981 586 3,512 16,501 -- Oakwood Village on Lake Nan......................... Oct-98 Winter Park, FL 1973 278 1,475 5,746 145 Ocean Oaks................... May-98 Port Orange, FL 1988 296 2,132 12,083 1,150 Old Farm..................... Dec-98 Lexington, KY 1985 330 1,893 10,725 430 Old Orchard.................. Dec-99 Grand Rapids, MI 1974 664 3,217 14,077 -- Old Salem.................... Oct-98 Charlottesville, VA 1967 364 2,809 12,713 871 Olmos Club................... Oct-97 San Antonio, TX 1983 134 322 1,825 186 Olympiad..................... Nov-94 Montgomery, AL 1986 176 1,046 5,958 736 Orchidtree................... Oct-97 Scottsdale, AZ 1971 278 2,314 13,112 617 Palencia..................... May-98 Tampa, FL 1985 420 2,804 15,887 2,269 Palm Lake (Village Square)... Oct-98 Tampa, FL 1972 150 832 1,143 190 Panorama Terrace............. Oct-98 Birmingham, AL 1975 227 1,401 4,672 115 Paradise Palms............... Jul-94 Phoenix, AZ 1970 130 647 3,684 540 Park at Cedar Lawn........... Nov-96 Galveston, TX 1985 192 769 5,073 2,659 Park at Deerbrook............ Oct-98 Humble, TX 1984 100 563 2,720 42 Park Colony.................. May-98 Norcross, GA 1984 352 3,257 18,454 409 Parktown Townhouses.......... Oct-98 Deer Park, TX 1968 309 2,031 6,674 93 Parliament Bend.............. Jul-94 San Antonio, TX 1980 232 765 4,342 769 DECEMBER 31, 1999 --------------------------------------------------------------------------------- TOTAL COST BUILDINGS NET OF AND ACCUMULATED ACCUMULATED PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES - ------------- -------- ------------ ---------- ------------ ------------ ------------ Lakehaven I.................. 510 3,369 3,879 220 3,659 5,387 Lakehaven II................. 1,219 9,818 11,036 467 10,569 13,714 Lakeland East................ 426 3,447 3,873 227 3,646 3,450 Lakeside..................... 4,866 20,517 25,384 1,272 24,111 17,200 Lakeside Place............... 6,186 22,793 28,979 2,289 26,690 14,261 Landmark..................... 780 4,781 5,561 340 5,221 2,400 Las Brisas................... 573 3,565 4,138 796 3,342 -- Las Brisas................... 1,100 5,955 7,055 1,069 5,986 3,217 Lebanon Station.............. 1,790 8,741 10,531 374 10,157 6,927 Legend Oaks (The Woodlands).. 2,304 13,565 15,869 996 14,873 7,779 Lexington.................... 312 1,924 2,236 433 1,803 1,007 Lexington Green.............. 1,726 6,580 8,306 769 7,536 3,392 Los Arboles.................. 1,662 10,164 11,826 944 10,882 7,149 Madera Point................. 2,103 12,903 15,006 921 14,084 8,067 Magnolia Trace............... 1,205 237 1,442 541 901 -- Maple Bay.................... 2,781 15,758 18,539 -- 18,539 10,176 Marbella Club................ 2,815 16,193 19,009 402 18,606 13,896 Meadow Creek................. 1,435 11,495 12,931 4,581 8,350 7,485 Meadows...................... 579 3,563 4,143 347 3,796 2,008 Mesa Ridge................... 1,209 7,075 8,284 498 7,786 4,980 Michigan Meadows............. 582 3,539 4,121 -- 4,121 1,726 Millhopper Village........... 988 3,547 4,534 477 4,058 2,700 Mills........................ 3,936 23,615 27,551 1,739 25,812 14,230 Montecito.................... 1,268 9,127 10,395 2,066 8,329 4,749 Mountain Run................. 240 7,526 7,766 1,977 5,789 -- Mountain View................ 2,536 14,851 17,387 1,044 16,343 9,093 Newberry Park................ 431 2,767 3,197 980 2,217 8,455 Newport...................... 800 5,267 6,067 1,250 4,817 2,456 North River Village.......... 931 3,509 4,440 399 4,041 1,657 Northview Harbor............. 2,016 10,696 12,712 -- 12,712 8,019 Northwoods Apartments........ 1,784 6,781 8,565 730 7,835 5,000 Nottingham Square............ 1,772 8,058 9,830 982 8,848 7,412 Oak Falls.................... 574 5,462 6,036 1,369 4,667 2,632 Oakbrook..................... 3,512 16,501 20,013 -- 20,013 8,727 Oakwood Village on Lake Nan......................... 1,475 5,891 7,365 774 6,591 3,884 Ocean Oaks................... 2,132 13,234 15,366 957 14,410 10,251 Old Farm..................... 1,893 11,156 13,048 451 12,597 9,824 Old Orchard.................. 3,217 14,077 17,293 -- 17,293 10,723 Old Salem.................... 2,809 13,584 16,394 1,296 15,098 10,187 Olmos Club................... 322 2,011 2,333 196 2,137 1,209 Olympiad..................... 1,046 6,694 7,740 1,438 6,301 4,993 Orchidtree................... 2,314 13,729 16,043 1,283 14,760 7,037 Palencia..................... 2,804 18,156 20,959 1,290 19,670 13,172 Palm Lake (Village Square)... 832 1,333 2,165 406 1,759 1,670 Panorama Terrace............. 1,401 4,787 6,188 694 5,494 3,731 Paradise Palms............... 647 4,224 4,871 961 3,910 2,205 Park at Cedar Lawn........... 843 7,658 8,501 1,650 6,851 5,150 Park at Deerbrook............ 563 2,762 3,326 90 3,236 1,510 Park Colony.................. 3,257 18,864 22,120 1,352 20,769 11,072 Parktown Townhouses.......... 2,031 6,767 8,798 722 8,076 3,017 Parliament Bend.............. 765 5,111 5,876 1,191 4,686 --
F-35 67
INITIAL COST COST ----------------------- CAPITALIZED BUILDINGS SUBSEQUENT DATE YEAR NUMBER AND TO PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION - ------------- -------- ---------------------- --------- -------- -------- ------------ ----------- Patchen Place................ Oct-98 Lexington, KY 1974 202 883 3,794 136 Peachtree Park............... Jan-96 Atlanta, GA 1962/1995 295 4,681 12,957 2,359 Penn Square.................. Dec-94 Albuquerque, NM 1982 210 1,128 6,478 657 Peppermill Place............. Nov-96 Houston, TX 1983 224 406 3,957 2,269 Pickwick Place............... Oct-98 Indianapolis, IN 1973 336 963 7,607 63 Pine Creek................... Oct-97 Clio, MI 1978 233 852 4,830 510 Pine Shadows................. May-98 Phoenix, AZ 1983 272 2,093 11,858 333 Pinebrook.................... Oct-98 Jacksonville, FL 1974 208 856 4,854 340 Pines of Northwest Crossing.................... Oct-98 Houston, TX 1973 412 1,566 5,974 233 Pines of Roanoke............. Oct-98 Roanoke, VA 1978 216 1,169 5,108 189 Pinetree..................... Oct-98 Charlotte, NC 1972 220 1,350 6,787 242 Place du Plantier............ Oct-98 Baton Rouge, LA 1972 268 1,702 6,252 127 Plantation Gardens........... Oct-98 Plantation, FL 1971 372 2,163 5,048 119 Pleasant Ridge............... Nov-94 Little Rock, AR 1982 200 1,660 9,464 972 Pleasant Valley Pointe....... Nov-94 Little Rock, AR 1985 112 907 5,069 910 Point West................... May-97 Lenexa, KS 1985 172 979 5,548 1,049 Pointe James................. Oct-98 Charleston, SC 1977 128 886 926 111 Polo Park.................... Oct-97 Midland, TX 1983 184 800 4,532 587 Prairie Hills................ Jul-94 Albuquerque, NM 1985 360 1,680 9,633 1,214 Preston Creek................ Oct-98 Dallas, TX 1979 228 1,625 6,650 83 Pride Gardens................ May-97 Flora, MS 1975 76 265 1,502 2,223 Prime Crest.................. May-98 Austin, TX 1973 148 724 4,104 486 Privado Park................. May-98 Phoenix, AZ 1984 352 2,636 14,937 382 Quail Hollow................. Oct-98 West Columbia, SC 1973 215 1,271 4,396 95 Quail Ridge.................. May-98 Tucson, AZ 1974 253 1,613 9,143 513 Quail Run.................... Oct-98 Zionsville, IN 1972 166 1,293 4,568 112 Quail Run.................... Oct-98 Columbia, SC 1970 332 1,885 8,270 75 Quail Woods.................. Oct-98 Gastonia, NC 1974 188 1,079 1,789 127 Quailtree.................... Oct-97 Phoenix, AZ 1978 184 659 3,735 412 Raintree..................... Oct-98 Pensacola, FL 1971 168 192 1,091 1,162 Raintree..................... Oct-98 Anderson, SC 1972 176 706 2,385 114 Ramblewood................... Dec-99 Grand Rapids, MI 1973 1,710 9,742 59,378 -- Rancho Sunset................ Mar-98 Escondido, CA 1985 344 3,103 16,755 1,436 Randol Crossing.............. Dec-96 Fort Worth, TX 1984 160 728 4,125 286 Regency Oaks................. Oct-98 Fern Park, FL 1965 343 1,666 (48) 50 Ridgecrest................... Dec-96 Denton, TX 1983 152 393 2,228 403 Rio Cancion.................. Oct-98 Tucson, AZ 1983 379 2,832 16,090 521 River Loft Apartments........ May-97 Philadelphia, PA 1910 197 1,103 12,223 79 River Reach.................. Oct-98 Jacksonville, FL 1972 298 2,271 8,575 78 Rivercrest................... Oct-97 Tucson, AZ 1984 310 751 4,253 280 Rivercrest................... Oct-98 Atlanta, GA 1970 312 2,929 5,416 31 Riverside.................... Jul-94 Littleton, CO 1987 248 1,553 8,828 1,447 Riverwalk.................... Dec-95 Little Rock, AR 1988 262 1,075 9,295 634 Rocky Creek.................. Oct-98 Augusta, GA 1979 120 620 2,555 32 Rocky Ridge.................. Oct-98 Birmingham, AL 1973 116 566 2,197 69 Rosemont Crossing (The Greens)..................... Oct-98 San Antonio, TX 1974 217 668 3,094 607 Royal Crest.................. May-98 Austin, TX 1973 204 1,220 5,912 1,402 Royal Gardens................ Oct-98 Hemet, CA 1987 137 521 2,817 458 Royal Palms.................. Jul-94 Mesa, AZ 1985 152 832 4,730 345 Ryan's Pointe................ Oct-98 Houston, TX 1983 280 1,551 8,313 146 DECEMBER 31, 1999 --------------------------------------------------------------------------------- TOTAL COST BUILDINGS NET OF AND ACCUMULATED ACCUMULATED PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES - ------------- -------- ------------ ---------- ------------ ------------ ------------ Patchen Place................ 883 3,930 4,813 620 4,192 3,000 Peachtree Park............... 4,683 15,314 19,997 2,557 17,440 9,111 Penn Square.................. 1,128 7,135 8,263 1,529 6,734 4,147 Peppermill Place............. 474 6,157 6,632 1,365 5,266 4,793 Pickwick Place............... 963 7,670 8,633 841 7,792 6,308 Pine Creek................... 852 5,339 6,192 406 5,786 2,292 Pine Shadows................. 2,093 12,191 14,283 866 13,418 7,500 Pinebrook.................... 857 5,193 6,050 256 5,793 3,594 Pines of Northwest Crossing.................... 1,566 6,207 7,773 845 6,929 4,828 Pines of Roanoke............. 1,169 5,297 6,466 571 5,895 4,225 Pinetree..................... 1,350 7,029 8,379 524 7,855 4,996 Place du Plantier............ 1,702 6,379 8,081 849 7,232 3,800 Plantation Gardens........... 2,163 5,167 7,330 1,194 6,136 6,776 Pleasant Ridge............... 1,661 10,435 12,096 2,292 9,803 6,700 Pleasant Valley Pointe....... 907 5,979 6,886 1,327 5,559 3,267 Point West................... 1,044 6,532 7,576 1,973 5,603 5,505 Pointe James................. 886 1,038 1,923 215 1,708 1,270 Polo Park.................... 800 5,119 5,919 475 5,444 2,209 Prairie Hills................ 2,011 10,516 12,527 2,326 10,201 6,916 Preston Creek................ 1,625 6,733 8,358 588 7,770 4,500 Pride Gardens................ 35 3,955 3,990 1,411 2,578 866 Prime Crest.................. 724 4,591 5,315 340 4,975 2,340 Privado Park................. 2,636 15,319 17,955 1,075 16,880 8,980 Quail Hollow................. 1,271 4,491 5,762 437 5,324 2,850 Quail Ridge.................. 1,613 9,657 11,270 703 10,567 6,245 Quail Run.................... 1,293 4,680 5,972 464 5,508 4,427 Quail Run.................... 1,885 8,345 10,230 903 9,327 5,508 Quail Woods.................. 1,079 1,917 2,996 244 2,752 2,447 Quailtree.................... 659 4,147 4,806 388 4,418 2,141 Raintree..................... 356 2,090 2,445 -- 2,445 2,610 Raintree..................... 706 2,499 3,204 316 2,888 1,339 Ramblewood................... 9,742 59,378 69,120 -- 69,120 37,854 Rancho Sunset................ 3,103 18,191 21,294 1,137 20,157 13,661 Randol Crossing.............. 728 4,411 5,140 469 4,671 2,365 Regency Oaks................. 1,666 2 1,668 983 685 -- Ridgecrest................... 393 2,631 3,024 376 2,648 2,390 Rio Cancion.................. 2,832 16,611 19,443 1,294 18,149 12,851 River Loft Apartments........ 1,103 12,302 13,405 749 12,656 6,499 River Reach.................. 2,271 8,653 10,924 1,017 9,907 6,962 Rivercrest................... 751 4,533 5,284 418 4,866 2,727 Rivercrest................... 2,929 5,447 8,376 (4,818) 13,194 6,659 Riverside.................... 1,956 9,872 11,828 2,278 9,551 5,708 Riverwalk.................... 1,075 9,929 11,004 1,704 9,300 5,411 Rocky Creek.................. 620 2,586 3,206 277 2,930 2,053 Rocky Ridge.................. 566 2,266 2,832 326 2,506 1,450 Rosemont Crossing (The Greens)..................... 668 3,701 4,369 404 3,965 2,840 Royal Crest.................. 1,220 7,314 8,534 529 8,005 3,320 Royal Gardens................ 521 3,275 3,796 118 3,678 2,396 Royal Palms.................. 832 5,076 5,907 1,135 4,773 3,358 Ryan's Pointe................ 1,551 8,459 10,010 315 9,695 4,317
F-36 68
INITIAL COST COST ----------------------- CAPITALIZED BUILDINGS SUBSEQUENT DATE YEAR NUMBER AND TO PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION - ------------- -------- ---------------------- --------- -------- -------- ------------ ----------- Salem Arms................... Oct-98 Augusta, GA 1971 136 598 1,421 64 San Marina................... Mar-98 Phoenix, AZ 1986 399 1,926 10,954 765 Sand Castles................. Oct-97 League City, TX 1987 136 978 5,541 408 Sand Pebble.................. Oct-97 El Paso, TX 1983 208 861 4,879 436 Sandalwood................... May-98 Houston, TX 1979 352 1,462 8,287 408 Sandpiper Cove............... May-97 Boynton Beach, FL 1987 416 11,447 29,088 (53) Sawgrass..................... Jul-97 Orlando, FL 1986 208 1,443 8,157 621 Seaside Point................ Nov-96 Galveston, TX 1985 102 295 2,994 2,851 Seasons...................... Oct-95 San Antonio, TX 1976 280 974 5,749 1,010 Shadetree.................... Oct-97 Tempe, AZ 1965 123 591 3,349 638 Shadow Brook................. Oct-98 Salt Lake, UT 1984 300 911 5,164 3,392 Shadow Creek................. May-98 Phoenix, AZ 1984 266 2,087 11,824 483 Shadow Lake.................. Oct-97 Greensboro, NC 1988 136 1,054 5,972 585 Shadowood.................... May-97 Chapel Hill, NC 1987 336 1,268 14,574 30 Shaker Square................ Oct-98 Whitehall, OH 1968 194 1,078 4,195 55 Shallow Creek................ May-98 San Antonio, TX 1982 208 1,234 6,995 263 Shirewood Townhomes.......... Oct-98 Shreveport, LA 1948 228 697 246 196 Shoreview.................... May-97 San Francisco, CA 1976 156 106 4,063 78 Signal Pointe (Squire One)... Oct-98 Winter Park, FL 1971 368 1,973 6,768 179 Signature Point.............. Nov-96 League City, TX 1994 304 2,160 13,627 3,344 Silktree..................... Oct-97 Phoenix, AZ 1979 86 421 2,383 222 Silver Ridge................. Oct-98 Maplewood, MN 1986 186 650 3,677 489 Silverado.................... Oct-98 El Paso, TX 1973 248 799 22 89 Ski Lodge.................... Oct-98 Montgomery, AL 1978 522 2,428 9,436 88 Snowden Village I............ Oct-98 Fredericksburg, VA 1970 132 905 2,337 478 Snowden Village II........... Oct-98 Fredericksburg, VA 1980 122 804 2,484 353 Snug Harbor.................. Dec-95 Las Vegas, NV 1990 64 750 2,966 392 Society Park................. Oct-98 Tampa, FL 1968 324 1,154 308 170 Society Park East............ Oct-98 Indian Harbor, FL 1963 200 899 1,256 291 Somerset Lakes............... May-99 Indianapolis, IN 1974 360 3,533 20,285 -- Somerset Village............. May-96 West Valley City, UT 1985 486 4,375 17,600 1,419 South Point.................. Oct-98 Durham, NC 1980 180 2,113 (520) 78 South Willow................. Jul-94 West Jordan, UT 1987 440 2,218 12,612 1,366 Southridge................... Dec-96 Greenville, TX 1984 160 643 3,645 421 Spectrum Pointe.............. Jul-94 Marietta, GA 1984 196 1,029 5,903 728 St. Charleston Village....... Oct-98 Las Vegas, NV 1980 312 1,909 7,697 93 Steeplechase................. May-99 Loveland, OH 1988 272 1,669 9,539 -- Stirling Court............... Nov-96 Houston, TX 1984 228 946 5,958 1,664 Stone Mountain West.......... Oct-98 Stone Mountain, GA 1971 142 1,143 4,019 28 Stone Pointe Village......... Dec-99 Fort Wayne, IN 1980 296 1,809 8,591 -- Stonebrook................... Jun-97 Sanford, FL 1991 244 1,583 9,046 1,279 Stoney Brook................. Nov-96 Houston, TX 1972 113 579 3,871 2,402 Stonybrook................... May-98 Tucson, AZ 1983 411 2,187 12,278 1,090 Strawbridge Square........... May-97 Alexandria, VA 1979 128 86 4,743 36 Summerchase.................. May-97 Van Buren, AR 1974 72 170 962 1,399 Summerwalk................... Oct-98 Winter Park, FL 1974 306 353 2,000 6,355 Summit Creek................. May-98 Austin, TX 1985 164 611 3,464 3,068 Sun Grove.................... Jul-94 Peoria, AZ 1986 86 659 3,749 230 Sun Katcher (Teal Pointe).... Dec-95 Jacksonville, FL 1972 360 578 3,440 6,191 Sun Lake..................... May-98 Lake Mary, FL 1986 600 4,556 25,819 980 Sun River Village............ Oct-98 Tempe, AZ 1981 334 2,518 9,063 189 DECEMBER 31, 1999 --------------------------------------------------------------------------------- TOTAL COST BUILDINGS NET OF AND ACCUMULATED ACCUMULATED PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES - ------------- -------- ------------ ---------- ------------ ------------ ------------ Salem Arms................... 598 1,485 2,084 139 1,945 1,193 San Marina................... 1,926 11,719 13,645 924 12,721 7,828 Sand Castles................. 978 5,949 6,927 566 6,361 3,000 Sand Pebble.................. 861 5,315 6,176 519 5,657 2,620 Sandalwood................... 1,462 8,695 10,158 622 9,536 4,619 Sandpiper Cove............... 7,459 33,023 40,482 6,233 34,249 12,814 Sawgrass..................... 1,443 8,778 10,221 905 9,315 4,564 Seaside Point................ 334 5,807 6,140 1,029 5,112 2,027 Seasons...................... 982 6,751 7,733 1,200 6,534 4,405 Shadetree.................... 591 3,987 4,578 392 4,186 1,994 Shadow Brook................. 2,153 7,314 9,467 801 8,666 6,000 Shadow Creek................. 2,087 12,306 14,393 867 13,526 6,815 Shadow Lake.................. 1,054 6,557 7,611 599 7,012 3,132 Shadowood.................... 1,268 14,605 15,872 1,575 14,297 9,834 Shaker Square................ 1,078 4,250 5,328 (547) 5,874 3,320 Shallow Creek................ 1,234 7,257 8,492 514 7,978 4,500 Shirewood Townhomes.......... 697 442 1,139 501 637 -- Shoreview.................... 106 4,141 4,248 405 3,843 4,283 Signal Pointe (Squire One)... 1,973 6,946 8,920 803 8,117 3,998 Signature Point.............. 2,161 16,970 19,131 2,690 16,441 7,121 Silktree..................... 421 2,606 3,026 249 2,777 1,506 Silver Ridge................. 722 4,095 4,816 -- 4,816 4,453 Silverado.................... 799 111 910 412 497 -- Ski Lodge.................... 2,428 9,524 11,952 1,287 10,665 6,800 Snowden Village I............ 905 2,816 3,720 225 3,496 2,472 Snowden Village II........... 804 2,836 3,640 171 3,469 2,616 Snug Harbor.................. 751 3,357 4,108 629 3,479 1,976 Society Park................. 1,154 478 1,633 728 905 -- Society Park East............ 899 1,547 2,447 512 1,935 1,966 Somerset Lakes............... 3,533 20,285 23,819 844 22,975 14,182 Somerset Village............. 4,375 19,019 23,394 2,843 20,551 8,061 South Point.................. 2,113 (443) 1,670 (5,997) 7,668 4,600 South Willow................. 2,218 13,979 16,196 3,185 13,012 7,842 Southridge................... 643 4,066 4,709 498 4,211 2,029 Spectrum Pointe.............. 1,029 6,631 7,660 1,486 6,175 4,108 St. Charleston Village....... 1,909 7,790 9,699 723 8,977 6,060 Steeplechase................. 1,669 9,539 11,208 396 10,812 8,442 Stirling Court............... 1,010 7,558 8,568 3,227 5,341 3,455 Stone Mountain West.......... 1,143 4,047 5,191 375 4,816 3,000 Stone Pointe Village......... 1,809 8,591 10,400 -- 10,400 6,414 Stonebrook................... 2,070 9,838 11,908 1,055 10,853 7,695 Stoney Brook................. 704 6,148 6,852 992 5,860 705 Stonybrook................... 2,167 13,388 15,554 994 14,561 4,028 Strawbridge Square........... 86 4,779 4,865 246 4,618 3,267 Summerchase.................. 59 2,472 2,531 1,482 1,049 643 Summerwalk................... 1,895 6,812 8,707 605 8,102 4,902 Summit Creek................. 1,153 5,990 7,143 787 6,356 3,491 Sun Grove.................... 659 3,978 4,638 912 3,725 -- Sun Katcher (Teal Pointe).... 785 9,424 10,209 1,005 9,204 8,675 Sun Lake..................... 4,556 26,799 31,355 1,935 29,420 14,889 Sun River Village............ 2,518 9,252 11,771 870 10,900 6,126
F-37 69
INITIAL COST COST ----------------------- CAPITALIZED BUILDINGS SUBSEQUENT DATE YEAR NUMBER AND TO PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION - ------------- -------- ---------------------- --------- -------- -------- ------------ ----------- Sunbury Downs................ Nov-96 Houston, TX 1982 240 565 4,380 2,521 Sunchase of Clearwater....... Nov-94 Clearwater, FL 1985 461 2,177 19,641 1,821 Sunchase of Orlando East..... Nov-94 Orlando, FL 1985 296 927 8,361 970 Sunchase of Orlando North.... Nov-94 Orlando, FL 1985 324 1,013 9,142 1,175 Sunchase Tampa............... Nov-94 Tampa, FL 1985 216 757 6,831 897 Sundown Village.............. Mar-98 Tucson, AZ 1984/1994 330 2,214 12,582 349 Sunlake...................... Sep-98 Brandon, FL 1986 88 189 1,086 3,777 Sunset Village............... Mar-98 Oceanside, CA 1987 114 1,128 6,392 262 Surrey Oaks.................. Oct-97 Bedford, TX 1983 152 628 3,560 377 Swiss Village................ Nov-96 Houston, TX 1972 360 1,011 11,310 391 Tall Timbers................. Oct-97 Houston, TX 1982 256 1,238 7,016 493 Tar River Estates............ Oct-98 Greenville, NC 1969 402 521 2,953 3,243 Tara Bridge.................. May-97 Jonesboro, GA 1988 220 1,253 7,100 1,213 Tates Creek Village.......... Oct-98 Lexington, KY 1970 204 1,145 1,788 126 Tatum Gardens Apartments..... May-98 Phoenix, AZ 1985 128 653 3,699 3,009 The Bluffs................... Dec-98 Lafayette, IN 1982 181 979 5,549 527 The Bradford................. Oct-97 Midland, TX 1982 264 705 3,996 (519) The Breakers................. Oct-98 Daytona Beach, FL 1985 258 1,008 5,710 397 The Falls of Bells Ferry..... May-98 Marietta, GA 1987 720 6,568 37,218 701 The Hills.................... Oct-97 Austin, TX 1983 329 1,367 7,747 531 The Knolls................... Oct-98 Colorado Springs, CO 1972 262 2,406 3,210 100 The Landings................. Oct-98 Tampa, FL 1978 200 800 3,508 116 The Loft..................... Oct-98 Raleigh, NC 1974 184 1,575 14,576 86 The Palisaides............... Oct-98 Montgomery, AL 1968 432 1,214 5,714 76 The Park..................... Oct-98 Melbourne, FL 1983 120 719 4,072 193 The Pines.................... Oct-98 Palm Bay, FL 1984 216 601 3,406 354 The Sterling................. Oct-98 Philadelphia, PA 1962 536 6,427 85,108 98 The Stratford................ May-98 San Antonio, TX 1979 269 1,920 10,879 398 Thurber Manor................ Oct-98 Columbus, OH 1965 115 810 2,281 237 Timber Ridge................. Oct-98 Sharonville, OH 1972 248 1,427 5,315 120 Timberlake................... May-97 Arlington, TX 1971 224 753 6,327 50 Timbermill................... Oct-95 San Antonio, TX 1982 296 778 4,674 784 Timbertree................... Oct-97 Phoenix, AZ 1980 387 2,334 13,229 875 Tor.......................... Dec-99 Columbia, MD 1974 324 2,715 15,382 1,223 Torrey Pines Village......... Oct-98 Las Vegas, NV 1980 204 1,230 4,743 99 Township at Highlands........ Nov-96 Littleton, CO 1986 119 1,058 11,166 10,853 Trails of Ashford............ May-98 Houston, TX 1979 514 2,650 15,018 497 Twin Lake Towers............. Oct-98 Westmont, IL 1969 399 3,233 11,262 2,551 Victoria Station............. Jun-98 Victoria, TX 1997 224 425 3,946 2,848 Villa La Paz................. Jun-98 Sun City, CA 1990 96 573 3,096 260 Villa Ladera................. Jan-96 Albuquerque, NM 1985 280 1,765 10,013 1,667 Village Creek at Brookhill... Jul-94 Westminster, CO 1987 324 2,446 13,901 1,162 Village Crossing............. May-98 W. Palm Beach, FL 1986 289 1,618 9,167 1,130 Village Gardens.............. Oct-98 Fort Collins, CO 1973 141 1,080 3,549 39 Village Green................ Oct-98 Montgomery, AL 1972 337 1,681 5,659 79 Village of Pennbrook......... Oct-98 Levitown, PA 1970 722 5,533 31,345 4,031 Vista Ventana................ May-98 Phoenix, AZ 1982 275 1,908 10,810 440 Walnut Springs............... Dec-96 San Antonio, TX 1983 224 998 5,657 347 Waterford.................... Nov-96 Houston, TX 1984 312 533 5,692 768 Waterways Village............ Jun-97 Aventura, FL 1991 180 4,504 11,702 458 Weatherly.................... Oct-98 Stone Mountain, GA 1984 274 1,275 6,887 541 DECEMBER 31, 1999 --------------------------------------------------------------------------------- TOTAL COST BUILDINGS NET OF AND ACCUMULATED ACCUMULATED PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES - ------------- -------- ------------ ---------- ------------ ------------ ------------ Sunbury Downs................ 633 6,834 7,466 1,348 6,118 2,370 Sunchase of Clearwater....... 2,177 21,462 23,639 4,625 19,014 16,566 Sunchase of Orlando East..... 927 9,331 10,258 1,994 8,264 8,694 Sunchase of Orlando North.... 1,013 10,317 11,330 2,189 9,141 11,660 Sunchase Tampa............... 757 7,727 8,485 1,728 6,757 6,969 Sundown Village.............. 2,214 12,931 15,145 970 14,175 8,373 Sunlake...................... 632 4,419 5,052 776 4,276 2,766 Sunset Village............... 1,128 6,654 7,782 412 7,370 5,498 Surrey Oaks.................. 628 3,937 4,565 314 4,251 2,230 Swiss Village................ 1,129 11,583 12,712 4,692 8,019 4,373 Tall Timbers................. 1,238 7,509 8,747 722 8,025 3,973 Tar River Estates............ 2,203 4,513 6,716 (1,085) 7,801 4,686 Tara Bridge.................. 1,009 8,557 9,566 2,104 7,462 6,642 Tates Creek Village.......... 1,145 1,914 3,058 696 2,362 2,481 Tatum Gardens Apartments..... 1,117 6,244 7,360 795 6,565 3,394 The Bluffs................... 979 6,076 7,055 255 6,800 3,848 The Bradford................. 519 3,663 4,182 333 3,850 1,588 The Breakers................. 1,008 6,107 7,115 318 6,797 3,747 The Falls of Bells Ferry..... 6,568 37,919 44,487 2,635 41,852 26,980 The Hills.................... 1,367 8,278 9,645 787 8,858 8,029 The Knolls................... 2,406 3,309 5,716 766 4,950 5,177 The Landings................. 800 3,624 4,424 362 4,062 2,213 The Loft..................... 1,575 14,662 16,237 497 15,741 4,338 The Palisaides............... 1,214 5,790 7,004 854 6,149 4,547 The Park..................... 720 4,264 4,984 222 4,761 2,518 The Pines.................... 603 3,758 4,361 168 4,192 2,209 The Sterling................. 6,427 85,207 91,633 5,071 86,562 22,736 The Stratford................ 1,920 11,278 13,198 835 12,362 5,805 Thurber Manor................ 810 2,518 3,328 158 3,170 2,303 Timber Ridge................. 1,427 5,435 6,862 337 6,525 5,206 Timberlake................... 753 6,377 7,130 160 6,970 2,042 Timbermill................... 778 5,457 6,236 1,027 5,209 3,456 Timbertree................... 2,334 14,104 16,438 1,314 15,124 7,637 Tor.......................... 2,898 16,422 19,320 -- 19,320 11,615 Torrey Pines Village......... 1,230 4,842 6,072 406 5,666 3,607 Township at Highlands........ 1,064 22,014 23,077 2,857 20,220 9,279 Trails of Ashford............ 2,650 15,514 18,165 1,089 17,076 8,840 Twin Lake Towers............. 3,233 13,813 17,046 1,411 15,635 10,886 Victoria Station............. 682 6,537 7,219 2,016 5,203 3,199 Villa La Paz................. 573 3,355 3,929 223 3,705 2,362 Villa Ladera................. 2,235 11,210 13,445 1,882 11,563 5,345 Village Creek at Brookhill... 2,446 15,063 17,509 3,341 14,168 -- Village Crossing............. 1,618 10,296 11,914 748 11,166 6,955 Village Gardens.............. 1,080 3,588 4,668 379 4,289 2,410 Village Green................ 1,681 5,739 7,419 705 6,715 4,744 Village of Pennbrook......... 6,401 34,508 40,909 -- 40,909 19,300 Vista Ventana................ 1,908 11,251 13,158 783 12,375 6,245 Walnut Springs............... 998 6,004 7,002 536 6,466 4,170 Waterford.................... 533 6,460 6,993 2,106 4,887 3,870 Waterways Village............ 4,504 12,160 16,664 1,372 15,292 7,575 Weatherly.................... 1,275 7,427 8,703 386 8,316 4,607
F-38 70
INITIAL COST COST ----------------------- CAPITALIZED BUILDINGS SUBSEQUENT DATE YEAR NUMBER AND TO PROPERTY NAME ACQUIRED LOCATION BUILT OF UNITS LAND IMPROVEMENTS ACQUISITION - ------------- -------- ---------------------- --------- -------- -------- ------------ ----------- West 135th Street............ Aug-98 New York, NY 1979 242 1,195 14,969 1,374 West Lake Arms Apartments.... May-97 Indianapolis, IN 1977 1,381 2,816 24,661 27 Westway Village.............. May-98 Houston, TX 1979 276 980 5,554 4,768 Westgate..................... Oct-98 Houston, TX 1971 313 1,985 9,158 124 Whispering Pines............. Oct-98 Madison, WI 1986 186 719 4,046 (191) Wickertree................... Oct-97 Phoenix, AZ 1983 226 1,225 6,944 335 Wildflower................... Oct-97 Midland, TX 1982 264 705 3,996 1,003 Williams Cove................ Jul-94 Irving, TX 1984 260 1,227 6,972 631 Williamsburg................. May-98 Rolling Meadows, IL 1985 379 2,717 15,398 685 Williamsburg Apartments...... Oct-98 Indianapolis, IN 1974 460 2,333 9,803 129 Williamsburg on the Wabash... Dec-99 West Lafayette, IN 1967 473 3,225 17,569 -- Willow Park on Lake Adelaide.................... Oct-98 Altamonte Springs, FL 1972 185 1,045 5,404 178 Willowick.................... Oct-98 Greenville, SC 1974 180 734 2,529 226 Windridge.................... May-98 San Antonio, TX 1983 286 1,480 8,386 306 Windsor at South Square...... Oct-98 Durham, NC 1972 230 1,415 4,852 103 Windsor Hills................ Oct-98 Blacksburg, VA 1970 300 1,859 6,857 137 Windsor Landing.............. Oct-97 Morrow, GA 1991 200 1,641 9,298 330 Windward at the Villages..... Oct-97 W. Palm Beach, FL 1988 196 1,595 9,037 683 Woodhill..................... Dec-96 Denton, TX 1985 352 1,554 8,805 983 Woodhollow................... Oct-97 Austin, TX 1974 108 658 3,728 299 Woodland Ridge............... Dec-96 Irving, TX 1984 130 595 3,373 267 Woodland Village I........... Oct-98 Columbia, SC 1970 308 768 4,351 3,491 Woodlands.................... Dec-99 Battle Creek, MI 1987 76 496 3,513 -- Woodlands/Odessa............. Jul-94 Odessa, TX 1982 240 676 3,835 888 Woodlands/Tyler.............. Jul-94 Tyler, TX 1984 256 1,029 5,845 733 Woods of Inverness........... Oct-98 Houston, TX 1983 272 1,774 6,802 121 Wyntre Brook Apartments...... May-97 West Chester, PA 1976 212 536 8,182 46 Yorktown Apartments.......... Oct-98 Lombard, IL 1973 368 3,712 10,447 657 Yorktree..................... Oct-97 Carolstream, IL 1972 293 1,968 11,151 911 -------- ---------- -------- $667,279 $3,432,295 $408,961 ======== ========== ======== DECEMBER 31, 1999 --------------------------------------------------------------------------------- TOTAL COST BUILDINGS NET OF AND ACCUMULATED ACCUMULATED PROPERTY NAME LAND IMPROVEMENTS TOTAL DEPRECIATION DEPRECIATION ENCUMBRANCES - ------------- -------- ------------ ---------- ------------ ------------ ------------ West 135th Street............ 1,196 16,342 17,538 5,416 12,122 328 West Lake Arms Apartments.... 2,816 24,689 27,505 1,040 26,465 16,446 Westway Village.............. 2,457 8,844 11,301 1,124 10,178 4,798 Westgate..................... 1,985 9,283 11,268 426 10,842 5,987 Whispering Pines............. 693 3,881 4,574 -- 4,574 4,251 Wickertree................... 1,225 7,279 8,504 718 7,786 4,014 Wildflower................... 705 4,999 5,704 458 5,246 2,011 Williams Cove................ 1,227 7,603 8,830 1,774 7,056 3,708 Williamsburg................. 2,717 16,083 18,800 1,154 17,646 12,240 Williamsburg Apartments...... 2,333 9,932 12,265 1,394 10,871 7,400 Williamsburg on the Wabash... 3,225 17,569 20,794 -- 20,794 12,554 Willow Park on Lake Adelaide.................... 1,045 5,582 6,627 553 6,073 4,000 Willowick.................... 734 2,755 3,489 320 3,169 1,178 Windridge.................... 1,480 8,692 10,172 614 9,557 6,115 Windsor at South Square...... 1,415 4,956 6,370 547 5,824 2,146 Windsor Hills................ 1,859 6,995 8,854 554 8,300 4,123 Windsor Landing.............. 1,642 9,627 11,269 901 10,367 5,278 Windward at the Villages..... 1,595 9,721 11,315 887 10,429 4,408 Woodhill..................... 1,554 9,789 11,343 819 10,524 5,627 Woodhollow................... 658 4,027 4,685 380 4,305 2,027 Woodland Ridge............... 595 3,639 4,234 402 3,832 2,006 Woodland Village I........... 1,913 6,697 8,610 709 7,901 4,950 Woodlands.................... 496 3,513 4,009 -- 4,009 2,154 Woodlands/Odessa............. 676 4,724 5,399 1,127 4,272 -- Woodlands/Tyler.............. 1,029 6,578 7,607 1,510 6,097 4,049 Woods of Inverness........... 1,774 6,923 8,697 629 8,068 5,052 Wyntre Brook Apartments...... 536 8,228 8,764 406 8,358 6,651 Yorktown Apartments.......... 3,712 11,105 14,817 900 13,917 12,187 Yorktree..................... 1,968 12,062 14,030 1,131 12,899 6,431 -------- ---------- ---------- -------- ---------- ---------- $661,502 $3,847,033 $4,508,535 $416,497 $4,092,038 $2,375,089 ======== ========== ========== ======== ========== ==========
F-39 71 APARTMENT INVESTMENT AND MANAGEMENT COMPANY REAL ESTATE AND ACCUMULATED DEPRECIATION FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
1999 1998 1997 ---------- ---------- ---------- REAL ESTATE Balance at beginning of year........................... $2,802,598 $1,657,207 $ 865,222 Additions during the year: Newly consolidated assets........................... 1,101,134 Acquisitions........................................ 462,891 1,116,643 786,571 Additions........................................... 177,245 80,368 26,808 Sales/transfers to held for sale.................... (35,333) (51,620) (21,394) ---------- ---------- ---------- Balance at end of year................................. $4,508,535 $2,802,598 $1,657,207 ========== ========== ========== ACCUMULATED DEPRECIATION Balance at beginning of year........................... $ 228,880 $ 153,285 $ 120,077 Additions during the year: Depreciation........................................ 131,754 84,635 37,741 Newly consolidated assets........................... 59,627 -- -- Sales/transfers to held for sale.................... (3,765) (9,040) (4,533) ---------- ---------- ---------- Balance at end of year................................. $ 416,497 $ 228,880 $ 153,285 ========== ========== ==========
F-40 72 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION ----------- ----------- 2.1 -- Second Amended and Restated Agreement and Plan of Merger, dated as of January 22, 1999, by and between Apartment Investment and Management Company and Insignia Properties Trust (Exhibit 2.2 to the Current Report on Form 8-K of Insignia Properties Trust, dated February 11, 1999, is incorporated herein by this reference) 2.2 -- Amended and Restated Agreement and Plan of Merger, dated as of May 26, 1998, by and among Apartment Investment Management Company, AIMCO Properties, L.P., Insignia Financial Group, Inc., and Insignia/ESG Holdings, Inc. (Exhibit 2.1 to AIMCO's Registration Statement on Form S-4, filed August 5, 1998, is incorporated herein by this reference) 3.1 -- Charter 3.2 -- Bylaws 4.1 -- Amended and Restated Declaration of Trust of IFT Financing I (formerly Insignia Financing I), dated as of November 1, 1996, among Insignia Financial Group, Inc. as Sponsor, First Union National Bank of South Carolina as Property Trustee, First Union Bank of Delaware, as Delaware Trustee and Andrew I. Farkas, John K. Lines and Ronald Uretta as Regular Trustees (Exhibit 4.2 to Form S-3 of Insignia Financial Group, Inc. dated December 10, 1996, is incorporated herein by this reference) 4.2 -- Indenture for the 6.5% Convertible Subordinated Debentures, dated as of November 1, 1996, between Insignia Financial Group, Inc., as Issuer and First Union National Bank of South Carolina, as Trustee (Exhibit 4.2 to Form S-3 of Insignia Financial Group, Inc., dated December 10, 1996, is incorporated herein by this reference) 4.3 -- First Supplemental Indenture, dated as of October 1, 1998, by and among Apartment Investment and Management Company, Insignia Financial Group, Inc., and First Union National Bank (formerly First Union National Bank of South Carolina, as Trustee) (Exhibit 4.3 to AIMCO's Annual Report on Form 10-K for the fiscal year 1998, is incorporated herein by this reference) 10.1 -- Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994 as amended and restated as of October 1, 1998 (Exhibit 10.8 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1998, is incorporated herein by this reference) 10.2 -- First Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of November 6, 1998 (Exhibit 10.9 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1998, is incorporated herein by this reference) 10.3 -- Second Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 30, 1998 (Exhibit 10.1 to Amendment No. 1 to AIMCO's Current Report on Form 8-K/A, filed February 11, 1999, is incorporated herein by this reference) 10.4 -- Third Amendment to Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of February 18, 1999 (Exhibit 10.12 to AIMCO's Annual Report on Form 10-K for the fiscal year 1998, is incorporated herein by this reference)
73
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.5 -- Fourth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of March 25, 1999 (Exhibit 10.2 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending March 31, 1999, is incorporated herein by this reference) 10.6 -- Fifth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of March 26, 1999 (Exhibit 10.3 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending March 31, 1999, is incorporated herein by this reference) 10.7 -- Sixth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of March 26, 1999 (Exhibit 10.1 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending June 30, 1999, is incorporated herein by this reference) 10.8 -- Seventh Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of September 27, 1999 (Exhibit 10.1 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1999, is incorporated herein by this reference) 10.9 -- Eighth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 14, 1999 10.10 -- Ninth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 21, 1999 10.11 -- Tenth Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 21, 1999 10.12 -- Eleventh Amendment to the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of January 13, 2000 10.13 -- Shareholders Agreement, dated October 1, 1998, by and among Apartment Investment and Management Company, Andrew L. Farkas, James A. Aston and Frank M. Garrison (Exhibit 10.4 to AIMCO's Schedule 13D filed on October 15, 1998, is incorporated herein by this reference) 10.14 -- Common Stock Purchase Agreement made as of August 26, 1997, by and between Apartment Investment and Management Company and ABKB/LaSalle Securities Limited Partnership (Exhibit 99.1 to AIMCO's Current Report on Form 8-K, dated August 26, 1997, is incorporated herein by this reference) 10.15 -- Amended and Restated Assignment and Assumption Agreement, dated as of December 7, 1998, by and among Insignia Properties, L.P. and AIMCO Properties, L.P. (Exhibit 10.1 to the Current Report on Form 8-K of Insignia Properties Trust, dated February 11, 1999, is incorporated herein by this reference) 10.16 -- Amended and Restated Indemnification Agreement, dated as of May 26, 1998, by and between Apartment Investment and Management Company and Insignia/ESG Holdings, Inc. (Exhibit 2.2 to AIMCO's Registration Statement on Form S-4, filed August 5, 1998, is incorporated herein by this reference) 10.17 -- Credit Agreement (Secured Revolving Credit Facility), dated as of August 16, 1999, among AIMCO Properties, L.P., Bank of America, BankBoston, N.A., and First Union National Bank (Exhibit 10.1 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated as of August 16, 1999, is incorporated herein by this reference)
74
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.18 -- Borrower Pledge Agreement, dated August 16, 1999 between AIMCO Properties, L.P. and Bank of America (Exhibit 10.2 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated August 16, 1999 is incorporated herein by this reference) 10.19 -- Form of Committed Loan Note, issued by AIMCO Properties, L.P. to Bank of America, BankBoston, N.A., and First Union National Bank (Exhibit 10.3 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated August 16, 1999, is incorporated herein by this reference) 10.20 -- Form of Swing Line Note, issued by AIMCO Properties, L.P. to Bank of America, BankBoston, N.A., and First Union National Bank (Exhibit 10.4 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated August 16, 1999, is incorporated herein by this reference) 10.21 -- Form of Payment Guaranty, by Apartment Investment and Management Company, AIMCO/NHP Holdings, Inc., NHP A&R Services, Inc., and NHP Management Company (Exhibit 10.5 to the Current Report on Form 8-K of Apartment Investment and Management Company, dated August 16, 1999, is incorporated herein by this reference) 10.22 -- Employment Contract, executed on July 29, 1994, by and between AIMCO Properties, L.P., and Peter Kompaniez (Exhibit 10.44A to AIMCO's Annual Report on Form 10-K for the fiscal year 1994, is incorporated herein by this reference)* 10.23 -- Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and Terry Considine (Exhibit 10.44C to AIMCO's Annual Report on Form 10-K for the fiscal year 1994, is incorporated herein by this reference)* 10.24 -- Employment Contract executed on July 29, 1994 by and between AIMCO Properties, L.P. and Steven D. Ira (Exhibit 10.44D to AIMCO's Annual Report on Form 10-K for fiscal year 1994, is incorporated herein by this reference)* 10.25 -- Apartment Investment and Management Company 1998 Incentive Compensation Plan (Annex B to AIMCO's Proxy Statement for Annual Meeting of Stockholders to be held on May 8, 1998, is incorporated herein by this reference)* 10.26 -- Apartment Investment and Management Company 1997 Stock Award and Incentive Plan (October 1999)* 10.27 -- Form of Restricted Stock Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.11 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1997, is incorporated herein by this reference)* 10.28 -- Form of Incentive Stock Option Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.42 to AIMCO's Annual Report on Form 10-K for the fiscal year 1998, is incorporated herein by this reference)* 10.29 -- Apartment Investment and Management Company Non-Qualified Employee Stock Option Plan, adopted August 29, 1996 (Exhibit 10.8 to AIMCO's Quarterly Report on Form 10-Q for the quarterly period ending September 30, 1996, is incorporated herein by this reference)* 10.30 -- Amended and Restated Apartment Investment and Management Company Non-Qualified Employee Stock Option Plan (Annex B to AIMCO's Proxy Statement for the Annual Meeting of Stockholders to be held on April 24, 1997, is incorporated herein by this reference)*
75
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.31 -- The 1994 Stock Incentive Plan for Officers, Directors and Key Employees of Ambassador Apartments, Inc., Ambassador Apartments, L.P., and Subsidiaries (Exhibit 10.40 to Ambassador Apartments, Inc. Annual Report on Form 10-K for the fiscal year 1997, is incorporated herein by this reference)* 10.32 -- Amendment to the 1994 Stock Incentive Plan for Officers, Directors and Key Employees of Ambassador Apartments, Inc., Ambassador Apartments, L.P. and Subsidiaries (Exhibit 10.41 to Ambassador Apartments, Inc. Annual Report on Form 10-K for the fiscal year 1997, is incorporated herein by this reference)* 10.33 -- The 1996 Stock Incentive Plan for Officers, Directors and Key Employees of Ambassador Apartments, Inc., Ambassador Apartments, L.P., and Subsidiaries, as amended March 20, 1997 (Exhibit 10.42 to Ambassador Apartments, Inc. Annual Report on Form 10-K for the fiscal year 1997, is incorporated herein by this reference)* 10.34 -- Insignia 1992 Stock Incentive Plan, as amended through March 28, 1994 and November 13, 1995 (Exhibit 10.1 to Insignia Financial Group, Inc. Annual Report on Form 10-K for the fiscal year 1997, is incorporated herein by this reference)* 10.35 -- NHP Incorporated 1990 Stock Option Plan (Exhibit 10.9 to NHP Incorporated Annual Report on Form 10-K for the fiscal year 1995, is incorporated herein by this reference)* 10.36 -- NHP Incorporated 1995 Incentive Stock Option Plan (Exhibit 10.10 to NHP Incorporated Annual Report on Form 10-K for the fiscal year 1995, is incorporated herein by this reference)* 10.37 -- Summary of Agreement for Sale of Stock to Executive Officers (Exhibit 10.104 to AIMCO's Annual Report on Form 10-K for the fiscal year 1996, is incorporated herein by this reference)* 21.1 -- List of Subsidiaries 23.1 -- Consent of Ernst & Young LLP 27.1 -- Financial Data Schedule 99.1 -- Agreement re: disclosure of long-term debt instruments
- --------------- (1) Schedule and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request. * Management contract EX-3.1 2 CHARTER 1 EXHIBIT 3.1 APARTMENT INVESTMENT AND MANAGEMENT COMPANY ARTICLES OF RESTATEMENT APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation, having its principal office in Baltimore City, Maryland (hereinafter referred to as the "CORPORATION" or "AIMCO"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: The Corporation desires to and does hereby restate its Charter as currently in effect. The Charter as currently in effect is found in the following charter documents filed with the State Department of Assessments and Taxation of Maryland (the "SDAT"): (1) Articles of Amendment and Restatement as filed with the SDAT on July 15, 1994 (as corrected by Certificates of Correction as filed with the SDAT on November 6, 1997 at 1:35 p.m., on November 30, 1998 at 1:22 p.m., on May 24, 1999 at 1:38 p.m. and on May 24, 1999 at 1:47 p.m., respectively); (2) Articles of Amendment as filed with the SDAT on July 28, 1994 at 11:33 a.m. (as corrected by Certificate of Correction as filed with the SDAT on November 6, 1997 at 1:37 p.m. and on May 24, 1999 at 1:43 p.m.); (3) Articles Supplementary as filed with the SDAT on August 4, 1997 (Class B Preferred Stock); 2 (4) Articles Supplementary as filed with the SDAT on December 22, 1997 (as corrected by Certificates of Correction as filed with the SDAT on February 18, 1998 and on November 30, 1998 at 1:24 p.m., respectively) (Class C Preferred Stock); (5) Articles Supplementary as filed with the SDAT on February 18, 1998 (as corrected by Certificate of Correction as filed with the SDAT on November 30, 1998 at 1:26 p.m.) (Class D Preferred Stock); (6) Articles of Amendment as filed with the SDAT on June 19, 1998; (7) Articles Supplementary as filed with the SDAT on July 13, 1998 (Class G Preferred Stock); (8) Articles Supplementary as filed with the SDAT on August 13, 1998 (Class H Preferred Stock); (9) Articles of Merger as filed with the SDAT on October 1, 1998 (as corrected by Certificate of Correction as filed with the SDAT on May 24, 1999 at 1:33 p.m.); (10) Articles Supplementary as filed with the SDAT on November 6, 1998 (Class J Preferred Stock); (11) Articles Supplementary as filed with the SDAT on February 17, 1999 (Class K Preferred Stock); 2 3 (12) Articles Supplementary as filed with the SDAT on May 25, 1999 at 1:24 p.m. (Class I Preferred Stock); and (13) Articles Supplementary as filed with the SDAT on May 25, 1999 at l:29 p.m. SECOND: The Charter of the Corporation as restated in its entirety (except to the extent that the provisions of Articles Supplementary referred to in Article FIRST, paragraphs (3), (4), (5), (7), (8), (10), (11), and (12) above relating to the various classes of Preferred Stock of the Corporation are incorporated by reference) is as follows: ARTICLE I ARTICLE II PURPOSE The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland authorizing the formation of corporations as now or hereafter in force. ARTICLE III PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT The post office address of the principal office of the Corporation in the State of Maryland is c/o CSC -- Lawyers Incorporating Service Company, 11 East Chase Street, Baltimore, Maryland 21202. The name and address of the resident agent of the Corporation in the State of Maryland is CSC -- Lawyers Incorporating Service Company, 11 East Chase Street, Baltimore, Maryland 21202. The resident agent is a Maryland corporation located in the State of Maryland. 3 4 ARTICLE IV STOCK SECTION 1. AUTHORIZED SHARES 1.1 CLASS AND NUMBER OF SHARES. The total number of shares of stock that the Corporation from time to time shall have authority to issue is 510,587,500 shares of capital stock having a par value of $.01 per share, amounting to an aggregate par value of $5,105,875, consisting of 480,937,500 shares currently classified as Class A Common Stock, par value $.01 per share (the "CLASS A COMMON STOCK") (the Class A Common Stock and all other classes or series of common stock hereafter classified being referred to collectively herein as the "COMMON STOCK"), 750,000 shares currently classified as Class B Cumulative Convertible Preferred Stock, par value $.01 per share (the "CLASS B PREFERRED STOCK"), 2,400,000 shares currently classified as Class C Cumulative Preferred Stock, par value $.01 per share (the "CLASS C PREFERRED STOCK"), 4,200,000 shares currently classified as Class D Cumulative Preferred Stock, par value $.01 per share (the "CLASS D PREFERRED STOCK"), 4,050,000 shares currently classified as Class G Cumulative Preferred Stock, par value $.01 per share (the "CLASS G PREFERRED STOCK"), 2,000,000 shares currently classified as Class H Cumulative Preferred Stock, par value $.01 per share (the "CLASS H PREFERRED STOCK"), 10,000,000 shares currently classified as Class I Cumulative Preferred Stock, par value $.01 per share (the "CLASS I PREFERRED STOCK"), 1,250,000 shares currently classified as Class J Cumulative Convertible Preferred Stock, par value $.01 per share (the "CLASS J PREFERRED STOCK"), and 5,000,000 shares currently classified as Class K Convertible Cumulative Preferred Stock, par value $.01 per share (the "CLASS K PREFERRED STOCK") (the Class B Preferred Stock, the Class C Preferred Stock, the Class D Preferred Stock, the Class G Preferred Stock, the Class H Preferred Stock, the Class J Preferred Stock, Class K Preferred Stock, and all other classes or series of preferred stock hereafter classified being referred to collectively herein as the "PREFERRED STOCK").(1) - ----------------------- (1) This section has been revised to reflect action taken in articles supplementary filed since the section was last amended on June 19, 1998: (i) to delete language relating to Class B Common Stock, the shares of which were either cancelled or reclassified into Class A Common Stock; (ii) to add language relating to Class G Preferred Stock, Class H Preferred Stock, Class I Preferred Stock, Class J Preferred Stock, and Class K Preferred Stock which were reclassified from Class A Common Stock; (iii) to adjust the number of shares and aggregate par value of the authorized (continued...) 4 5 1.2 CHANGES IN CLASSIFICATION AND PREFERENCES. The Board of Directors by resolution or resolutions from time to time may classify and reclassify any unissued shares of capital stock by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares of capital stock, including, but not limited to, ownership restrictions consistent with the Ownership Restrictions with respect to each such class or subclass of capital stock, and the number of shares constituting each such class or subclass, and to increase or decrease the number of shares of any such class or subclass. SECTION 2. NO PREEMPTIVE RIGHTS. No holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of the stock of the Corporation or any other security of the Corporation that it may issue or sell. SECTION 3. COMMON STOCK. 3.1 DIVIDEND RIGHTS. The holders of shares of Common Stock shall be entitled to receive such dividends as may be declared by the Board of Directors of the Corporation out of funds legally available therefor. 3.2 RIGHTS UPON LIQUIDATION. Subject to the preferential rights of Preferred Stock, if any, as may be determined by the Board of Directors pursuant to Section l of this Article IV, in the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of the Corporation, each holder of shares of Common Stock shall be entitled to receive, ratably with each other holder of Common Stock, that portion of the assets of the Corporation available for distribution to its shareholders as the number of shares of the Common Stock held by such holder bears to the total number of shares of Common Stock then outstanding. - ----------------------- (1) (...continued) capital stock of the Corporation for those shares of Class B Common Stock that were cancelled, and (iv) to adjust the number of shares of authorized Class A Common Stock, Class C Preferred Stock, Class D Preferred Stock, Class H Preferred Stock, Class I Preferred Stock, and Class K Preferred Stock for shares reclassified into or from Class A Common Stock. Class E Preferred Stock was authorized, issued, converted and reclassified into Class A Common Stock. Class F Preferred Stock has not heretofore been used as class a designations. 5 6 3.3 VOTING RIGHTS. The holders of shares of Common Stock shall be entitled to vote on all matters (on which a holder of shares of Common Stock shall be entitled to vote) at the meetings of the shareholders of the Corporation, and shall be entitled to one vote for each share of Common Stock entitled to vote at such meeting. 3.4 RESTRICTION ON OWNERSHIP AND TRANSFERS. The Beneficial Ownership and Transfer of Common Stock shall be subject to the restrictions set forth in this Section 3.4 of this Article IV. 3.4.1 RESTRICTIONS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Common Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Common Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Common Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Common Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Common Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Common Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Common Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Common Stock that would be otherwise 6 7 Beneficially Owned by the Initial Holder in excess of the Initial Holder Limit, and the Initial Holder shall acquire no rights in such shares of Common Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Common Stock in excess of the Look-Through Ownership Limit shall be void ab initio as to the Transfer of such shares of Common Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look- Through Ownership Limit, and such Look-Through Entity shall acquire no rights in such shares of Common Stock. (E) TRANSFERS RESULTING IN OWNERSHIP BY FEWER THAN 100 PERSONS. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Common Stock being Beneficially Owned by less than 100 Persons (determined without reference to any rules of attribution) shall be void ab initio as to the Transfer of such shares of Common Stock that would be otherwise Beneficially Owned by the transferee, and the intended transferee shall acquire no rights in such shares of Common Stock. (F) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the date of the Initial Public Offering, any Transfer that, if effective, would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Common Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Common Stock. 7 8 (G) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Common Stock that is null and void under Sections 3.4.1(B), (C), (D), (E) or (F) of this Article IV because it would, if effective, result in (i) the ownership of Common Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Common Stock being Beneficially Owned by less than 100 Persons (determined without reference to any rules of attribution), (iii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iv) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Common Stock in the same or any other related transaction. 3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 3.4.1 of this Article IV or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Common Stock in violation of Section 3.4.1 of this Article IV (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Common Stock acquired in violation of Section 3.4.1 of this Article IV or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 3.4.1 of this Article IV, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 3.4.3 of this Article IV; provided, further, that the provisions of this Section 3.4.2 shall be subject to the provisions of Section 3.4.12 of this Article IV; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Common Stock that is expressly authorized pursuant to Section 3.4.8(D) of this Article IV. 8 9 3.4.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article IV, at any time after the date of the Initial Public Offering there is a purported Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Common Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Common Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Common Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Common Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit is referred to as a "PROHIBITED TRANSFEREE"), then, except as otherwise provided in Section 3.4.8 of this Article IV, such shares of Common Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the date of the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Common Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the event provided in Section 3.4.3(E), the Prohibited Transferee shall have no rights in the Common Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 9 10 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Common Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Common Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Common Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Common Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Common Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may transfer the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a transfer is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 3.4.3(E). The Prohibited Transferee shall receive the lesser of (l) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. if any of the transfer restrictions set forth in this Section 3.4.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Common Stock as to which such restrictions would, by their terms, apply, and to hold such Common Stock on behalf of the Corporation. 10 11 (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Common Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Common Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 3.4.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Common Stock in violation of Section 3.4.1 of this Article IV, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 3.4.3 of this Article IV, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 3.4.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the date of the Initial Public Offering certain record and Beneficial Owners and transferees of shares of Common Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Common Stock shall, within 30 days after January l of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Common Stock Beneficially Owned, and a full 11 12 description of how such shares are held. Each such record or Beneficial Owner of Common Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Common Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each shareholder of record, including without limitation any Person that holds shares of Common Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 3.4.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Common Stock and any Person (including the shareholder of record) that is holding shares of Common Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Common Stock already Beneficially Owned by such shareholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 3.4.6 REMEDIES NOT LIMITED. Nothing contained in this Article IV shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 3.4.12 of this Article IV) (i) to protect the Corporation and the interests of its shareholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 3.4.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 3.4 of this Article IV, or in the case of an ambiguity in any definition contained in Section 4 of this Article IV, the Board of Directors shall have the power to determine the application of the provisions of this Article IV with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 12 13 3.4.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 3.4.1 of this Article IV. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purpose of Section 542(a) of the Code and is a corporation, partnership, estate or trust; provided, however, that in no event may any such exception cause such Person's ownership, direct or indirect (without taking into account such Person's ownership of interests in any partnership of which the Corporation is a partner), to exceed 9.8% of the number of Outstanding shares of Common Stock. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article IV, the pledge by the Initial Holder of all or any portion of the Common Stock directly owned at any time or from time to time shall not constitute a violation of Section 3.4.1 of this Article IV and the pledgee shall not be subject to the Ownership Limit with respect to the Common Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days following the purchase of Common Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Common Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Common Stock purchased by it as a part of or in connection with such offering and with respect to any Common Stock purchased in connection with market making activities. (D) OWNERSHIP AND TRANSFERS BY THE CMO TRUSTEE. The Ownership Limit shall not apply to the initial holding of Common Stock by the "CMO TRUSTEE" (as that term is defined in the "Glossary" to the Prospectus) for the benefit of "HF FUNDING TRUST" (as that term is defined in the "Glossary" to the Prospectus), to any subsequent acquisition of Common Stock by the CMO Trustee in connection with any conversion of Preferred Stock or to any transfer or assignment of all or any part of the legal or beneficial interest in the Common Stock to the CMO Trustee, "FSA" (as that term is defined in the "Glossary" to the Prospectus), any entity 13 14 controlled by FSA, or any direct or indirect creditor of HF Funding Trust (including without limitation any reinsurer of any obligation of HF Funding Trust) or any acquisition of Common Stock by any such person in connection with any conversion of Preferred Stock. 3.4.9 LEGEND. Each certificate for Common Stock shall bear the following legend: "The shares of Class A Common Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class A Common Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter. Any Person that attempts to Beneficially Own shares of Class A Common Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter, as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated, (i) the transfer of shares of Class A Common Stock represented hereby will be void in accordance with the Charter or (ii) the shares of Class A Common Stock represented hereby automatically be will transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 3.4.10 SEVERABILITY. If any provision of this Article IV or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 3.4.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article IV to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look- Through Ownership Limit in the event of a change in law. 3.4.12 SETTLEMENT. Nothing in this Section 3.4 of this Article IV shall be interpreted to preclude the settlement of any transaction entered into through the 14 15 facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. SECTION 4. DEFINITIONS. The terms set forth below shall have the meanings specified below when used in this Article IV or in Article V of the Charter.(2) 4.1 BENEFICIAL OWNERSHIP. The term "BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of shares of Common Stock equal to the sum of (i) the shares of Common Stock directly owned by such Person, (ii) the number of shares of Common Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Common Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (b) of the definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative meanings. 4.2 CHARITABLE BENEFICIARY. The term "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 3.4.3 of this Article IV, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 4.3 CODE. The term "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. 4.4 COMMON STOCK. The term "COMMON STOCK" shall mean all shares now or hereafter authorized of any class of Common Stock of the Corporation and any other capital stock of the Corporation, however designated, authorized after the Issue Date, that has the right (subject always to prior rights of any class of Preferred Stock) - ------------------------ (2) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." 15 16 to participate in the distribution of the assets and earnings of the Corporation without limit as to per share amount. 4.5 EXCESS TRANSFER. The term "EXCESS TRANSFER" has the meaning set forth in Section 3.4.3(A) of this Article IV. 4.6 EXCHANGE ACT. The term "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. 4.7 INITIAL HOLDER. The term "INITIAL HOLDER" shall mean Terry Considine. 4.8 INITIAL HOLDER LIMIT. The term "INITIAL HOLDER LIMIT" shall mean 15% of the number of Outstanding shares of Common Stock applied, in the aggregate, to the Initial Holder. From the date of the Initial Public Offering, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. 4.9 INITIAL PUBLIC OFFERING. The term "INITIAL PUBLIC OFFERING" shall mean the first underwritten public offering of Class A Common Stock registered under the Securities Act of 1933, as amended, on a registration statement on Form S-11 filed with the Securities and Exchange Commission. 4.10 LOOK-THROUGH ENTITY. The term "LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. 4.11 LOOK-THROUGH OWNERSHIP LIMIT. The term "LOOK-THROUGH OWNERSHIP LIMIT" shall mean 15% of the number of Outstanding shares of Common Stock. 4.12 MARKET PRICE. The term "MARKET PRICE" on any date shall mean the Closing Price on the Trading Day immediately preceding such date. The term "CLOSING PRICE" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting 16 17 system with respect to securities listed or admitted to trading on the NYSE or, if the Common Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Common Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors of the Company. The term "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. 4.13 NYSE. The term "NYSE" shall mean the New York Stock Exchange, Inc. 4.14 OUTSTANDING. The term "OUTSTANDING" shall mean issued and outstanding shares of Common Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "OUTSTANDING" shall be deemed to include the number of shares of Common Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. 4.15 OWNERSHIP LIMIT. The term "OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, 8.7% of the number of the Outstanding shares of Common Stock of the Corporation. 4.16 OWNERSHIP RESTRICTIONS. The term "OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. 17 18 4.17 PERSON. The term "PERSON" shall mean (A) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (B) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act. 4.18 PROHIBITED TRANSFEREE. The term "PROHIBITED TRANSFEREE" has the meaning set forth in Section 3.4.3(A) of this Article IV. 4.19 REIT. The term "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. 4.20 TRANSFER. The term "TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Common Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Common Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Common Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Common Stock). The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings. 4.21 TRUST. The term "TRUST" shall mean the trust created pursuant to Section 3.4.3 of this Article IV. 4.22 TRUSTEE. The term "TRUSTEE" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. 4.23 PROSPECTUS. The term "PROSPECTUS" shall mean the prospectus that forms a part of the registration statement filed with the Securities and Exchange Commission in connection with the initial Public Offering, in the form included in the registration statement at the time the registration statement becomes effective; provided, however, that, if such prospectus is subsequently supplemented or amended for use in connection with the Initial Public Offering, "PROSPECTUS" shall refer to such prospectus as so supplemented or amended. 18 19 ARTICLE V GENERAL REIT PROVISIONS SECTION 1. TERMINATION OF REIT STATUS. The Board of Directors shall take no action to terminate the Corporation's status as a REIT until such time as (i) the Board of Directors adopts a resolution recommending that the Corporation terminate its status as a REIT, (ii) the Board of Directors presents the resolution at an annual or special meeting of the shareholders and (iii) such resolution is approved by the vote of a majority of the shares entitled to be cast on the resolution. SECTION 2. EXCHANGE OR MARKET TRANSACTIONS. Nothing in Article IV or this Article V shall preclude the settlement of any transaction entered into through the facilities of the NYSE or other national securities exchange or an automated inter-dealer quotation system. The fact that the settlement of any transaction is permitted shall not negate the effect of any other provision of this Article V or any provision of Article IV, and the transferee, including but not limited to any Prohibited Transferee, in such a transaction shall remain subject to all the provisions and limitations of Article IV and this Article V. SECTION 3. SEVERABILITY. If any provision of Article IV or this Article V or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. SECTION 4. WAIVER. The Corporation shall have authority at any time to waive the requirement that the Corporation redeem shares of Preferred Stock if, in the sole discretion of the Board of Directors, any such redemption would jeopardize the status of the Corporation as a REIT for federal income tax purposes. ARTICLE VI BOARD OF DIRECTORS SECTION 1. MANAGEMENT. The business and the affairs of the Corporation shall managed under the direction of its Board of Directors. SECTION 2. NUMBER. The number of directors that will constitute the entire Board of Directors shall be fixed by, or in the manner provided in, the Bylaws but shall 19 20 in no event be less than three. Any increases or decreases in the size of the board shall be apportioned equally among the classes of directors to prevent stacking in any one class of directors. There are currently six directors in office whose names are as follows: Terry Considine, Peter K. Kompaniez, Richard S. Ellwood, J. Landis Martin, Thomas L. Rhodes and John D. Smith.(3) SECTION 3. Intentionally deleted. SECTION 4. VACANCIES. Except as otherwise provided in the Charter,(4) newly created directorships resulting from any increase in the number of directors may be filled by the majority vote of the Board of Directors, and any vacancies on the Board of Directors resulting from death, resignation, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the Board of Directors, or, if applicable, by a sole remaining director. Any director elected in accordance with the preceding sentence shall hold office until the next annual meeting of the Corporation at which time a successor shall be elected to fill the remaining term of the position filled by such director. SECTION 5. REMOVAL. Except as otherwise provided in the Charter,(5) any director may be removed from office only for cause and only by the affirmative vote of two-thirds of the aggregate number of votes then entitled to be cast generally in the election of directors. For purposes of this Section 5, "CAUSE" shall mean the willful and continuous failure of a director to substantially perform the duties to the Corporation of such director (other than any such failure resulting from temporary incapacity due to physical or mental illness) or the willful engaging by a director in gross misconduct materially and demonstrably injurious to the Corporation. SECTION 6. BYLAWS. The Board of Directors shall have power to adopt, amend, alter, change and repeal any Bylaws of the Corporation by vote of the majority of the Board of Directors then in office. Any adoption, amendment, alteration, change or repeal of any Bylaws by the shareholders of the Corporation shall require the affirmative vote - ------------------------ (3) See Article FORTH. (4) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." (5) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." 20 21 of a majority of the aggregate number of votes then entitled to be cast generally in the election of directors. Notwithstanding anything in this Section 6 to the contrary, no amendment, alteration, change or repeal of any provision of the Bylaws relating to the removal of directors or repeal of the Bylaws shall be effected without the vote of two-thirds of the aggregate number of votes entitled be cast generally in the election of Directors. SECTION 7. POWERS. The enumeration and definition of particular powers of the Board of Directors included elsewhere in the Charter(6) shall in no way be limited or restricted by reference to or inference from the terms of any other clause of this or any other Article of the Charter,(7) or construed as excluding or limiting, or deemed by inference or otherwise in any manner to exclude or limit, the powers conferred upon the Board of Directors under the Maryland General Corporation Law ("MGCL") as now or hereafter in force. ARTICLE VII LIMITATION OF LIABILITY No director or officer of the Corporation shall be liable to the Corporation or its shareholders for money damages to the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers. Neither the amendment nor repeal of this Article VII, nor the adoption or amendment of any other provision of the charter or Bylaws of the Corporation inconsistent with this Article VII, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act that occurred prior to such amendment, repeal or adoption. - ------------------------ (6) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." (7) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." 21 22 ARTICLE VIII INDEMNIFICATION The Corporation shall indemnify, to the fullest extent permitted by Maryland law, as applicable from time to time, all persons who at any time were or are directors or officers of the Corporation for any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) relating to any action alleged to have been taken or omitted in such capacity as a director or an officer. The Corporation shall pay or reimburse all reasonable expenses incurred by a present or former director or officer of the Corporation in connection with any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) in which the present or former director or officer is a party, in advance of the final disposition of the proceeding, to the fullest extent permitted by, and in accordance with the applicable requirements of, Maryland law, as applicable from time to time. The Corporation may indemnify any other persons permitted but not required to be indemnified by Maryland law, as applicable from time to time, if and to extent indemnification is authorized and determined to be appropriate, in each case in accordance with applicable law, by the Board of Directors, the majority of the shareholders of the Corporation entitled to vote thereon or special legal counsel appointed by the Board of Directors. No amendment of the Charter(8) of the Corporation or repeal of any of its provisions shall limit or eliminate any of the benefits provided to directors and officers under this Article VIII in respect of any act or omission that occurred prior to such amendment or repeal. ARTICLE IX WRITTEN CONSENT OF SHAREHOLDERS Any corporate action upon which a vote of shareholders is required or permitted may be taken without a meeting or vote of shareholders with the unanimous written consent of shareholders entitled to vote thereon. - ------------------------ (8) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." 22 23 ARTICLE X AMENDMENT The Corporation reserves the right to amend, alter or repeal any provision contained in this charter upon (i) adoption by the Board of Directors of a resolution recommending such amendment, alteration, or repeal, (ii) presentation by the Board of Directors to the shareholders of a resolution at an annual or special meeting of the shareholders and (iii) approval of such resolution by the affirmative vote of the holders of a majority (or, as applicable, a two-thirds vote) of the aggregate number of votes entitled to be case generally in the election of directors. All rights conferred upon shareholders herein are subject to this reservation. ARTICLE XI EXISTENCE The Corporation is to have a perpetual existence. ARTICLE XII [Reserved.] ARTICLE XIII CLASS B PREFERRED STOCK The terms of the Class B Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class B Preferred Stock, as filed with the SDAT on August 4, 1997. 23 24 ARTICLE XIV CLASS C PREFERRED STOCK The terms of the Class C Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class C Preferred Stock, as filed with the SDAT on December 22, 1997 (as corrected by Certificates of Correction as filed with the SDAT on February 18, 1998 and on November 30, 1998 at 1:24 p.m., respectively). ARTICLE XV CLASS D PREFERRED STOCK The terms of the Class D Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class D Preferred Stock, as filed with the SDAT on February 18, 1998 (as corrected by Certificate of Correction as filed with the SDAT on November 30, 1998 at 1:26 p.m.). ARTICLE XVI CLASS G PREFERRED STOCK The terms of the Class G Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class G Preferred Stock, as filed with the SDAT on July 13, 1998. ARTICLE XVII CLASS H PREFERRED STOCK The terms of the Class H Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class G Preferred Stock, as filed with the SDAT on July 13, 1998. 24 25 ARTICLE XVIII [Reserved.] ARTICLE XIX In accordance with Section 15.4 of the Indenture, dated as of November 1, 1996. by and between Insignia Financial Group, Inc. ("INSIGNIA"), a Delaware corporation (as Issuer) and First Union National Bank of South Carolina (as Trustee)(the "INDENTURE"), upon effectiveness of the Merger (as defined in the Amended and Restated Agreement and Plan of Merger, dated as of May 26, 1998, by and among the Corporation, Insignia, Insignia/ESG Holdings, Inc., a Delaware corporation, and AIMCO Properties, L.P., a Delaware limited partnership (the "MERGER AGREEMENT")), the 6 1/2% Convertible Subordinated Debentures due 2016 issued by Insignia (the "CONVERTIBLE DEBENTURES") will become convertible into the same consideration received by holders of Class A Common Stock, par value $.01 per share, of Insignia, pursuant to the Merger (i.e., shares of Class E Cumulative Preferred Stock, par value $.01 per share, of AIMCO (the "AIMCO CLASS E PREFERRED STOCK"), (or shares of Class A Common Stock, par value $.01 per share, of the Corporation (the "AIMCO COMMON STOCK"), if such Convertible Debentures are converted after the AIMCO Class E Preferred Stock has been converted into AIMCO Common Stock), the Cash Amount (as defined in the Merger Agreement), if any, and cash in lieu of fractional shares). Furthermore, the consideration to be received by holders of Convertible Debentures who convert such Convertible Debentures subsequent to the effectiveness of the Merger shall be adjusted as required by Article XV of the Indenture.(9) - ------------------------ (9) All of the outstanding shares of AIMCO Class E Preferred Stock were converted into shares of AIMCO Common Stock on January 15, 1999 and all of the authorized shares of AIMCO Class E Preferred Stock have been reclassified into Class A Common Stock. 25 26 ARTICLE XX CLASS J PREFERRED STOCK The terms of the Class J Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class J Preferred Stock, as filed with the SDAT on November 6, 1998. ARTICLE XXI CLASS K PREFERRED STOCK The terms of the Class K Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class K Preferred Stock, as filed with the SDAT on February 17, 1999. ARTICLE XXII CLASS I PREFERRED STOCK The terms of the Class I Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, forth in the Articles Supplementary relating to the Class K Preferred Stock, as filed with the SDAT on February 17, 1999. ARTICLE XXII CLASS I PREFERRED STOCK The terms of the Class I Preferred Stock (including the preferences, conversion or other rights, voting powers restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class I Preferred Stock, as filed with the SDAT on May 25, 1999 at 1:24 p.m. 26 27 * * * * * * * THIRD: The Board of Directors of the Corporation at a meeting or by a unanimous consent in writing in lieu of a meeting under Section 2-408 of the Maryland General Corporation Law adopted a resolution that set forth and approved the foregoing restatement of the Charter. FORTH: The Charter of the Corporation is not amended by these Articles of Amendment and Restatement; provided, however, consistent with Section 2-608(b)(7) of the Maryland General Corporation Law, the current number and names of directors are provided in the last sentence of Section 2 of Article VI of the restated Charter of the Corporation. 27 28 IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has caused these presents to be signed in its name and on its behalf by its Vice Chairman and President and witnessed by its Secretary on April 21, 1999. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ - -------------------------------- ---------------------------------- Joel F. Bonder, Peter K. Kompaniez, Secretary Vice Chairman and President THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the foregoing Articles of Restatement of which this certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles of Restatement to be the corporate act of said Corporation and hereby certifies that to the best of his knowledge, information, and belief the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ PETER K. KOMPANIEZ ---------------------------------- Peter K. Kompaniez, Vice Chairman and President 28 29 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS B CUMULATIVE CONVERTIBLE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, the Board of Directors has duly divided and classified 750,000 authorized but unissued shares of the capital stock of the Corporation into a class designated as Class B Cumulative Convertible Preferred Stock and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class B Cumulative Convertible Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 750,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 10,000,000 shares immediately prior to the reclassification to 9,250,000 shares immediately after the reclassification. The number of shares classified as Class B Cumulative Convertible Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class B Cumulative Convertible Preferred Stock (including the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class B Cumulative Convertible Preferred Stock (the "Class B Preferred Stock") and Seven Hundred Fifty Thousand (750,000) shall be the authorized number of shares of such Class B Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class B Preferred Stock, the following terms shall have the meanings indicated: -1- 30 "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Base Common Stock Dividend" shall have the meaning set forth in paragraph (a) of Section 9 of this Article. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class B Preferred Stock. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Call Date" shall have the meaning set forth in paragraph (b) of Section 5 of this Article. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class B Preferred Stock" shall have the meaning set forth in Section 1 of this Article. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or -2- 31 any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation or such shares of the Corporation's capital stock into which outstanding shares of Common Stock shall be reclassified. "Conversion Price" shall mean the conversion price per share of Common Stock for which each share of Class B Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to paragraph (d) of Section 7 of this Article. The initial Conversion Price shall be $30.45 (equivalent to an initial conversion rate of 3.28407 shares of Common Stock for each share of Class B Preferred Stock). "Current Market Price" of publicly traded shares of Common Stock or any other class or series of capital stock or other security of the Corporation or of any similar security of any other issuer for any day shall mean the closing price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices regular way on such day, in either case as reported on the principal national securities exchange on which such securities are listed or admitted for trading, or, if such security is not quoted on any national securities exchange, on the National Market of the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or, if such security is not quoted on the NASDAQ National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any New York Stock Exchange or National Association of Securities Dealers, Inc. member firm regularly making a market in such security selected for such purpose by the Chief Executive Officer or the Board of Directors or if any class or series of securities are not publicly traded, the fair value of the shares of such class as determined reasonably and in good faith by the Board of Directors of the Corporation. "distribution" shall have the meaning set forth in paragraph (d)(iii) of Section 7 of this Article. "Dividend Payment Date" shall mean, with respect to each Dividend Period, (a) the date that cash dividends are paid on the Common Stock with respect to such Dividend Period; or (b) if such dividends have not been paid on the Common Stock by 9:00 a.m., New York City time, on the sixtieth day from and including the last day of such Dividend Period, then on such day; provided, further, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date. -3- 32 "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 1, April 1, July 1 and October 1 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class B Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Call Date with respect to the Class B Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 11.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" shall mean the average of the daily Current Market Prices of a share of Common Stock during five (5) consecutive Trading Days selected by the Corporation commencing not more than twenty (20) Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex" date with respect to the issuance or distribution requiring such computation. The term "'ex' date," when used with respect to any issuance or distribution, means the first day on which the share of Common Stock trades regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. "Issue Date" shall mean August 4, 1997. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including September 30, 1997. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class B Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. -4- 33 "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class B Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "Closing Price" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Company. "NYSE" shall mean the New York Stock Exchange, Inc. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class B Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value -5- 34 of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 11.3(A) of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class B Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day", as to any securities, shall mean any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ National Market or, if such securities are not listed or admitted for trading on the NASDAQ National Market, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. -6- 35 "Transaction" shall have the meaning set forth in paragraph (e) of Section 7 of this Article. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class B Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class B Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class B Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class B Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class B Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class B Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class B Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class B Preferred Stock equal to the greater of (i) the base dividend of $1.78125 per quarter (the "Base Rate") or (ii) the cash dividends declared on the number of shares of Common Stock, or portion thereof, into which a share of Class B Preferred Stock is convertible. The dividends payable with respect to the Initial Dividend Period shall be determined solely by reference to the Base Rate. The amount referred to in clause (ii) of this paragraph (a) with respect to each succeeding Dividend Period shall be determined as of the applicable Dividend Payment Date by multiplying the number of shares of Common Stock, or portion thereof calculated to the fourth decimal point, into which a share of Class B Preferred Stock would be convertible at the opening of business on such Dividend Payment Date (based on the Conversion Price then in effect) by the aggregate cash dividends payable or paid for such Dividend Period in respect of a share of Common Stock outstanding as of the record date for the payment of dividends on the Common Stock with respect to such Dividend Period. If (A) the Corporation pays a cash dividend on the Common Stock after the -7- 36 Dividend Payment Date for the corresponding Dividend Period and (B) the dividend on the Class B Preferred Stock for such Dividend Period calculated pursuant to clause (ii) of this paragraph (a), taking into account the Common Stock dividend referenced in clause (A), exceeds the dividend previously declared on the Class B Preferred Stock for such Dividend Period, the Corporation shall pay an additional dividend to the holders of the Class B Preferred Stock on the date that the Common Stock dividend referenced in clause (A) is paid, in an amount equal to the difference between the dividend calculated pursuant to clause (B) and the dividends previously declared on the Class B Preferred Stock with respect to such Dividend Period. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on the Dividend Payment Dates, commencing on the first Dividend Payment Date after the Issue Date. Each such dividend shall be payable in arrears to the holders of record of the Class B Preferred Stock, as they appear on the stock records of the Corporation at the close of business on a record date fixed by the Board of Directors which shall be not more than 60 days prior to the applicable Dividend Payment Date and, within such 60 day period, shall be the same date as the record date for the regular quarterly dividend payable with respect to the Common Stock for the Dividend Period to which such Dividend Payment Date relates (or, if there is no such record date for Common Stock, then such date as the Board of Directors may fix). Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. Upon a final administrative determination by the Internal Revenue Service that the Corporation does not qualify as a real estate investment trust in accordance with Section 856 of the Code, the Base Rate set forth in (a)(i) will be increased to $3.03125 until such time as the Corporation regains its status as a real estate investment trust; provided, however, that if the Corporation contests its loss of real estate investment trust status in Federal Court, following its receipt of an opinion of nationally recognized tax counsel to the effect that there is a reasonable basis to contest such loss of status, the Base Rate shall not be increased during the pendency of such judicial proceeding; provided further, however, that upon a final judicial determination in Federal Tax Court, Federal District Court or the Federal Claims Court that the Corporation does not qualify as a real estate investment trust, the Base Rate will be increased as stated above from the date of such judicial determination. (b) The amount of dividends payable per share of Class B Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class B Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Class B Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class B Preferred Stock that may be in arrears. -8- 37 (c) So long as any of the shares of Class B Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any class or series of Parity Stock for any period unless dividends equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment on the Class B Preferred Stock for all Dividend Periods terminating on or prior to the Dividend Payment Date with respect to such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class B Preferred Stock and all dividends declared upon any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class B Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class B Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of or options, warrants or rights to subscribe for or purchase shares of Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) directly or indirectly by the Corporation (except by conversion into or exchange for Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless in each case (i) the full cumulative dividends (including all accumulated, accrued and unpaid dividends) on all outstanding shares of Class B Preferred Stock and any other Parity Stock of the Corporation shall have been paid or such dividends have been declared and set apart for payment for all past Dividend Periods with respect to the Class B Preferred Stock and all past dividend periods with respect to such Parity Stock and (ii) sufficient funds shall have been paid or set apart for the payment of the full dividend for the current Dividend Period with respect to the Class B Preferred Stock and the current dividend period with respect to such Parity Stock. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class B Preferred Stock shall be entitled to receive One Hundred Dollars ($100) per share of Class B Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class B Preferred Stock have been paid the Liquidation Preference in full, plus an -9- 38 amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class B Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class B Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class B Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class B Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class B Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class B Preferred Stock shall not be redeemable by the Corporation prior to August 4, 2002. On and after August 4, 2002, the Corporation, at its option, may redeem shares of Class B Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accrued and unpaid dividends to the Call Date. (b) Shares of Class B Preferred Stock shall be redeemed by the Corporation on the date specified in the notice to holders required under paragraph (d) of this Section 5 (the "Call Date"). The Call Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class B Preferred Stock and any other class or series of Parity Stock of the Corporation have not been paid or declared and set apart for payment, no shares of Class B Preferred Stock may be redeemed unless -10- 39 all outstanding shares of Class B Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class B Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class B Preferred Stock. (d) If the Corporation shall redeem shares of Class B Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Call Date; (2) the number of shares of Class B Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the place or places at which certificates for such shares are to be surrendered for cash; and (4) the then-current Conversion Price. Notice having been mailed as aforesaid, from and after the Call Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Class B Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class B Preferred Stock called for redemption (except that, in the case of a Call Date after a dividend record date and prior to the related Dividend Payment Date, holders of Class B Preferred Stock on the dividend record date will be entitled on such Dividend Payment Date to receive the dividend payable on such shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class B Preferred Stock of the Corporation shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Class B Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Class B Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Call Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class B Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the -11- 40 certificates for any such shares of Class B Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class B Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class B Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class B Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class B Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class B Preferred Stock which shall have been issued and reacquired in any manner by the Corporation (including shares of Class B Preferred Stock which have been surrendered for conversion into Common Stock) shall be returned to the status of authorized, but unissued shares of Class B Preferred Stock. 7. CONVERSION. At any time on or after August 4, 1998. Holders of shares of Class B Preferred Stock shall have the right to convert all or a portion of such shares into shares of Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, a holder of shares of Class B Preferred Stock shall have the right, at such holder's option, at any time on or after August 4, 1998 to convert such shares, in whole or in part, into the number of fully paid and non-assessable shares of authorized but previously unissued shares of Common Stock per each share of Class B Preferred Stock obtained by dividing the Liquidation Preference (excluding any accumulated, accrued and unpaid dividends) per share of Class B Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in the last subparagraph of paragraph (b) of this Section 7) and by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (b) of this Section 7; provided, however, that the right to convert shares of Class B Preferred Stock called for redemption pursuant to Section 5 shall terminate at the close of business on the Call Date fixed for such redemption, unless the Corporation shall default in making payment of cash payable upon such redemption under Section 5 of this Article. (b) In order to exercise the conversion right, the holder of each share of Class B Preferred Stock to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent, accompanied by written notice to the Corporation that the holder thereof elects to convert such -12- 41 share of Class B Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class B Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid). Holders of shares of Class B Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof following such dividend payment record date and prior to such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the shares of Common Stock issued upon such conversion. As promptly as practicable after the surrender of certificates for shares of Class B Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or send on such holder's written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares of Class B Preferred Stock in accordance with provisions of this Section 7, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in paragraph (c) of this Section 7. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Class B Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. If the dividend payment record date for the Class B Preferred Stock and Common Stock do not coincide, and the preceding sentence does not operate to ensure that a holder of shares of Class B Preferred Stock whose shares are converted into Common Stock does not receive dividends on both the shares of Class B Preferred Stock and the Common Stock into which such shares are converted for the same Dividend Period, then notwithstanding anything herein to the contrary, it is the intent, and the Transfer Agent is authorized to ensure that no conversion after the earlier of such record dates will be accepted until after the latter of such record dates. -13- 42 (c) No fractional share of Common Stock or scrip representing fractions of a share of Common Stock shall be issued upon conversion of the shares of Class B Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of shares of Class B Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of the Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class B Preferred Stock so surrendered. (d) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its capital stock in shares of Common Stock, (B) subdivide its outstanding Common Stock into a greater number of shares, (C) combine its outstanding Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its outstanding Common Stock, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the day following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any share of Class B Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock (or fraction of a share of Common Stock) that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share of Class B Preferred Stock been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this paragraph (d)(i) of this Section 7 shall become effective immediately after the opening of business on the day next following the record date (except as provided in paragraph (h) below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification. (ii) If the Corporation shall issue after the Issue Date rights, options or warrants to all holders of Common Stock entitling them (for a period expiring within 45 days after the record date described below in this paragraph (d)(ii) of this Section 7) to subscribe for or purchase Common Stock at a price per share less than the Fair Market Value per share of the Common Stock on the record date for the determination of stockholders entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the date fixed for such determination by (B) a fraction, the numerator of which shall be the sum of (X) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (Y) the number of shares that could be -14- 43 purchased at such Fair Market Value from the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Common Stock, and the denominator of which shall be the sum of (XX) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (YY) the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in paragraph (h) below). In determining whether any rights, options or warrants entitle the holders of Common Stock to subscribe for or purchase Common Stock at less than such Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors. (iii) If the Corporation shall after the Issue Date make a distribution on its Common Stock other than in cash or shares of Common Stock (including any distribution in securities (other than rights, options or warrants referred to in paragraph (d)(ii) of this Section 7)) (each of the foregoing being referred to herein as a "distribution"), then the Conversion Price in effect at the opening of business on the next day following the record date for determination of stockholders entitled to receive such distribution shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the record date by (B) a fraction, the numerator of which shall be the difference between (X) the number of shares of Common Stock outstanding on the close of business on the record date and (Y) the number of shares determined by dividing (aa) the aggregate value of the property being distributed by (bb) the Fair Market Value per share of Common Stock on the record date, and the denominator of which shall be the number of shares of Common Stock outstanding on the close of business on the record date. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided below). The value of the property being distributed shall be as determined in good faith by the Board of Directors; provided, however, if the property being distributed is a publicly traded security, its value shall be calculated in accordance with the procedure for calculating the Fair Market Value of a share of Common Stock (calculated for a period of five consecutive Trading Days commencing on the twentieth Trading Day after the distribution). Neither the issuance by the Corporation of rights, options or warrants to subscribe for or purchase securities of the Corporation nor the exercise thereof shall be deemed a distribution under this paragraph. (iv) If after the Issue Date the Corporation shall acquire, pursuant to an issuer or self tender offer, all or any portion of the outstanding Common Stock and such tender offer involves the payment of consideration per share of Common Stock having a fair market value (as determined in good faith by the Board of Directors), at the last time (the "Expiration Time") tenders may be made pursuant to such offer, that exceeds the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time, then the Conversion Price in effect on the opening of business on the day next succeeding the Expiration -15- 44 Time shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the Expiration Time by (B) a fraction, the numerator of which shall be (X) the number of shares of Common Stock outstanding (including the shares acquired in the tender offer (the "Acquired Shares")) immediately prior to the Expiration Time, multiplied by (Y) the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator of which shall be the sum of (XX) the fair market value (determined as aforesaid) of the aggregate consideration paid to acquire the Acquired Shares and (YY) the product of (I) the number of shares of Common Stock outstanding (less any Acquired Shares) at the Expiration Time, multiplied by (II) the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time. (v) No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided, however, that any adjustments that by reason of this paragraph (d)(v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this paragraph (d)(v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Common Stock. Notwithstanding any other provisions of this Section 7, the Corporation shall not be required to make any adjustment of the Conversion Price for the issuance of (A) any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of optional amounts in shares of Common Stock under such plan or (B) any options, rights or shares of Common Stock pursuant to any stock option, stock purchase or other stock-based plan maintained by the Corporation. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (d) of this Section 7 to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this paragraph (d), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable, or if that is not possible, to diminish any income taxes that are otherwise payable because of such event. (e) If the Corporation shall be a party to any transaction (including without limitation a merger, consolidation, statutory share exchange, issuer or self tender offer for at least 30% of the shares of Common Stock outstanding, sale of all or substantially all of the Corporation's assets or recapitalization of the Common Stock, but excluding any transaction as to which paragraph (d)(i) of this Section 7 applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which shares of Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), each share of Class B Preferred Stock which is not converted into the right to receive -16- 45 stock, securities or other property in connection with such Transaction shall thereupon be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon such consummation by a holder of that number of shares of Common Stock into which one share of Class B Preferred Stock was convertible immediately prior to such Transaction (without giving effect to any Conversion Price adjustment pursuant to Section 7(d)(iv) of this Article). The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (e), and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Class B Preferred Stock that will contain provisions enabling the holders of the Class B Preferred Stock that remain outstanding after such Transaction to convert into the consideration received by holders of Common Stock at the Conversion Price in effect immediately prior to such Transaction. The provisions of this paragraph (e) shall similarly apply to successive Transactions. (f) If: (i) the Corporation shall declare a dividend (or any other distribution) on the Common Stock (other than cash dividends and cash distributions); or (ii) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of any class or series of capital stock or any other rights or warrants; or (iii) there shall be any reclassification of the outstanding Common Stock or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or a statutory share exchange, an issuer or self tender offer shall have been commenced for at least 30% of the outstanding shares of Common Stock (or an amendment thereto changing the maximum number of shares sought or the amount or type of consideration being offered therefor shall have been adopted), or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or (iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to each holder of shares of Class B Preferred Stock at such holder's address as shown on the stock records of the Corporation, as promptly as possible, a notice stating (A) the record date for the payment of such dividend, distribution or rights or warrants, or, if a record date is not established, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected -17- 46 that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up or (C) the date on which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of any amendment thereto). Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7. (g) Whenever the Conversion Price is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to each holder of shares of Class B Preferred Stock at such holder's last address as shown on the stock records of the Corporation. (h) In any case in which paragraph (d) of this Section 7 provides that an adjustment shall become effective on the day next following the record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Class B Preferred Stock converted after such record date and before the occurrence of such event the additional Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of this Section 7. (i) There shall be no adjustment of the Conversion Price in case of the issuance of any capital stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 7. (j) If the Corporation shall take any action affecting the Common Stock, other than action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class B Preferred Stock, the Conversion Price for the Class B Preferred Stock may be adjusted, to the extent permitted by law, in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. (k) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock solely for the purpose of effecting conversion of the Class B Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Class B Preferred -18- 47 Stock not theretofore converted into Common Stock. For purposes of this paragraph (k), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Class B Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder (and without regard to the Ownership Limit set forth in the Charter of the Corporation). The Corporation covenants that any shares of Common Stock issued upon conversion of the shares of Class B Preferred Stock shall be validly issued, fully paid and nonassessable. The Corporation shall use its best efforts to list the shares of Common Stock required to be delivered upon conversion of the shares of Class B Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding shares of Common Stock are listed at the time of such delivery. (l) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion or redemption of shares of Class B Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the shares of Class B Preferred Stock to be converted or redeemed, and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. (m) In addition to any other adjustment required hereby, to the extent permitted by law, the Corporation from time to time may decrease the Conversion Price by any amount, permanently or for a period of at least twenty Business Days, if the decrease is irrevocable during the period. (n) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class B Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in the Charter), after taking into account any waiver of such limitation granted to any holder of the shares of Class B Preferred Stock. 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class B Preferred Stock ("Senior Stock"); -19- 48 (b) on a parity with the Class B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class B Preferred Stock, if the holders of such class of stock or series and the Class B Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Stock"); and (c) junior to the Class B Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or if the holders of Class B Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Stock"). 9. VOTING. (a) If and whenever (i) six quarterly dividends (whether or not consecutive) payable on the Class B Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, or (ii) for two consecutive quarterly dividend periods the Corporation fails to pay dividends on the Common Stock in an amount per share at least equal to $0.4625 (subject to adjustment consistent with any adjustment of the Conversion Price pursuant to Section 7(d) of this Article) (the "Base Common Stock Dividend") the number of directors then constituting the Board of Directors shall be increased by two (in the case of an arrearage in dividends described in clause (i)) or one additional director (in the case of an arrearage in dividends described in clause (ii)) (in each case if not already increased by reason of similar types of provisions with respect to Voting Preferred Stock (as defined below)) and the holders of shares of Class B Preferred Stock, together with the holders of shares of every other series or class of Parity Stock (any other such series, the "Voting Preferred Stock"), voting as a single class regardless of series, shall be entitled to elect the two additional directors (in the case of an arrearage in dividends described in clause (i)) or one (in the case of an arrearage in dividends described in clause (ii)) to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class B Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever (1) in the case of an arrearage in dividends described in clause (i), all arrears in dividends on the Class B Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, or (2) in the case of an arrearage in dividends described in clause (ii), the Corporation makes a quarterly dividend payment on the Common Stock in an amount per share equal to or exceeding the Base Common Stock Dividend, then the -20- 49 right of the holders of the Class B Preferred Stock and the Voting Preferred Stock to elect such additional two directors (in the case of an arrearage in dividends described in clause (i)) or one additional director (in the case of an arrearage in dividends described in clause (ii)) shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all Persons elected as directors by the holders of the Class B Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class B Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class B Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class B Preferred Stock and of the Voting Preferred Stock for the election of the two directors (in the case of an arrearage in dividends described in clause (i)) or one director (in the case of an arrearage in dividends described in clause (ii)) to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class B Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors or director elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class B Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class B Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class B Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class B Preferred Stock, given in Person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class B Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class B Preferred Stock; or -21- 50 (ii) The authorization, creation of, the increase in the authorized amount of, or issuance of , any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock (whether or not such class of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class B Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision is made for the redemption of all shares of Class B Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class B Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock shall have the right to vote with the Class B Preferred Stock as a single class on any matter, then the Class B Preferred Stock and such other class or series shall have with respect to such matters one (1) vote per $100 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Class B Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class B Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class B Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class B Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class B Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class B Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class B Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class B Preferred Stock. -22- 51 (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class B Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class B Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class B Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.8 from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class B Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class B Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class B Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class B Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class B Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class B Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class B Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class B Preferred Stock in the same or any other related transaction. 11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section -23- 52 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class B Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class B Preferred Stock acquired in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class B Preferred Stock that is expressly authorized pursuant to Section 11.8(d) of this Article. 11.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class B Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class B Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class B Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class B Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class B Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the Excess -24- 53 Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class B Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(E), the Prohibited Transferee shall have no rights in the Class B Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class B Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class B Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class B Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class B Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class B Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited -25- 54 Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class B Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class B Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class B Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class B Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class B Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class B Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class B Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class B Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record -26- 55 or Beneficial Owner of Class B Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class B Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class B Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class B Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class B Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class B Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 11.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 11.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 11 of this Article, or in the case of an ambiguity in any definition contained in Section 11 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 11.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection -27- 56 with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class B Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 11.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class B Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days following the purchase of Class B Preferred Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Class B Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class B Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class B Preferred Stock purchased in connection with market making activities. 11.9 LEGEND. Each certificate for Class B Preferred Stock shall bear the following legend: "The shares of Class B Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class B Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class B Preferred Stock). Any Person that attempts to Beneficially Own shares of Class B Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class B Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated, the shares of Class B Preferred Stock represented hereby will be either (i) void in accordance with the Certificate or (ii) automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 11.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. -28- 57 11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class B Cumulative Convertible Preferred Stock set forth in Article Third hereof shall become Article XIII of the Charter. -29- 58 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Vice President and witnessed by its Secretary on August 1, 1997. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Leeann Morein /s/ Patricia K. Heath Leeann Morein, Patricia K. Heath, Secretary Vice President THE UNDERSIGNED, Vice President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ Patricia K. Heath Patricia K. Heath, Vice President -30- 59 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS C CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, the Board of Directors has duly divided and classified 2,760,000 authorized but unissued shares of the capital stock of the Corporation into a class designated as Class C Cumulative Preferred Stock and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class C Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,760,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 9,250,000 shares immediately prior to the reclassification to 6,490,000 shares immediately after the reclassification. The number of shares classified as Class C Cumulative Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class C Cumulative Preferred Stock (including the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class C Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million Seven Hundred Sixty Thousand (2,760,000) shall be the authorized number of shares of such Class C Preferred Stock constituting such class. 5 60 2. DEFINITIONS. For purposes of the Class C Preferred Stock, the following terms shall have the meanings indicated: "ACT" shall mean the Securities Act of 1933, as amended. "AFFILIATE" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, PROVIDED that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (ii) of the definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative meanings. "BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class C Preferred Stock. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "CLASS C PREFERRED STOCK" shall have the meaning set forth in Section 1 of this Article. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable 6 61 regulations or other administrative pronouncements as in effect from time to time. "COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation or such shares of the Corporation's capital stock into which outstanding shares of Common Stock shall be reclassified. "DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15 and October 15 of each year; provided, further, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "DIVIDEND PERIODS" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class B Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class C Preferred Stock being redeemed. "EQUITY STOCK" shall mean one or more shares of any class of capital stock of the Corporation. "EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this Article. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "ISSUE DATE" shall mean December 23, 1997(1). "INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including the Issue Date and ending on and including April 14, 1998. "INITIAL HOLDER" shall mean Terry Considine. "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the thencurrent Initial Holder Limit applicable to the Initial Holder. 7 62 "JUNIOR STOCK" shall mean the Common Stock and any other class or series of capital stock of the Corporation over which the shares of Class C Preferred Stock have preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. "LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Look-Through Entity. "MARKET PRICE" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "CLOSING PRICE" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the overthecounter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Company. The term "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Equity Stock is listed or admitted to trading is open for the transaction of business or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "NYSE" shall mean the New York Stock Exchange, Inc. "OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of the Corporation, PROVIDED that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "OUTSTANDING" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. 8 63 "OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class C Preferred Stock that are Beneficially Owned by the Person. "OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. The Class B Preferred Stock shall be a Parity Stock. "PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "PROHIBITED TRANSFEREE" has the meaning set forth in Section 10.3(A) of this Article. "REDEMPTION DATE" shall have the meaning set forth in paragraph (b) of Section 5 of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "SET APART FOR PAYMENT" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class C Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "TRADING DAY", as to any securities, shall mean any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ 9 64 National Market or, if such securities are not listed or admitted for trading on the NASDAQ National Market, in the securities market in which such securities are traded. "TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class C Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class C Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class C Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class C Preferred Stock). The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings. "TRANSFER AGENT" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class C Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class C Preferred Stock. "TRUST" shall mean the trust created pursuant to Section 10.3 of this Article. "TRUSTEE" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8 of this Article. 3. DIVIDENDS. (a) The holders of Class C Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class C Preferred Stock equal to $2.25 per annum. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on April 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class C Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the January 1, April 1, July 1 or October 1, as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) The amount of dividends payable per share of Class C Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30day months and a 360day 10 65 year. Holders of Class C Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Class C Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class C Preferred Stock that may be in arrears. (c) So long as any of the shares of Class C Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any class or series of Parity Stock for any period unless dividends equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment on the Class C Preferred Stock for all Dividend Periods terminating on or prior to the Dividend Payment Date with respect to such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class C Preferred Stock and all dividends declared upon any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class C Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class C Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless in each case the full cumulative dividends (including all accumulated, accrued and unpaid dividends) on all outstanding shares of Class C Preferred Stock shall have been paid or such dividends have been declared and set apart for payment for all past Dividend Periods with respect to the Class C Preferred Stock. Notwithstanding the provisions of this Section 3(d), the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 11 66 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class C Preferred Stock shall be entitled to receive TwentyFive Dollars ($25) per share of Class C Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class C Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class C Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class C Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class C Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class C Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class C Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class C Preferred Stock shall not be redeemable by the Corporation prior to December 23, 2002(2) except as set forth in Section 10.2 of this Article. On and after December 23, 2002(3), the Corporation, at its option, may redeem shares of Class C Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"). In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class C Preferred Stock (other than any portion thereof consisting of accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or AIMCO Properties, L.P., a Delaware limited partnership (the "Operating Partnership") of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, 'capital shares' means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. 12 67 (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class C Preferred Stock have not been paid or declared and set apart for payment, no shares of Class C Preferred Stock may be redeemed unless all outstanding shares of Class C Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class C Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class C Preferred Stock. (d) If the Corporation shall redeem shares of Class C Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class C Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; and (3) the place or places at which certificates for such shares are to be surrendered for cash. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Class C Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class C Preferred Stock called for redemption (except that, in the case of a Redemption Date after a dividend record date and prior to the related Dividend Payment Date, holders of Class C Preferred Stock on the dividend record date will be entitled on such Dividend Payment Date to receive the dividend payable on such shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class C Preferred Stock of the Corporation shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Class C Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Class C Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class C Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. 13 68 As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class C Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class C Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class C Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class C Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class C Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class C Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class C Preferred Stock. 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class C Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class C Preferred Stock ("Senior Stock"); (b) on a parity with the Class C Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class C Preferred Stock, if the holders of such class of stock or series and the Class C Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Stock"); and (c) junior to the Class C Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or if the holders of Class C Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Stock"). 14 69 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class C Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class C Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class C Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class C Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, then the right of the holders of the Class C Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all Persons elected as directors by the holders of the Class C Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class C Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class C Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class C Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class C Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class C Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the thenremaining director elected by the holders of the Class C Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class C Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 662/3% of the votes entitled to be cast by the holders of the Class C Preferred Stock voting as a single class 15 70 with the holders of all other classes or series of Preferred Stock entitled to vote on such matters, given in Person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Charter or the ByLaws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class C Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class C Preferred Stock; or (ii) The authorization, creation of, the increase in the authorized amount of, or issuance of any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock (whether or not such class of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class C Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision is made for the redemption of all shares of Class C Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class C Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock shall have the right to vote with the Class C Preferred Stock as a single class on any matter, then the Class C Preferred Stock and such other class or series shall have with respect to such matters one quarter of one (.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Class C Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class C Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 16 71 10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class C Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class C Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class C Preferred Stock in excess of the Look-Through Ownership Limit. 17 72 (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class C Preferred Stock in excess of the Ownership Limit shall be void AB INITIO as to the Transfer of such shares of Class C Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class C Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class C Preferred Stock in excess of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such shares of Class C Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class C Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10.8 from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class C Preferred Stock in excess of the Look-Through Ownership limit shall be void AB INITIO as to the Transfer of such shares of Class C Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class C Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void AB INITIO as to the Transfer of shares of Class C Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class C Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class C Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class C Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the 18 73 meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class C Preferred Stock in the same or any other related transaction. 10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class C Preferred Stock in violation of Section 10.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of longterm indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class C Preferred Stock acquired in violation of Section 10.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article, regardless of any action (or nonaction) by the Board of Directors or such committee, (a) shall be void AB INITIO or (b) shall automatically result in the transfer described in Section 10.3 of this Article; PROVIDED, FURTHER, that the provisions of this Section 10.2 shall be subject to the provisions of Section 10.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class C Preferred Stock that is expressly authorized pursuant to Section 10.8(d) of this Article. 10.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class C Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class C Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class C Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class C Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class C Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the 19 74 exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class C Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10.3(E), the Prohibited Transferee shall have no rights in the Class C Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class C Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class C Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void AB INITIO with respect to such shares of Class C Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class C Preferred Stock have been transferred to the Trustee will be rescinded as void AB INITIO and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class C Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court 20 75 having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class C Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class C Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class C Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class C Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class C Preferred Stock in violation of Section 10.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class C Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class C Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class C Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class C Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class C Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including 21 76 without limitation any Person that holds shares of Class C Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class C Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class C Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class C Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 10.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class C Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class C Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. 22 77 (C) UNDERWRITERS. For a period of 270 days following the purchase of Class C Preferred Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Class C Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class C Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class C Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class C Preferred Stock shall bear the following legend: "The shares of Class C Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class C Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class C Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated, the shares of Class C Cumulative Preferred Stock represented hereby will be either (i) void in accordance with the Certificate or (ii) automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system. FOURTH: The terms of the Class C Cumulative Preferred Stock set forth in Article Third hereof shall become Article XIV of the Charter. 23 78 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Chairman and witnessed by its Secretary on December 19, 1997. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Leeann Morein /s/ Terry Considine - ----------------------- -------------------------- Leeann Morein, Terry Considine Secretary Chairman THE UNDERSIGNED, Chairman of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ Terry Considine Terry Considine ----------------------- Chairman 24 79 CERTIFICATE OF CORRECTION TO ARTICLES SUPPLEMENTARY CLASS C CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY (A MARYLAND CORPORATION) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Articles Supplementary, dated December, 1997, of the Corporation relating to its Class C Cumulative Preferred Stock (par value $.01 per share) were filed with the State Department of Assessments and Taxation of Maryland on December 22, 1997, and said Articles Supplementary require correction as permitted by Section 1-207 of the Corporations and Associations Article of the Annotated Code of Maryland. SECOND: ARTICLE FIRST of the Articles Supplementary as previously filed and to be corrected hereby read as follows: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, the Board of Directors has duly divided and classified 2,300,000 authorized but unissued shares of the capital stock of the Corporation into a class designated as Class C Cumulative Preferred Stock and has provided for the issuance of such class. THIRD: ARTICLE FIRST of the Articles Supplementary as corrected hereby is as follows: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, the Board of Directors has duly divided and classified 2,760,000 authorized but unissued shares of the capital stock of the Corporation into a class designated as Class C Cumulative Preferred Stock and has provided for the issuance of such class. FOURTH: The inaccuracy or defect in ARTICLE FIRST of the Articles Supplementary as previously filed is that ARTICLE FIRST contained the wrong number of shares classified as Class C Cumulative Preferred Stock. 80 FIFTH: ARTICLE SECOND of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: SECOND: The reclassification increases the number of shares classified as Class C Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,300,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 9,250,000 shares immediately prior to the reclassification to 6,950,000 shares immediately after the reclassification. The number of shares classified as Class C Cumulative Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. SIXTH: ARTICLE SECOND of the Articles Supplementary as corrected hereby is as follows: SECOND: The reclassification increases the number of shares classified as Class C Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,760,00 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 9,250,000 shares immediately prior to the reclassification to 6,490,000 shares immediately after the reclassification. The number of shares classified as Class C Cumulative Preferred Stock may be decreases pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. SEVENTH: The inaccuracies or defects in ARTICLE SECOND of the Articles Supplementary as previously filed are that ARTICLE SECOND contained the wrong number of shares classified as Class C Cumulative Preferred Stock immediately after the reclassification and the wrong number of shares classified as Preferred Stock, par value $.01 per share, immediately after the reclassification. EIGHTH: Section 1 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: 1. Number of Shares and Designation. This class of Preferred Stock shall be designated as Class C Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million Three Hundred Thousand (2,300,000) shall be the authorized number of shares of such Class C Preferred Stock constituting such class. -2- 81 NINTH: The first paragraph of Section 1 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: 1. Number of Shares and Designation. This class of Preferred Stock shall be designated as Class C Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million Seven Hundred Sixty Thousand (2,760,000) shall be the authorized number of shares of such Class C Preferred Stock constituting such class. TENTH: The inaccuracy or defect in Section 1 of ARTICLE THIRD of the Articles Supplementary as previously filed is that Section 1 of ARTICLE FIRST contained the wrong number of shares classified as Class C Cumulative Preferred Stock. ELEVENTH: The definition of "Dividend Periods" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: "DIVIDEND PERIODS" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class B Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class C Preferred Stock being redeemed. TWELFTH: The definition of "Dividend Periods" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: "DIVIDEND PERIODS" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class C Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class C Preferred Stock being redeemed. THIRTEENTH: The inaccuracy or defect in the definition of "Dividend Periods" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed is that the reference to "Class B Preferred Stock" in the fifth line thereof should be to "Class C Preferred Stock." FOURTEENTH: The definition of "Initial Holder Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: -3- 82 "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors' a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. FIFTEENTH: The definition of "Initial Holder Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class C Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. SIXTEENTH: The inaccuracy or defect in the definition of "Initial Holder Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed is that the reference to "Class B Preferred Stock" in the fourth and fifth lines thereof should be to "Class C Preferred Stock." SEVENTEENTH: The definition of "Look-Through Ownership Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: "LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Look-Through Entity. EIGHTEENTH: The definition of "Look-Through Ownership Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: "LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class C Preferred Stock of the Corporation -4- 83 having an Aggregate Value not in excess of the (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class C Preferred Stock that are Beneficially Owned by the Look-Through Entity. NINETEENTH: The inaccuracy or defect in the definition of "Look-Through Ownership Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed is that the reference to "Class B Preferred Stock" in the fifth line thereof should be to "Class C Preferred Stock." TWENTIETH: The provision in the Articles Supplementary as previously filed and to be corrected hereby reads as follows: IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Chairman and witnessed by its Secretary on December ____, 1997. TWENTY-FIRST: The provision in the Articles Supplementary as corrected hereby is as follows: IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Chairman and witnessed by its Secretary on December 22, 1997. TWENTY-SECOND: The inaccuracy or defect in the provision of the Articles Supplementary as previously filed is that such statement failed to state correctly the date such Articles were signed. -5- 84 IN WITNESS WHEREOF, Apartment Investment and Management Company has caused this Certificate of Correction to be signed in its name and on its behalf by its Chairman and witnessed by its Secretary on February 17, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LEEANN MOREIN By: TERRY CONSIDINE - ----------------------------- ----------------------------- Leeann Morein, Secretary Terry Considine, Chairman The undersigned, Chairman of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, the foregoing Certificate of Correction to be the act of said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects, under the penalties of perjury. /s/ TERRY CONSIDINE ----------------------------- Terry Considine, Chairman -6- 85 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS D CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, the Board of Directors has duly divided and classified 4,600,000 authorized but unissued shares of the capital stock of the Corporation into a class designated as Class D Cumulative Preferred Stock and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class D Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 4,600,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 6,490,000 shares immediately prior to the reclassification to 1,890,000 shares immediately after the reclassification. The number of shares classified as Class D Cumulative Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class D Cumulative Preferred Stock (including the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class D Cumulative Preferred Stock (the "Class D Preferred Stock") and Four Million Six Hundred Thousand (4,600,000) shall be the authorized number of shares of such Class D Preferred Stock constituting such class. 86 2. DEFINITIONS. For purposes of the Class D Preferred Stock, the following terms shall have the meanings indicated: "ACT" shall mean the Securities Act of 1933, as amended. "AFFILIATE" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, PROVIDED that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (ii) of the definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative meanings. "BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class D Preferred Stock. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 2 87 "CLASS D PREFERRED STOCK" shall have the meaning set forth in Section 1 of this Article. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation or such shares of the Corporation's capital stock into which outstanding shares of Common Stock shall be reclassified. "DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15 and October 15 of each year; provided, further, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "DIVIDEND PERIODS" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class D Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class D Preferred Stock being redeemed. "EQUITY STOCK" shall mean one or more shares of any class of capital stock of the Corporation. "EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this Article. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "ISSUE DATE" shall mean February 19, 1998. "INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including the Issue Date and ending on and including April 14, 1998. "INITIAL HOLDER" shall mean Terry Considine. "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class D Preferred Stock of the Corporation having an Aggregate Value not in excess 3 88 of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class D Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the thencurrent Initial Holder Limit applicable to the Initial Holder. "JUNIOR STOCK" shall mean the Common Stock and any other class or series of capital stock of the Corporation over which the shares of Class D Preferred Stock have preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. "LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class D Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class D Preferred Stock that are Beneficially Owned by the Look-Through Entity. "MARKET PRICE" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "CLOSING PRICE" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the overthecounter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of 4 89 Directors of the Company. The term "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Equity Stock is listed or admitted to trading is open for the transaction of business or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "NYSE" shall mean the New York Stock Exchange, Inc. "OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of the Corporation, PROVIDED that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "OUTSTANDING" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class D Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class D Preferred Stock that are Beneficially Owned by the Person. "OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. The Class B Preferred Stock and the Class C Preferred Stock shall each be a Parity Stock. "PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "PROHIBITED TRANSFEREE" has the meaning set forth in Section 10.3(A) of this Article. 5 90 "REDEMPTION DATE" shall have the meaning set forth in paragraph (b) of Section 5 of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "SET APART FOR PAYMENT" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class D Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "TRADING DAY", as to any securities, shall mean any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ National Market or, if such securities are not listed or admitted for trading on the NASDAQ National Market, in the securities market in which such securities are traded. "TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class D Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class D Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class D Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class D Preferred Stock). The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings. "TRANSFER AGENT" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class D Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class D Preferred Stock. 6 91 "TRUST" shall mean the trust created pursuant to Section 10.3 of this Article. "TRUSTEE" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8 of this Article. 3. DIVIDENDS. (a) The holders of Class D Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class D Preferred Stock equal to $2.1875 per annum. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on April 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class D Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the January 1, April 1, July 1 or October 1, as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) The amount of dividends payable per share of Class D Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30day months and a 360day year. Holders of Class D Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Class D Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class D Preferred Stock that may be in arrears. (c) So long as any of the shares of Class D Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any class or series of Parity Stock for any period unless dividends equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for 7 92 such payment on the Class D Preferred Stock for all Dividend Periods terminating on or prior to the Dividend Payment Date with respect to such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class D Preferred Stock and all dividends declared upon any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class D Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class D Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless in each case the full cumulative dividends (including all accumulated, accrued and unpaid dividends) on all outstanding shares of Class D Preferred Stock shall have been paid or such dividends have been declared and set apart for payment for all past Dividend Periods with respect to the Class D Preferred Stock. Notwithstanding the provisions of this Section 3(d), the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class D Preferred Stock shall be entitled to receive TwentyFive Dollars ($25) per share of Class D Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final 8 93 distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class D Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class D Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class D Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class D Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class D Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class D Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class D Preferred Stock shall not be redeemable by the Corporation prior to February 19, 2003, except as set forth in Section 10.2 of this Article. On and after February 19, 2003, the Corporation, at its option, may redeem shares of Class D Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"). In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class D Preferred Stock (other than any portion thereof consisting of accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or AIMCO Properties, L.P., a Delaware limited Partnership (the "Operating Partnership"), of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, 'capital shares' means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless 9 94 and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class D Preferred Stock have not been paid or declared and set apart for payment, no shares of Class D Preferred Stock may be redeemed unless all outstanding shares of Class D Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class D Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class D Preferred Stock. (d) If the Corporation shall redeem shares of Class D Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class D Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; and (3) the place or places at which certificates for such shares are to be surrendered for cash. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Class D Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class D Preferred Stock called for redemption (except that, in the case of a Redemption Date after a dividend record date and prior to the related Dividend Payment Date, holders of Class D Preferred Stock on the dividend record date will be entitled on such Dividend Payment Date to receive the dividend payable on such shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class D Preferred Stock of the Corporation shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the 10 95 Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Class D Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Class D Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class D Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class D Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class D Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class D Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class D Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class D Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class D Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class D Preferred Stock. 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class D Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class D Preferred Stock ("Senior Stock"); 11 96 (b) on a parity with the Class D Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class D Preferred Stock, if the holders of such class of stock or series and the Class D Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Stock"); and (c) junior to the Class D Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or if the holders of Class D Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Stock"). 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class D Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class D Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class D Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class D Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, then the right of the holders of the Class D Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all Persons elected as directors by the holders of the Class D Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class D Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class D Preferred 12 97 Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class D Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class D Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class D Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then remaining director elected by the holders of the Class D Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class D Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 662/3% of the votes entitled to be cast by the holders of the Class D Preferred Stock voting as a single class with the holders of all other classes or series of Preferred Stock entitled to vote on such matters, given in Person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Charter or the ByLaws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class D Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class D Preferred Stock; or (ii) The authorization, creation of, the increase in the authorized amount of, or issuance of any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock (whether or not such class of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class D Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision 13 98 is made for the redemption of all shares of Class D Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class D Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock shall have the right to vote with the Class D Preferred Stock as a single class on any matter, then the Class D Preferred Stock and such other class or series shall have with respect to such matters one quarter of one (.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Class D Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class D Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class D Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class D Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class D Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class D Preferred Stock in excess of the Ownership Limit shall be void AB INITIO as to the Transfer of such shares of Class D Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class D Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into 14 99 through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class D Preferred Stock in excess of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such shares of Class D Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class D Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10.8 from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class D Preferred Stock in excess of the Look-Through Ownership limit shall be void AB INITIO as to the Transfer of such shares of Class D Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class D Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void AB INITIO as to the Transfer of shares of Class D Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class D Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class D Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class D Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class D Preferred Stock in the same or any other related transaction. 10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10.1 of this Article or that a Person intends to acquire or has 15 100 attempted to acquire Beneficial Ownership of any shares of Class D Preferred Stock in violation of Section 10.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of longterm indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class D Preferred Stock acquired in violation of Section 10.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article, regardless of any action (or nonaction) by the Board of Directors or such committee, (a) shall be void AB INITIO or (b) shall automatically result in the transfer described in Section 10.3 of this Article; PROVIDED, FURTHER, that the provisions of this Section 10.2 shall be subject to the provisions of Section 10.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class D Preferred Stock that is expressly authorized pursuant to Section 10.8(d) of this Article. 10.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class D Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class D Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class D Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class D Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class D Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the 16 101 exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class D Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10.3(E), the Prohibited Transferee shall have no rights in the Class D Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class D Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class D Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void AB INITIO with respect to such shares of Class D Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class D Preferred Stock have been transferred to the Trustee will be rescinded as void AB INITIO and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class D Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall receive the lesser of (1) the price 17 102 paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class D Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class D Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class D Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class D Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class D Preferred Stock in violation of Section 10.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class D Preferred Stock will be required to provide certain information as set out below. 18 103 (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class D Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class D Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class D Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class D Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class D Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class D Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class D Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class D Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 19 104 10.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class D Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class D Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days following the purchase of Class D Preferred Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Class D Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class D Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class D Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class D Preferred Stock shall bear the following legend: "The shares of Class D Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class D Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class D Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class D Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class D Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent 20 105 without charge to each stockholder that so requests. If the restrictions on transfer are violated, the shares of Class D Cumulative Preferred Stock represented hereby will be either (i) void in accordance with the Certificate or (ii) automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system. FOURTH: The terms of the Class D Cumulative Preferred Stock set forth in Article Third hereof shall become Article XV of the Charter. 21 106 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Senior Vice President and Chief Financial Officer and witnessed by its Secretary on February 17, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Leeann Morein /s/ Troy D. Butts - --------------------------- ------------------------------ Leeann Morein, Troy D. Butts Secretary Senior Vice President and Chief Financial Officer THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ Troy D. Butts ----------------------------------- Troy D. Butts Senior Vice President and Chief Financial Officer 107 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS G CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 4,050,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share (the "Class A Common Stock"), into a class designated as Class G Cumulative Preferred Stock, par value $.01 per share, and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class G Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 4,050,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 502,377,500 shares immediately prior to the reclassification to 498,327,500 shares immediately after the reclassification. THIRD: The terms of the Class G Cumulative Preferred Stock (including the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class G Cumulative Preferred Stock, par value $.01 per share (the "Class G Preferred Stock") and Four Million Fifty Thousand (4,050,000) shall be the authorized number of shares of such Class G Preferred Stock constituting such class. 108 2. DEFINITIONS. For purposes of the Class G Preferred Stock, the following terms shall have the meanings indicated: "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner,""Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class G Preferred Stock. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 2 109 "Class G Preferred Stock" shall have the meaning set forth in Section 1 of this Article. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation or such shares of the Corporation's capital stock into which outstanding shares of Common Stock shall be reclassified. "Dividend Payment Date" shall mean January 15, April 15, July 15 and October 15 of each year; provided, further, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class G Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class G Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 10.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean July 15, 1998. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including October 15, 1998. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class G Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of 3 110 Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class G Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall mean the Common Stock and any other class or series of capital stock of the Corporation over which the shares of Class G Preferred Stock have preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class G Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class G Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "Closing Price" on any date shall mean that last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Company. The term "Trading Day" shall mean a day on which the principal national securities exchange on which 4 111 the Equity Stock is listed or admitted to trading is open for the transaction of business or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "NYSE" shall mean the New York Stock Exchange, Inc. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class G Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class G Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. The Class B Preferred Stock, the Class C Preferred Stock and the Class D Preferred Stock shall each be a Parity Stock. "Person" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 10.3(A) of this Article. "Redemption Date" shall have the meaning set forth in paragraph (b) of Section 5 of this Article. 5 112 "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class G Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day", as to any securities, shall mean any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ National Market or, if such securities are not listed or admitted for trading on the NASDAQ National Market, in the securities market in which such securities are traded. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class G Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class G Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class G Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class G Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class G Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class G Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10.3 of this Article. 6 113 "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 8 of this Article. 3. DIVIDENDS. (a) The holders of Class G Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class G Preferred Stock equal to $2.34375 per annum. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on October 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class G Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the January 1, April 1, July 1 or October 1, as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class G Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class G Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Class G Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class G Preferred Stock that may be in arrears. (c) So long as any of the shares of Class G Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any class or series of Parity Stock for any period unless dividends equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment on the Class G Preferred Stock for all Dividend Periods terminating on or prior to the Dividend Payment Date with respect to such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class G Preferred Stock and all dividends declared upon any 7 114 other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class G Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class G Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless in each case the full cumulative dividends (including all accumulated, accrued and unpaid dividends) on all outstanding shares of Class G Preferred Stock shall have been paid or such dividends have been declared and set apart for payment for all past Dividend Periods with respect to the Class G Preferred Stock. Notwithstanding the provisions of this Section 3(d), the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class G Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class G Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class G Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the 8 115 Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class G Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class G Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class G Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class G Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class G Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class G Preferred Stock shall not be redeemable by the Corporation prior to July 15, 2008, except as set forth in Section 10.2 of this Article. On and after July 15, 2008, the Corporation, at its option, may redeem shares of Class G Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"). In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class G Preferred Stock (other than any portion thereof consisting of accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or AIMCO Properties, L.P., a Delaware limited Partnership (the "Operating Partnership"), of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, "capital shares" means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. 9 116 (c) If full cumulative dividends on all outstanding shares of Class G Preferred Stock have not been paid or declared and set apart for payment, no shares of Class G Preferred Stock may be redeemed unless all outstanding shares of Class G Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class G Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class G Preferred Stock. (d) If the Corporation shall redeem shares of Class G Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice of the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class G Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; and (3) the place or places at which certificates for such shares are to be surrendered for cash. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Class G Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class G Preferred Stock called for redemption(except that, in the case of a Redemption Date after a dividend record date and prior to the related Dividend Payment Date, holders of Class G Preferred Stock on the dividend record date will be entitled to such Dividend Payment Date to receive the dividend payable on such shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class G Preferred Stock of the Corporation shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Class G Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Class G Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class G Preferred 10 117 Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class G Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class G Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class G Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class G Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class G Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. Status of Reacquired Stock. All shares of Class G Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class G Preferred Stock. 7. Ranking. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class G Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class G Preferred Stock ("Senior Stock"); (b) on a parity with the Class G Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class G Preferred Stock, if the holders of such class of stock or series and the Class G Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Stock"); and 11 118 (c) junior to the Class G Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or if the holders of Class G Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Stock"). 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class G Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class G Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class G Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class G Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, then the right of the holders of the Class G Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all Persons elected as directors by the holders of the Class G Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class G Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class G Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class G Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class G Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have 12 119 previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class G Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class G Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class G Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class G Preferred Stock voting as a single class with the holders of all other classes or series of Preferred Stock entitled to vote on such matters, given in Person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class G Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class G Preferred Stock; or (ii) The authorization, creation of, the increase in the authorized amount of, or issuance of any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock (whether or not such class of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class G Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision is made for the redemption of all shares of Class G Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class G Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock shall have the right to vote with the Class G Preferred Stock as a single class on any matter, then the Class G Preferred Stock and such other class or series shall have with respect to such matters one quarter of one(.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Class G Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 13 120 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class G Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class G Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class G Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class G Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class G Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class G Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class G Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class G Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class G Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class G Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10.8 from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class G Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class G 14 121 Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class G Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class G Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class G Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class G Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class G Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class G Preferred Stock in the same or any other related transaction. 10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class G Preferred Stock in violation of Section 10.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class G Preferred Stock acquired in violation of Section 10.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 10.3 of this 15 122 Article; provided, further, that the provisions of this Section 10.2 shall be subject to the provisions of Section 10.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class G Preferred Stock that is expressly authorized pursuant to Section 10.8(d) of this Article. 10.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class G Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class G Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class G Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class G Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class G Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class G Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10.3(E), the Prohibited Transferee shall have no rights in the Class G Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 16 123 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class G Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class G Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class G Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class G Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class G Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10.3(E) or any application thereof is determined in a final judgement to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class G Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class G Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class G Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and 17 124 (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class G Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class G Preferred Stock in violation of Section 10.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporations's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class G Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class G Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class G Preferred Stock Beneficially Owned, and a full description of how such shared are held. Each such record or Beneficial Owner of Class G Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class G Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class G Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class G Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class G Preferred Stock for a Beneficial 18 125 Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class G Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 10.8 EXPECTATIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class G Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class G Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. 19 126 (C) UNDERWRITERS. For a period of 270 days following the purchase of Class G Preferred Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Class G Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class G Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class G Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class G Preferred Stock shall bear the following legend: "The shares of Class G Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class G Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class G Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class G Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class G Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class G Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class G Cumulative Preferred Stock) or (ii) the shares of Class G Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 20 127 10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class G Cumulative Preferred Stock set forth in Article Third hereof shall become Article XVI of the Charter. 21 128 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Senior Vice President and Chief Financial Officer and witnessed by its Secretary on July 13, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ JOEL BONDER /s/ TROY D. BUTTS - ------------------------------ ----------------------------- Joel Bonder Troy D. Butts Secretary Senior Vice President and Chief Financial Officer THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ TROY D. BUTTS ----------------------------- Troy D. Butts Senior Vice President and Chief Financial Officer 22 129 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS H CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 2,300,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share (the "Class A Common Stock"), into a class designated as Class H Cumulative Preferred Stock, par value $.01 per share, and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class H Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,300,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 498,327,500 shares immediately prior to the reclassification to 496,027,500 shares immediately after the reclassification. THIRD: The terms of the Class H Cumulative Preferred Stock (including the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class H Cumulative Preferred Stock, par value $.01 per share (the "Class H Preferred Stock") and Two Million Three Hundred Thousand (2,300,000) shall be the authorized number of shares of such Class H Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class H Preferred Stock, the following terms shall have the meanings indicated: 130 "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class H Preferred Stock; provided that, for purposes of paragraph (a) of Section 8 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class H Preferred Stock" shall have the meaning set forth in Section 1 of this Article. 2 131 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation, and the Class B Common Stock, $.01 par value per share, of the Corporation and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock or Class B Common Stock shall be reclassified. "Dividend Payment Date" shall mean January 15, April 15, July 15 and October 15 of each year; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class H Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class H Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 10.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean August 14, 1998. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including October 14, 1998. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class H Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of 3 132 Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class H Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 7 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class H Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class H Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "Closing Price," when used with respect to a share of any Equity Stock and for any date, shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. The term "Trading Day," when used with respect to the Closing Price of a share of any Equity Stock, shall mean (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the 4 133 transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "NYSE" shall mean the New York Stock Exchange, Inc. "Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware limited partnership. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class H Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class H Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. "Person" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining 5 134 Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 10.3(A) of this Article. "Redemption Date" shall have the meaning set forth in paragraph (a) of Section 5 of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class H Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class H Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class H Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class H Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class H Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class H Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class H Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10.3 of this Article. 6 135 "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 8 of this Article. 3. DIVIDENDS. (a) The holders of Class H Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class H Preferred Stock equal to $2.375 per annum (equivalent to 9 1/2% per annum of the per share Liquidation Preference (as hereinafter defined)). Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on October 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class H Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the January 1, April 1, July 1 or October 1, as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class H Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class H Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class H Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class H Preferred Stock that may be in arrears. (c) So long as any of the shares of Class H Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class H Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class H Preferred Stock for all Dividend Periods ending on or prior to the date such dividend 7 136 or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class H Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class H Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class H Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class H Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class H Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by 8 137 the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class H Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class H Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class H Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class H Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class H Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class H Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class H Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class H Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class H Preferred Stock shall not be redeemable by the Corporation prior to August 14, 2003, except as set forth in Section 10.2 of this Article. On and after August 14, 2003, the Corporation, at its option, may redeem shares of Class H Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"); provided, however, that in the event of a redemption of shares of Class H Preferred Stock, if the Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of 9 138 business on such dividend record date, and shall not be payable as part of the redemption price for such shares. In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class H Preferred Stock (other than any portion thereof consisting of accumulated, accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or the Operating Partnership, of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, "capital shares" means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class H Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class H Preferred Stock may be redeemed unless all outstanding shares of Class H Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class H Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class H Preferred Stock. (d) If the Corporation shall redeem shares of Class H Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class H Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the place or places at which certificates for such shares are to be surrendered for cash; and (4) the redemption price payable on such Redemption Date, including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be (x) payable as part of the redemption price, or (y) payable on the next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. 10 139 Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class H Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class H Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class H Preferred Stock of the Corporation shall cease except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required; provided, however, that if the Redemption Date for any shares of Class H Preferred Stock occurs after any dividend record date and on or prior to the related Dividend Payment Date, the full dividend payable on such Dividend Payment Date in respect of such shares of Class H Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class H Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class H Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class H Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class H Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class H Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class H Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class H Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class H Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class H Preferred Stock represented by any certificate are redeemed, 11 140 then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class H Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class H Preferred Stock. 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class H Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class H Preferred Stock ("Senior Stock"); (b) on a parity with the Class H Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class H Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, or Class G Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class H Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class H Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class H Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 12 141 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class H Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class H Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class H Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class H Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class H Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class H Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class H Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class H Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class H Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class H Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class H Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class H Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. 13 142 (b) So long as any shares of Class H Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66- 2/3% of the votes entitled to be cast by the holders of the Class H Preferred Stock voting as a single class with the holders of all other classes or series of Parity Stock entitled to vote on such matters, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class H Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class H Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class H Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class H Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class H Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class H Preferred Stock as a single class on any matter, then the Class H Preferred Stock and such other class or series shall have with respect to such matters one quarter of one (.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class H Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class H Preferred Stock as the true and lawful owner thereof for all 14 143 purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class H Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class H Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class H Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class H Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class H Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class H Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class H Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class H Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class H Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10.8 from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class H Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class H Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look- Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class H Preferred Stock. 15 144 (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class H Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class H Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class H Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class H Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class H Preferred Stock in the same or any other related transaction. 10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class H Preferred Stock in violation of Section 10.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class H Preferred Stock acquired in violation of Section 10.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 10.3 of this Article; provided, further, that the provisions of this Section 10.2 shall be subject to the provisions of Section 10.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may 16 145 exercise such authority in a manner that interferes with any ownership or transfer of Class H Preferred Stock that is expressly authorized pursuant to Section 10.8(C) of this Article. 10.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class H Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class H Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class H Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class H Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class H Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class H Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10.3(E), the Prohibited Transferee shall have no rights in the Class H Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 17 146 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class H Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class H Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class H Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class H Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class H Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class H Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class H Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class H Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 18 147 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class H Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class H Preferred Stock in violation of Section 10.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class H Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class H Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class H Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class H Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class H Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class H Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10.5 from the Beneficial Owner. 19 148 (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class H Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class H Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class H Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 10.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class H Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of this Article and the pledgee shall not be subject to the 20 149 Ownership Limit with respect to the Class H Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class H Preferred Stock) following the purchase of Class H Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class H Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class H Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class H Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class H Preferred Stock shall bear substantially the following legend: "The shares of Class H Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class H Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class H Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class H Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class H Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class H Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class H Cumulative Preferred Stock) or (ii) the shares of Class H Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 21 150 10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter- dealer quotation system. FOURTH: The terms of the Class H Cumulative Preferred Stock set forth in Article Third hereof shall become Article XVII of the Charter. 22 151 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Senior Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on August 12, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ KATHLEEN HARVEY /s/ TROY D. BUTTS - ---------------------------------- ------------------------------------- Kathleen Harvey Troy D. Butts Assistant Secretary Senior Vice President and Chief Financial Officer THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ TROY D. BUTTS ------------------------------------- Troy D. Butts Senior Vice President and Chief Financial Officer 152 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS J CUMULATIVE CONVERTIBLE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 2,000,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share (the "Class A Common Stock"), into a class designated as Class J Cumulative Convertible Preferred Stock, par value $.01 per share, and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class J Cumulative Convertible Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,000,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 486,027,500 shares immediately prior to the reclassification to 484,027,500 shares immediately after the reclassification. THIRD: The terms of the Class J Cumulative Convertible Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions and qualifications) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class J Cumulative Convertible Preferred Stock, par value $.01 per share (the "Class J Preferred Stock") and Two Million (2,000,000) shall be the authorized number of shares of such Class J Preferred Stock constituting such class. 153 2. DEFINITIONS. For purposes of the Class J Preferred Stock, the following terms shall have the meanings indicated: "ABP Subscription Agreement" shall mean the Subscription Agreement dated as of November 6, 1998 between the Corporation and Stichting Pensioenfonds ABP. "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class J Preferred Stock; provided that, for purposes of paragraph (a) of Section 8 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. 2 154 "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class E Articles Supplementary" shall have the meaning set forth in Section 7.3 of this Article. "Class J Preferred Stock" shall have the meaning set forth in Section 1 of this Article. "Closing Price" shall mean, when used with respect to a share of any Equity Stock and for any date, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation, and the Class B Common Stock, $.01 par value per share, of the Corporation and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock or Class B Common Stock shall be reclassified. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class J Preferred Stock is convertible, 3 155 as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $40 (equivalent to a conversion rate of 2.50 shares of Class A Common Stock for each share of Class J Preferred Stock). "Current Market Price" of a share of any Equity Stock shall mean the closing price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, on such day, in either case as reported on the principal national securities exchange on which such securities are listed or admitted for trading, or, if such security is not quoted on any national securities exchange, on the NASDAQ National Market or if such security is not quoted on the NASDAQ National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for each security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any New York Stock Exchange or National Association of Securities Dealers, Inc. member firm regularly making a market in such security selected for such purpose by the Chief Executive Officer of the Corporation or the Board of Directors of the Corporation or if any class or series of securities are not publicly traded, the fair value of the shares of such class as determined reasonably and in good faith by the Board of Directors of the Corporation. "distribution" shall have the meaning set forth in paragraph (a)(iii) of Section 7.3 of this Article. "Dividend Payment Date" shall mean, with respect to each Dividend Period, (a) the date that cash dividends are paid on the Class A Common Stock with respect to such Dividend Period; or (b) if such dividends have not been paid on the Class A Common Stock by 9:00 a.m., New York City time, on the sixtieth day from and including the last day of such Dividend Period, then on such day; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including February 15, May 15, August 15 and November 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. 4 156 "Excess Transfer" has the meaning set forth in Section 11.3(a) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" shall mean the average of the daily Current Market Prices of a share of Class A Common Stock during five (5) consecutive Trading Days selected by the Corporation commencing not more than twenty (20) Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex" date, if any, with respect to any issuance or distribution requiring such computation. The term "'ex' date," when used with respect to any issuance or distribution, means the first day on which the share of Class A Common Stock trades regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. "Issue Date" shall mean the date on which shares of Class J Preferred Stock are issued pursuant to the ABP Subscription Agreement and the OP Subscription Agreement. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including November 14, 1998. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class J Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class J Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Internal Rate of Return" shall mean, as of any determination date, the effective discount rate under which the present value of the Inflows associated with an outstanding share of Class J Preferred Stock equals the Outflow on the Issue Date associated with such share. For purposes of calculation of Internal Rate of Return: (i) "Inflows" shall mean (a) all dividends (whether paid in cash, property or stock) that have been received on such share, (b) any other distributions that have been received on such share, and (c) as of the determination date, the average of the daily Current Market Prices of a share 5 157 of the Corporation's Class A Common Stock during the five most recent Trading Days, such average multiplied by the Liquidation Preference (excluding any accumulated, accrued and unpaid dividends) per share of Class J Preferred Stock, and such product divided by the Conversion Price. For purposes of calculating the amounts of any Inflows, all dividends or distributions received in property or stock shall be deemed to have a value equal to the fair market value of such dividends or distributions as of the date such dividend or distribution is received, as determined in good faith by the Board of Directors. All Inflows shall be deemed to have taken place on the date on which payment was actually received by the holder. (ii) "Outflow" shall mean $100 plus an amount equal to one one-millionth of any and all out-of-pocket costs of Stichting Pensioenfonds ABP relating to the acquisition of 1,000,000 shares of the Corporation's Class J Preferred Stock on the Issue Date. Outflow shall be deemed to have taken place on the Closing Date of the ABP Subscription Agreement and the OP Subscription Agreement, and (iii) Neither the fact of any transfer of Class J Preferred Stock nor the amount of any consideration received by the holder thereof or paid by any successor holder in connection with any transfer shall affect the calculation of Internal Rate of Return. Schedule A attached hereto shows the calculation of Internal Rate of Return at certain hypothetical dates of determination and given a certain hypothetical aggregate purchase price, certain hypothetical Inflows and certain hypothetical levels of the Current Market Price of the Corporation's Class A Common Stock. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. "NYSE" shall mean the New York Stock Exchange, Inc. "OP Subscription Agreement" shall mean the Stock Purchase Agreement dated as of November 6, 1998 between the Corporation and AIMCO Properties, L.P. 6 158 "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder, a number of the Outstanding shares of Class J Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class J Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean, collectively, the Ownership Limit as applied to Persons other than the Initial Holder and the Initial Holder Limit as applied to the Initial Holder. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 11.3(a) of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of 7 159 Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class J Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to the Closing Price of a share of any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transaction" shall have the meaning set forth in Section 7.3 of this Article. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class J Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class J Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class J Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class J Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class J Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class J Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. 8 160 "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class J Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class J Preferred Stock equal to (i) 7% per annum of the per share Liquidation Preference (as hereinafter defined) for the period beginning on and including the Issue Date and lasting until November 15, 1998; (ii) 8% per annum of the per share Liquidation Preference for the period beginning on and including November 15, 1998 and lasting until November 15, 1999; (iii) 9% per annum of the per share Liquidation Preference for the period beginning on and including November 15, 1999 and lasting until November 15, 2000; and (iv) 9.5% per annum of the per share Liquidation Preference thereafter. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on November 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class J Preferred Stock, as they appear on the stock records of the Corporation at the close of business on a record date fixed by the Board of Directors which shall not be more than 60 days prior to the applicable Dividend Payment Date and, within such 60 day period, shall be the same date as the record date for the regular quarterly dividend payable with respect to the Class A Common Stock for the Dividend Period to which such Dividend Payment Date relates (or if there is no such record date for Class A Common Stock, then such date as the Board of Directors may fix). Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class J Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class J Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class J Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class J Preferred Stock that may be in arrears. (c) So long as any of the shares of Class J Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other 9 161 distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class J Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class J Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class J Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class J Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class J Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class J Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class J Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) redeeming, purchasing 10 162 or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, setting apart for payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class J Preferred Stock shall be entitled to receive One Hundred Dollars ($100) per share of Class J Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class J Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class J Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class J Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class J Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class J Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class J Preferred Stock and any Parity Stock shall not be entitled to share therein. 11 163 5. REDEMPTION. The Class J Preferred Stock is not redeemable, other than as specified in Section 11.2 hereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class J Preferred Stock which shall have been issued and reacquired in any manner by the Corporation (including without limitation shares of Class J Preferred Stock which have been surrendered for conversion into Class A Common Stock) shall be returned to the status of authorized, but unissued shares of Class J Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, holders of shares of Class J Preferred Stock shall have the right to convert all or a portion of such shares into shares of Class A Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, a holder of shares of Class J Preferred Stock shall have the right, at such holder's option, at any time on or after the Issue Date to convert such shares, in whole or in part, into the number of fully paid and non-assessable shares of authorized but previously unissued shares of Class A Common Stock per each share of Class J Preferred Stock obtained by dividing the Liquidation Preference (excluding any accumulated accrued and unpaid dividends) per share of Class J Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in subparagraph (b)(iv) of this Section 7.1) and by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (b) of this Section 7.1. (b) (i) In order to exercise the conversion right, the holder of each share of Class J Preferred Stock to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent, accompanied by written notice to the Corporation that the holder thereof elects to convert such share of Class J Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class J Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or 12 164 evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid). (ii) A holder of shares of Class J Preferred Stock shall, as of the date of the conversion of such shares to shares of Class A Common Stock, be entitled to receive cash payment in respect of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid thereon as of the time of such conversion, provided, however, that payment in respect of any dividend on such shares that has been declared but for which the Dividend Payment Date has not yet been reached shall be payable as of such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares. (iii) As promptly as practicable after the surrender of certificates for shares of Class J Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or send on such holder's written order, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such shares of Class J Preferred Stock in accordance with provisions of this Section 7, and any fractional interest in respect of a share of Class A Common Stock arising upon such conversion shall be settled as provided in paragraph (c) of this Section 7.1. (iv) Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Class J Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. If the dividend payment record date for the Class J Preferred Stock and Class A Common Stock do not coincide, and the preceding sentence does not operate to ensure that a holder of shares of Class J Preferred Stock whose shares are converted into Class A Common Stock does not receive dividends on both the shares of Class J Preferred Stock and the Class A Common Stock into which such shares are converted for the same Dividend Period, then notwithstanding anything herein to the contrary, it is the intent, and the Transfer Agent is authorized to ensure, that no conversion after the earlier of such record dates will be accepted until after the latter of such record dates. 13 165 (c) No fractional share of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of the shares of Class J Preferred Stock. Instead of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of shares of Class J Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class J Preferred Stock so surrendered. 7.2 MANDATORY CONVERSION. (a) The Corporation shall have the right to require that all or part of the issued and outstanding shares of Class J Preferred Stock be converted into shares of Class A Common Stock under the following circumstances: (i) At any time on or prior to the fourth anniversary of the Issue Date, in the event that the Internal Rate of Return exceeds 12.5%, the Corporation shall have the right to require the issued and outstanding shares of Class J Preferred Stock to be converted, in whole or in part, into shares of Class A Common Stock as set forth in this Section 7.2. (ii) At any time after the fourth anniversary of the Issue Date, so long as the average of the daily Current Market Prices of the issued and outstanding shares of Class A Common Stock during the five most recent Trading Days is equal to or greater than $40, the Corporation shall have the right to require the issued and outstanding shares of Class J Preferred Stock to be converted, in whole or in part, into shares of Class A Common Stock as set forth in this Section 7.2. (b) Subject to and upon compliance with the provisions of this Section 7, the Corporation shall have the right, under the circumstances set forth in (a) (i) or (ii) above, to convert such shares, in whole or in part, into the number of fully paid and non-assessable shares of authorized but previously unissued shares of Class A Common Stock per each share of Class J Preferred Stock obtained by dividing the Liquidation Preference (excluding any accumulated accrued and unpaid dividends) per share of Class J Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in subparagraph (c)(v) of this Section 7.2). (c) (i) In order to exercise the conversion right, the Corporation shall, promptly upon the occurrence of an event described in (a)(i) or (ii) above, and in no event later than the close of business on the next succeeding business day, give notice of such conversion to each holder of record of the shares to be converted. Such 14 166 notice shall be provided by facsimile or, if facsimile is not available, then by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Any notice which was transmitted or mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date received by the holder. Each such notice shall state, as appropriate: (1) the date of conversion, which date may be any date within one business day following the date on which the notice is transmitted or mailed; (2) the number of shares of Class J Preferred Stock to be converted and, if fewer than all such shares held by such holder are to be converted, the number of such shares to be converted; (3) the event which gave rise to the conversion right; and (4) the then current Conversion Price. (ii) Upon receiving such notice of conversion, each such holder shall promptly surrender the certificates representing such shares of Class J Preferred Stock as are being converted on the conversion date, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent; provided, however, that the failure to so surrender any such certificates shall not in any way affect the validity of the conversion of the underlying shares of Class J Preferred Stock into shares of Class A Common Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such shares of Class J Preferred Stock are registered, each such share surrendered following conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid). (iii) A holder of shares of Class J Preferred Stock shall, as of the date of the conversion of such shares to shares of Class A Common Stock, be entitled to receive cash payment in respect of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid thereon as of the time of such conversion, provided, however, that payment in respect of any dividend on such shares that has been declared but for which the Dividend Payment Date has not yet been reached shall be payable as of such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares. (iv) As promptly as practicable after the surrender of certificates for shares of Class J Preferred Stock as aforesaid, and in any event no later than three business days after the date of such surrender, the Corporation shall issue and shall deliver at such office to such holder, or send on such holder's written order, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such shares of Class J Preferred Stock in accordance with the provisions of this Section 7.2, and any fractional interest in respect of a share of Class A Common Stock arising upon such conversion shall be settled as provided in paragraph (d) of this Section 7.2. 15 167 (v) Each conversion shall be deemed to have been effected immediately prior to the close of business on the date identified as the conversion date in the notice of conversion sent by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date identified as the conversion date in the notice of conversion sent by the Corporation as aforesaid. If the dividend payment record dates for the Class J Preferred Stock and Class A Common Stock do not coincide, and the preceding sentence does not operate to ensure that a holder of shares of Class J Preferred Stock whose shares are converted into Class A Common Stock does not receive dividends on both the shares of Class J Preferred Stock and the Class A Common Stock into which such shares are converted for the same Dividend Period, then notwithstanding anything herein to the contrary, it is the intent, and the Transfer Agent is authorized to ensure, that no conversion after the earlier of such record dates will be accepted until after the latter of such record dates. (d) No fractional share of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of the shares of Class J Preferred Stock. Instead of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of shares of Class J Preferred Stock, the Corporation shall pay to the holder of such share an amount of cash based upon the Current Market Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion. If more than one of any holder's shares shall be converted at one time, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class J Preferred Stock so surrendered. 7.3 ADJUSTMENTS TO CONVERSION PRICE (a) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its capital stock in shares of Class A Common Stock, (B) subdivide its outstanding Class A Common Stock into a greater number of shares, (C) combine its outstanding Class A Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its outstanding Class A Common Stock, the Conversion Price in effect at the opening of business on 16 168 the day following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the day following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any share of Class J Preferred Stock thereafter converted shall be entitled to receive the number of shares of Class A Common Stock (or fraction of a share of Class A Common Stock) that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share of Class J Preferred Stock been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this paragraph (a)(i) of this Section 7.3 shall become effective immediately after the opening of business on the day next following the record date (except as provided in paragraph (e) below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification. (ii) If the Corporation shall, after the Issue Date, issue rights, options or warrants to all holders of Class A Common Stock entitling them (for a period expiring within 45 days after the record date described below in this paragraph (a)(ii) of this Section 7.3) to subscribe for or purchase Class A Common Stock at a price per share less than the Fair Market Value per share of the Class A Common Stock on the record date for the determination of stockholders entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the date fixed for such determination by (B) a fraction, the numerator of which shall be the sum of (X) the number of shares of Class A Common Stock outstanding on the close of business on the date fixed for such determination and (Y) the number of shares that could be purchased at such Fair Market Value from the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Class A Common Stock, and the denominator of which shall be the sum of (XX) the number of shares of Class A Common Stock outstanding on the close of business on the date fixed for such determination and (YY) the number of additional shares of Class A Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in paragraph (e) below). In determining whether any rights, options or warrants entitle the holders of Class A Common Stock to subscribe for or purchase Class A Common Stock at less than such Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors. 17 169 (iii) If the Corporation shall after the Issue Date make a distribution on its Class A Common Stock other than in cash or shares of Class A Common Stock (including any distribution in securities (other than rights, options or warrants referred to in paragraph (a)(ii) of this Section 7.3)) (each of the foregoing being referred to herein as a "distribution"), then the Conversion Price in effect at the opening of business on the next day following the record date for determination of stockholders entitled to receive such distribution shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the record date by (B) a fraction, the numerator of which shall be the difference between (X) the number of shares of Class A Common Stock outstanding on the close of business on the record date and (Y) the number of shares determined by dividing (aa) the aggregate value of the property being distributed by (bb) the Fair Market Value per share of Class A Common Stock on the record date, and the denominator of which shall be the number of shares of Class A Common Stock outstanding on the close of business on the record date. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided below). The value of the property being distributed shall be as determined in good faith by the Board of Directors; provided, however, if the property being distributed is a publicly traded security, its value shall be calculated in accordance with the procedure for calculating the Fair Market Value of a share of Class A Common Stock (calculated for a period of five consecutive Trading Days commencing on the twentieth Trading Day after the distribution). Neither the issuance by the Corporation of rights, options or warrants to subscribe for or purchase securities of the Corporation nor the exercise thereof shall be deemed a distribution under this paragraph. (iv) No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price: provided, however, that any adjustments that by reason of this paragraph (a)(iv) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7.3 (other than this paragraph (a)(iv)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Class A Common Stock. Notwithstanding any other provisions of this Section 7, the Corporation shall not be required to make any adjustment of the Conversion Price for the issuance of (A) any shares of Class A Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of optional amounts in shares of Class A Common Stock under such plan or (B) any options, rights or shares of Class A Common Stock pursuant to any stock option, stock purchases or other stock-based plan maintained by the Corporation. All calculations under this Section 7 shall be made to the nearest cent ($.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (a) of this Section 7 to the contrary notwithstanding, the Corporation 18 170 shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this paragraph (a), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable, or if that is not possible, to diminish any income taxes that are otherwise payable because of such event. (b) If the Corporation shall be a party to any transaction (including with limitation a merger, consolidation, statutory share exchange, sale of all or substantially all of the Corporation's assets or recapitalization of the Class A Common Stock, but excluding any transaction as to which paragraph (a)(i) of this Section 7.3 applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which shares of Class A Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), each share of Class J Preferred Stock which is not converted into the right to receive stock, securities or other property in connection with such Transaction shall thereupon be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon such consummation by a holder of that number of shares of Class A Common Stock into which one share of Class J Preferred Stock was convertible immediately prior to such Transaction. The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (b), and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Class J Preferred Stock that will contain provisions enabling the holders of the Class J Preferred Stock that remain outstanding after such Transaction to convert into the consideration received by holders of Class A Common Stock at the Conversion Price in effect immediately apply to successive Transactions: (c) If: (i) the Corporation shall declare a dividend (or any other distribution) on the Class A Common Stock (other than cash dividends and cash distributions); or (ii) the Corporation shall authorize the granting to all holders of the Class A Common Stock of rights or warrants to subscribe for or purchase any shares of any class or series of capital stock or any other rights or warrants; or (iii) there shall be any reclassification of the outstanding Class A Common Stock or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or a statutory share exchange, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or 19 171 (iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to each holder of shares of Class J Preferred Stock at such holder's address as shown on the stock records of the Corporation, as promptly as possible, a notice stating (A) the record date for the payment of such dividend, distribution or rights or warrants, or, if a record date is not established, the date as of which the holders of Class A Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Class A Common Stock of record shall be entitled to exchange their shares of Class A Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7. (d) Whenever the Conversion Price is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to each holder of shares of Class J Preferred Stock at such holder's address as shown on the stock record of the Corporation. (e) In any case in which paragraph (a) of this Section 7.3 provides that an adjustment shall become effective on the day next following the record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Class J Preferred Stock converted after such record date and before the occurrence of such event the additional Class A Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Class A Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of any fraction pursuant to Section 7.2(d) or Section 7.1(c). (f) There shall be no adjustment of the Conversion Price in case of the issuance of any capital stock of the Corporation except as specifically set forth in 20 172 this Section 7. In addition, notwithstanding any other provision contained in this Section 7, there shall be no adjustment of the Conversion Price upon the payment of any cash dividends or distributions on any capital stock of the Corporation, including, without limitation, the Special Dividend (as such term is defined in the Class E Articles Supplementary) on the Corporation's Class E Preferred Stock or upon the automatic conversion of the shares of such Preferred Stock into shares of Class A Common Stock, as provided in the Class E Articles Supplementary. (g) If the Corporation shall take any action affecting the Class A Common Stock, other than action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class J Preferred Stock, the Conversion Price for the Class J Preferred Stock may be adjusted, to the extent permitted by law in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. (h) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Class A Common Stock solely for the purpose of effecting conversion of the Class J Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class J Preferred Stock not theretofore converted into Class A Common Stock. For purposes of this paragraph (h), the number of shares of Class A Common Stock that shall be deliverable upon the conversion of all outstanding shares of Class J Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder (and without regard to the Ownership Limit). The Corporation covenants that any shares of Class A Common Stock issued upon conversion of the shares of Class J Preferred Stock shall be validly issued, fully paid and nonassessable. The Corporation shall use its best efforts to list the shares of Class A Common Stock required to be delivered upon conversion of the shares of Class J Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding shares of Class A Common Stock are listed at the time of such delivery. (i) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Class A Common Stock or other securities or property on conversion of shares of Class J Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Class A Common Stock or other securities or property in a name other than that of the holder of the shares of Class J Preferred Stock to be converted, and no such issue or delivery shall be made unless 21 173 and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. (j) In addition to any other adjustment required hereby, to the extent permitted by law, the Corporation from time to time may decrease the Conversion Price by any amount, permanently or for a period of at least twenty Business Days, if the decrease is irrevocable during the period. (k) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class J Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in the Charter), after taking into account any waiver of such limitation granted to any holder of the shares of Class J Preferred Stock. 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class J Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class J Preferred Stock ("Senior Stock"); (b) on a parity with the Class J Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or liquidation prices per share thereof be different from those of the Class J Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, or Class H Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class J Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class J Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock, (ii) such capital stock is Class E Cumulative Convertible Preferred Stock or (iii) the holders of Class J 22 174 Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i), (ii) and (iii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 9. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class J Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class J Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class J Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class J Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class J Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class J Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class J Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class J Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class J Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class J Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu 23 175 thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class J Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class J Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class J Preferred Stock are outstand ing, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class J Preferred Stock voting as a single class with the holders of all other classes or series of Parity Stock entitled to vote on such matters, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class J Preferred Stock; provided, however, that the amendment of or supplement to the provisions of the Charter so as to authorize or create, or to increase or decrease the authorized amount of, or to issue any Junior Stock, Class J Preferred Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class J Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized). For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class J Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class J Preferred Stock as a single class on any matter, then the Class J Preferred Stock and such other class or series shall have with respect to such matters one quarter of one (.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class J Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 24 176 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class J Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 11. OWNERSHIP AND TRANSFERS. 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (a) Limitation on Beneficial Ownership. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder) shall Beneficially Own shares of Class J Preferred Stock in excess of the Ownership Limit and the Initial Holder shall not Beneficially Own shares of Class J Preferred Stock in excess of the Initial Holder Limit. (b) Transfers in Excess of Ownership Limit. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder) Beneficially Owning shares of Class J Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class J Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class J Preferred Stock. (c) Transfers in Excess of Initial Holder Limit. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class J Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class J Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class J Preferred Stock. (d) Transfers Resulting in "Closely Held" Status. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 25 177 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class J Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class J Preferred Stock. (e) Severability on Void Transactions. A Transfer of a share of Class J Preferred Stock that is null and void under Sections 11.1(b), (c) or (d) of this Article because it would, if effective, result in (i) the ownership of Class J Preferred Stock in excess of the Initial Holder Limit or the Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class J Preferred Stock in the same or any other related transaction. 11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class J Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then Current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class J Preferred Stock acquired in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class J Preferred Stock that is expressly authorized pursuant to Section 11.8(c) of this Article. 26 178 11.3 TRANSFER IN TRUST. (a) Establishment of Trust. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder) would Beneficially Own shares of Class J Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class J Preferred Stock in excess of the Initial Holder Limit (in either such event, the Person or Initial Holder that would Beneficially Own shares of Class J Preferred Stock in excess of the Ownership Limit or the Initial Holder Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class J Preferred Stock in excess of the Ownership Limit or the Initial Holder Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit or the Initial Holder Limit. (b) Appointment of Trustee. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (c) Status of Shares Held by the Trustee. Shares of Class J Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(e), the Prohibited Transferee shall have no rights in the Class J Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (d) Dividend and Voting Rights. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class J Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class J Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class J Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable 27 179 Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class J Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit or the Initial Holder Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class J Preferred Stock for the benefit of the Charitable Beneficiary. (e) Restrictions on Transfer. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(e). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(e) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class J Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class J Preferred Stock on behalf of the Corporation. (f) Purchase Right in Stock Transferred to the Trustee. Shares of Class J Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (g) Designation of Charitable Beneficiaries. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class J Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) 28 180 each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class J Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class J Preferred Stock will be required to provide certain information as set out below. (a) Annual Disclosure. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class J Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class J Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class J Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class J Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit or the Initial Holder Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class J Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. (b) Disclosure at the Request of the Corporation. Any Person that is a Beneficial Owner of shares of Class J Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class J Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit and the Initial Holder Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class J Preferred Stock already Beneficially Owned by such stockholder or 29 181 proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 11.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit and the Initial Holder Limit. 11.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 11 of this Article, or in the case of an ambiguity in any definition contained in Section 11 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 11.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (a) Waiver of Ownership Limit. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may, but shall not be required to, waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion. (b) Pledge by Initial Holder. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class J Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 11.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class J Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (c) Underwriters. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class J Preferred Stock) following the purchase of Class J Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class J Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class J Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class J Preferred Stock purchased in connection with market making activities. 30 182 11.9 LEGEND. Each certificate for Class J Preferred Stock shall bear substantially the following legend: "The shares of Class J Cumulative Convertible Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class J Cumulative Convertible Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class J Cumulative Convertible Preferred Stock). Any Person that attempts to Beneficially Own shares of Class J Cumulative Convertible Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class J Cumulative Convertible Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class J Cumulative Convertible Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class J Cumulative Convertible Preferred Stock) or (ii) the shares of Class J Cumulative Convertible Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 11.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit and the Initial Holder Limit in the event of a change in law. 11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. 31 183 FOURTH: The terms of the Class J Cumulative Convertible Preferred Stock set forth in Article Third hereof shall become Article XX of the Charter. 32 184 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Senior Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on November 6, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LUCY CORDOVA /s/ TROY D. BUTTS - ------------------------- --------------------------------------------- Lucy Cordova Troy D. Butts Assistant Secretary Senior Vice President and Chief Financial Officer THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ TROY D. BUTTS --------------------------------------------- Troy D. Butts Senior Vice President and Chief Financial Officer 185 CERTIFICATE OF CORRECTION to ARTICLES SUPPLEMENTARY Class C Cumulative Preferred Stock (Par Value $.01 Per Share) of APARTMENT INVESTMENT AND MANAGEMENT COMPANY (a Maryland corporation) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Articles Supplementary, dated December 22, 1997, of the Corporation were filed with the State Department of Assessments and Taxation of Maryland on December 22, 1997, at 1:38 p.m. (as corrected by the Certificate of Correction to Articles Supplementary of the Corporation, dated February 17, 1998 and filed with the State Department of Assessments and Taxation of Maryland on February 18, 1998) and said Articles Supplementary require correction as permitted by Section 1-207 of the Corporations and Associations Article of the Annotated Code of Maryland. SECOND: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: 10.9 Legend. Each certificate for Class C Preferred Stock shall bear the following legend: "The shares of Class C Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class C Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class C Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated, the shares of Class C Cumulative Preferred Stock represented hereby will be either (i) 186 void in accordance with the Certificate or (ii) automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." THIRD: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: 10.9 Legend. Each certificate for Class C Preferred Stock shall bear the following legend: "The shares of Class C Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class C Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class C Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class C Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock) or (ii) the shares of Class C Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." FOURTH: The inaccuracy or defect in the legend contained in Section 10.9 of ARTICLE THIRD of the Articles Supplementary as previously filed is that the legend contains an inaccurate description of the effects of an improper transfer as set forth elsewhere in the Charter. 2 187 IN WITNESS WHEREOF, Apartment Investment and Management Company has caused this Certificate of Correction to be signed in its name and on its behalf by its Vice Chairman and President and witnessed by its Secretary on October 21, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ - ------------------------------- ----------------------------- Joel F. Bonder, Peter K. Kompaniez, Secretary Vice Chairman and President THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, the foregoing Certificate of Correction to be the act of said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects, under the penalties of perjury. By: /s/ PETER K. KOMPANIEZ -------------------------------- Peter K. Kompaniez, Vice Chairman and President 3 188 CERTIFICATE OF CORRECTION to ARTICLES SUPPLEMENTARY Class D Cumulative Preferred Stock (Par Value $.01 Per Share) of APARTMENT INVESTMENT AND MANAGEMENT COMPANY (a Maryland corporation) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Articles Supplementary, dated February 17, 1998, of the Corporation were filed with the State Department of Assessments and Taxation of Maryland on February 18, 1998, at 1:40 p.m. and said Articles Supplementary require correction as permitted by Section 1-207 of the Corporations and Associations Article of the Annotated Code of Maryland. SECOND: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: 10.9 Legend. Each certificate for Class D Preferred Stock shall bear the following legend: "The shares of Class D Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class D Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class D Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class D Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class D Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated, the shares of Class D Cumulative Preferred Stock represented hereby will be either (i) void in accordance with the Certificate or (ii) automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 189 THIRD: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: 10.9 Legend. Each certificate for Class D Preferred Stock shall bear the following legend: "The shares of Class D Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class D Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class D Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class D Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class D Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of shares of Class D Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class D Cumulative Preferred Stock) or (ii) the shares of Class D Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries. FOURTH: The inaccuracy or defect in the legend contained in Section 10.9 of ARTICLE THIRD of the Articles Supplementary as previously filed is that the legend contains an inaccurate description of the effects of an improper transfer as set forth elsewhere in the Charter. 2 190 IN WITNESS WHEREOF, Apartment Investment and Management Company has caused this Certificate of Correction to be signed in its name and on its behalf by its Vice Chairman and President and witnessed by its Secretary on October 21, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ - ------------------------------- ----------------------------- Joel F. Bonder, Peter K. Kompaniez, Secretary Vice Chairman and President THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, the foregoing Certificate of Correction to be the act of said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects, under the penalties of perjury. By: /s/ PETER K. KOMPANIEZ -------------------------------- Peter K. Kompaniez, Vice Chairman and President 3 191 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS K CONVERTIBLE CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 5,750,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share (the "Class A Common Stock"), into a class designated as Class K Convertible Cumulative Preferred Stock, par value $.01 per share, and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class K Convertible Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 5,750,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 484,027,500 shares immediately prior to the reclassification to 478,277,500 shares immediately after the reclassification. THIRD: The terms of the Class K Convertible Cumulative Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class K Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class K Preferred Stock"), and Five Million Seven Hundred Fifty Thousand (5,750,000) shall be the authorized number of shares of such Class K Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class K Preferred Stock, the following terms shall have the meanings indicated: 192 "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class K Preferred Stock; provided that, for purposes of paragraph (a) of Section 9 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Cash Redemption Price" shall mean, with respect to any shares of Class K Preferred Stock to be redeemed, (i) if the Redemption Date occurs during the period from and including February 20, 2002, to but excluding February 18, 2003, 102% of the Liquidation Preference thereof, and (ii) if the Redemption Date occurs on or after February 18, 2003, 100% of the Liquidation Preference thereof, plus, in the case of clause (i) or (ii), all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. 2 193 "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class K Preferred Stock" shall have the meaning set forth in Section 1 of this Article. "Closing Price" shall mean, when used with respect to a share of any Equity Stock and for any date, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation, and the Class B Common Stock, $.01 par value per share, of the Corporation and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock or Class B Common Stock shall be reclassified. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class K Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $42.00 (equivalent to a 3 194 conversion rate of 0.59524 shares of Class A Common Stock for each share of Class K Preferred Stock). "Dividend Payment Date" shall mean January 15, April 15, July 15 and October 15 of each year; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including February 18, May 18, August 18 and November 18 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class K Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class K Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 11.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean February 18, 1999. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including May 17, 1999. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class K Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class K Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. 4 195 "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class K Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class K Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. "NYSE" shall mean the New York Stock Exchange, Inc. "Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware limited partnership. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class K Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class K Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit, as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit, as applied to the Initial Holder, and the Look-Through Ownership Limit, as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. 5 196 "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, "private foundation," within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) a "group," as that term is used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 11.3(A) of this Article. "Record Date" shall have the meaning set forth in paragraph (a) of Section 3 of this Article. "Redemption Market Price" shall mean, with respect to any redemption of shares of Class K Preferred Stock, the lesser of (i) the average of the daily Closing Prices of the Class A Common Stock for the 20 consecutive Trading Days immediately preceding the first Business Day immediately preceding the date of the applicable redemption notice and (ii) the Closing Price of the Class A Common Stock on the Trading Day immediately preceding the first Business Day immediately preceding the date of the applicable redemption notice. "Redemption Date" shall mean, in the case of any redemption of any shares of Class K Preferred Stock, the date fixed for redemption of such shares. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class K Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. 6 197 "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class K Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class K Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class K Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class K Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class K Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class K Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class K Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for that purpose, quarterly cash dividends on the Class K Preferred Stock in an amount per share equal to (i) during the period from the Issue Date through and including 7 198 February 17, 2002, the greater of $0.50 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class K Preferred Stock is convertible, and (ii) during the period from and after February 18, 2002, the greater of $0.625 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class K Preferred Stock is convertible. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on May 18, 1999. Each such dividend shall be payable in arrears to the holders of record of the Class K Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the February 1, May 1, August 1 or November 1 (each a "Record Date"), as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class K Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class K Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class K Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class K Preferred Stock that may be in arrears. (c) So long as any of the shares of Class K Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class K Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class K Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class K Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class K Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. 8 199 (d) So long as any of the shares of Class K Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class K Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class K Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class K Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class K Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class K Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not 9 200 earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class K Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class K Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class K Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class K Preferred Stock and any Parity Stock, as provided in Section 4(a), any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class K Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class K Preferred Stock shall not be redeemable by the Corporation prior to February 20, 2002, except as set forth in Section 11.2 of this Article. During the period beginning on February 20, 2002, the Corporation, at its option, may redeem shares of Class K Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Cash Redemption Price applicable thereto. On and after February 20, 2002, the Corporation, at its option, may redeem shares of Class K Preferred Stock, in whole or from time to time in part, in exchange for a number of shares of Class A Common Stock equal to (i) 105% of the applicable Cash Redemption Price, divided by (ii) the Redemption Market Price applicable to such redemption. In lieu of any fractional shares of Class A Common Stock which would otherwise be issuable upon any redemption of Class K Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount in cash (computed to the nearest cent) equal to the applicable Redemption Market Price multiplied by the fractional interest (computed to the nearest 1/100th of a percent) that otherwise would have been deliverable upon such redemption of Class K Preferred Stock. In the event of a redemption of shares of Class K Preferred Stock, if the Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of business on such dividend record 10 201 date notwithstanding the redemption of such shares, and shall not be payable as part of the redemption price for such shares. In connection with any redemption for cash pursuant to this Section 5(a), the redemption price of the Class K Preferred Stock (other than any portion thereof consisting of accumulated, accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or the Operating Partnership of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, "capital shares" means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class K Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class K Preferred Stock may be redeemed unless all outstanding shares of Class K Preferred Stock are simultaneously redeemed, and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class K Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class K Preferred Stock. (d) If the Corporation shall redeem shares of Class K Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which has been mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (i) the Redemption Date; (ii) the number of shares of Class K Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the place or places at which certificates for such shares are to be surrendered for cash or shares of Class A Common Stock; and (iv) the redemption price payable on such Redemption Date (whether in cash or shares of Class A Common Stock), including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be payable as part of the redemption price, or payable on the next Dividend 11 202 Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class K Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class K Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class K Preferred Stock of the Corporation shall cease except the right to receive the cash payable, or shares of Class A Common Stock issuable, upon such redemption, without interest thereon, upon surrender of their certificates if so required; provided, however, that if the Redemption Date for any shares of Class K Preferred Stock occurs after any dividend record date and on or prior to the related Dividend Payment Date, the full dividend payable on such Dividend Payment Date in respect of such shares of Class K Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. At the close of business on the Redemption Date, without any further action, each holder of shares of Class K Preferred Stock redeemed for shares of Class A Common Stock shall be deemed a holder of the number of shares of Class A Common Stock for which such Class K Convertible Preferred Stock has been redeemed (unless the Corporation defaults on its obligation to deliver shares of Class A Common Stock or cash). The Corporation's obligation to make available the cash necessary to effect such redemption in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class K Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class K Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class K Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class K Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class K Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) or shares of Class A Common Stock for which such shares have been 12 203 redeemed in accordance with such notice. If fewer than all the outstanding shares of Class K Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class K Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class K Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class K Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. (e) All shares of Class A Common Stock that may be issued upon redemption of shares of Class K Preferred Stock shall be duly and validly issued and fully paid and non-assessable, and prior to giving any notice of redemption the Corporation shall take any corporate action necessary therefor. 6. STATUS OF REACQUIRED STOCK. All shares of Class K Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class K Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class K Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, holders of shares of Class K Preferred Stock shall have the right to convert all or a portion of such shares into shares of Class A Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, each share of Class K Preferred Stock shall, at the option of the holder thereof, be convertible at any time (unless such share is called for redemption, then to and including but not after the close of business on the date immediately prior to the Redemption Date, unless the Corporation shall default in payment due upon redemption thereof), into that number of fully paid and non-assessable shares of Class A Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $25 by the Conversion Price in effect at such time and by surrender of the certificate representing such shares to be converted in the manner provided in subsection (b) of this Section 7.1. (b) In order to convert shares of Class K Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at any office or agency maintained by the Corporation for such purpose, accompanied by 13 204 the funds, if any, required by the last paragraph of this subsection (b), and shall give written notice of conversion in the form provided on such certificate representing shares of Class K Preferred Stock (or such other notice as is acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class K Preferred Stock specified in such notice. Such notice shall also state the name or names, together with address or addresses, in which the certificate or certificates for shares of Class A Common Stock which shall be issuable in such conversion shall be issued. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class K Preferred Stock is registered, each certificate representing a share of Class K Preferred Stock surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax. As promptly as practicable after the surrender of certificates representing such shares of Class K Preferred Stock and the receipt of such notice, instruments of transfer and funds, if any, as aforesaid, the Corporation shall issue and shall deliver at such office or agency to such holder, or as designated in such holder's written instructions, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such share or shares of Class K Preferred Stock in accordance with provisions of this Section 7, and a check or cash in respect of any fractional interest in a share of Class A Common Stock arising upon such conversion, as provided in paragraph (c) of this Section 7.1. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which certificates representing such shares of Class K Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Holders of Class K Preferred Stock at the close of business on a Record Date will be entitled to receive an amount equal to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such Record Date and prior to such Dividend Payment Date; provided, however, that Class K Preferred Stock surrendered for conversion during the period between the close of business on any Record Date and the opening of business 14 205 on the corresponding Dividend Payment Date (except shares converted after the issuance of a notice of redemption with respect to a Redemption Date during such period or coinciding with such Dividend Payment Date, which will be entitled to such dividend) must be accompanied by payment of an amount equal to the dividend payable on such shares on such Dividend Payment Date. A holder of Class K Preferred Stock on a Record Date who (or whose transferee) tenders any such shares for conversion into shares of Class A Common Stock on such Dividend Payment Date will receive the dividend payable by the Corporation on such shares of Class K Preferred Stock on such date, and the converting holder need not include payment of the amount of such dividend upon surrender of Class K Preferred Stock for conversion. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the Class A Common Stock issued upon such conversion. (c) No fractional shares of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of shares of Class K Preferred Stock. If more than one share of Class K Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class K Preferred Stock so surrendered. In lieu of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of any share of Class K Preferred Stock, the Corporation shall pay to the holder of such shares an amount in cash (computed to the nearest cent) equal to the Closing Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion, multiplied by the fractional interest that otherwise would have been deliverable upon conversion of such share. 7.2 ADJUSTMENTS TO CONVERSION PRICE (a) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its Class A Common Stock in shares of Class A Common Stock, (B) subdivide its outstanding shares of Class A Common Stock into a greater number of shares, (C) combine its outstanding shares of Class A Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its outstanding Class A Common Stock, then, in each such case, the Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Class K Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Class A Common Stock or other capital stock of the Corporation which such holder would have owned or been entitled to receive immediately following such action had such share been converted immediately prior to the occurrence of such event. An adjustment made pursuant to 15 206 this subsection (i) of this Section 7.2(a) shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (i), the holder of any share of Class K Preferred Stock thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock or shares of Class A Common Stock and other capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Class A Common Stock and other capital stock. (ii) If the Corporation shall, after the Issue Date, issue rights, options or warrants to all holders of its outstanding shares of Class A Common Stock entitling them (for a period expiring within 45 days after the record date described below) to subscribe for or purchase shares of Class A Common Stock at a price per share less than the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock (other than pursuant to any stock option, restricted stock or other incentive or benefit plan or stock ownership or purchase plan for the benefit of employees, directors or officers or any dividend reinvestment plan of the Corporation in effect at the time hereof or any other similar plan adopted or implemented hereafter), then the Conversion Price in effect immediately prior thereto shall be adjusted so that it shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date by a fraction, the numerator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of shares which the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Class A Common Stock would purchase at such current market price, and the denominator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of additional shares of Class A Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall be made successively whenever any rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants; provided, however, that if all of the shares of Class A Common Stock offered for subscription or purchase are not delivered upon the exercise of such rights, options or warrants, upon the expiration of such rights, options or warrants, the Conversion Price shall be readjusted to the Conversion Price which would have been in effect had the numerator and the denominator of the foregoing fraction and the resulting adjustment been made based upon the number of shares of Class A Common Stock actually delivered upon the exercise of such rights, options or warrants rather than upon the number of shares of Class A Common Stock offered for subscription or purchase. In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of Class A Common Stock at less than such current market price, and in determining 16 207 the aggregate offering price of such shares of Class A Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants, with the value of such consideration, if other than cash, determined by the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent). (iii) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its outstanding Class A Common Stock any capital stock (other than Class A Common Stock), evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase securities of the Corporation (excluding (A) those referred to in subsections (i) and (ii) of this Section 7.2(a), (B) dividends and distributions paid in cash out of the retained earnings of the Corporation, and (C) distributions upon mergers or consolidations to which subsection (b) of this Section 7.2 applies), then, in each such case, the Conversion Price shall be adjusted to equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date of such distribution by a fraction, the numerator of which shall be the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock, less the fair market value on such record date (determined by the Board or Directors, whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) of the portion of the capital stock or assets or the evidences of indebtedness or assets so distributed to the holder of one share of Class A Common Stock or of such subscription rights or warrants applicable to one share of Class A Common Stock, and the denominator of which shall be such current market price per share of Class A Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (iv) For the purpose of any computation under subsections (ii) and (iii) of this Section 7.2(a), the current market price per share of Class A Common Stock on any date shall be the average of the Closing Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination or (B) the period commencing on the date next succeeding the first public announcement of the issuance of such rights or warrants or such distribution through such last full Trading Day prior to the Time of Determination. For purposes of the foregoing, the term "Time of Determination" shall mean the time and date of the earlier of (A) the record date for determining stockholders entitled to receive the rights, warrants or distribution referred to in subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of "ex-dividend" trading on the exchange or market referred to in the definition of "Closing Price." (v) No adjustment in the Conversion Price shall be required to be made unless such adjustment would require an increase or decrease of at least one percent of such price; provided, however, that any adjustment which by reason of this subsection (v) is not required to be made shall be carried forward and taken into 17 208 account in any subsequent adjustment. All calculations under this Section 7.2 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to the contrary notwithstanding, the Corporation shall be entitled to make such reduction in the Conversion Price, in addition to those required by this Section 7.2, as it shall determine in its discretion to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. Except as set forth in subsections (i), (ii) and (iii) above, the Conversion Price shall not be adjusted for the issuance of Class A Common Stock, or any securities convertible into or exchangeable for Class A Common Stock or carrying the right to purchase any of the foregoing, in exchange for cash, property or services. (vi) The Corporation from time to time may decrease the Conversion Price by any amount for any period of time if the period is at least 20 days and if the decrease is irrevocable during the period. Whenever the Conversion Price is so decreased, the Corporation shall mail to holders of record of shares of Class K Preferred Stock a notice of the decrease at least 15 days before the date the decreased Conversion Price takes effect, and such notice shall state the decreased Conversion Price and the period it will be in effect. (b) Notwithstanding any other provision herein to the contrary, in case of any merger or consolidation to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the continuing entity and in which the Class A Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, or the securities or other property of another entity), or in the case of any sale or transfer of all or substantially all of the Corporation's property and assets to another entity, there will be no adjustment of the Conversion Price, and lawful provision shall be made by the entity formed by such consolidation or the entity whose securities, cash or other property will immediately after the merger or consolidation be owned, by virtue of the merger or consolidation, by the holders of Class A Common Stock immediately prior to the merger or consolidation, or the entity which shall have acquired such assets of the Corporation, such that each share of Class K Preferred Stock then outstanding will, without the consent of the holder thereof, become convertible into the kind and amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Class A Common Stock into which such share of Class K Preferred Stock was convertible immediately prior to such merger, consolidation, sale or transfer assuming such holder of Class A Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer. In the case of a cash merger of the Corporation into another entity or any other cash transaction of the type mentioned in this Section 7.2(b), each share of Class K Preferred Stock will thereafter be convertible at the Conversion Price in effect at such time into the same amount of cash per share into which each share of Class K Preferred Stock would have been convertible had 18 209 such share been converted into Class A Common Stock immediately prior to the effective date of such cash merger or other transaction. The foregoing provisions of this Section 7.2(b) shall similarly apply to successive mergers, consolidations, sales or transfers. (c) If (i) the Corporation shall take any action that would require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the Corporation shall authorize the granting to the holders of the Class A Common Stock generally of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; (iii) there shall be any reorganization or reclassification of the Class A Common Stock (other than an event to which subsection (i) of Section 7.2(a) applies) or any consolidation or merger to which the Corporation is a party or any sale or transfer of all or substantially all of the assets of the Corporation, in each case, for which approval of any stockholders of the Corporation is required; or (iv) there shall be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then, in each such case, the Corporation shall cause to be given to the holders of shares of Class K Preferred Stock and the Transfer Agent as promptly as possible, but in any event at least 15 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Class A Common Stock of record shall be entitled to exchange their shares of Class A Common Stock for securities, cash or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.2(c). (d) Whenever the Conversion Price is adjusted as herein provided, (i) the Corporation shall promptly file with the Transfer Agent a certificate setting forth the Conversion Price after such adjustment and a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) the Corporation shall mail or cause to be mailed by first class mail, postage prepaid, as soon as practicable to each holder of record of shares of Class K Preferred Stock a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price. (e) In any case in which paragraph (a) of this Section 7.2 shall require that an adjustment be made immediately following a record date or an effective date, the Corporation may elect to defer (but only until the filing by the Corporation with the Transfer Agent of the certificate required by subsection 7.2(d)) (i) issuing to 19 210 the holder of any share of Class K Preferred Stock converted after such record date or effective date the shares of Class A Common Stock issuable upon such conversion in excess of the shares of Class A Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment, and (ii) paying to such holder any amount of cash in lieu of a fractional share. (f) In the event that at any time, as a result of an adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any share of Class K Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of the Corporation other than shares of Class A Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any share of Class K Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Class A Common Stock contained in this Section 7.2. (g) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Class A Common Stock, for the purpose of effecting conversion of shares of Class K Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class K Preferred Stock not theretofore converted and on or before (and as a condition of) taking any action that would cause an adjustment of the Conversion Price resulting in an increase in the number of shares of Class A Common Stock deliverable upon conversion in excess of the number thereof previously reserved and available therefor, the Corporation shall take all such action so required. For purposes of this paragraph (g), the number of shares of Class A Common Stock which shall be deliverable upon the conversion of all outstanding shares of Class K Preferred Stock shall be computed as if at the time of computation all such outstanding shares of Class K Preferred Stock were held by a single holder (and without regard to the Ownership Limit). Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Class A Common Stock deliverable upon conversion of the shares of Class K Preferred Stock, the Corporation shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Class A Common Stock at such adjusted Conversion Price. (h) The Corporation will pay any and all documentary stamp, issue or transfer taxes, and any other similar taxes, payable in respect of the issue or delivery of shares of Class A Common Stock upon conversion of shares of Class K Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Class A Common Stock in a name other than that of the holder of the shares of Class K Preferred Stock to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. 20 211 (i) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class K Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in the Charter). 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class K Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class K Preferred Stock ("Senior Stock"); (b) on a parity with the Class K Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class K Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock or Class J Cumulative Convertible Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class K Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class K Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class K Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 21 212 9. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class K Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class K Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class K Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class K Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class K Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class K Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class K Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class K Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class K Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class K Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class K Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class K Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. 22 213 (b) So long as any shares of Class K Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class K Preferred Stock voting as a single class with the holders of all other classes or series of Parity Stock entitled to vote on such matters, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class K Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class K Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class K Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class K Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class K Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class K Preferred Stock as a single class on any matter, then the Class K Preferred Stock and such other class or series shall have with respect to such matters one quarter of one vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class K Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class K Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 23 214 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class K Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class K Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class K Preferred Stock in excess of the Look- Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class K Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class K Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class K Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class K Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class K Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class K Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.8 from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class K Preferred Stock in excess of the Look- Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class K Preferred Stock that would be otherwise Beneficially Owned by such Look- Through Entity in excess of the Look-Through Ownership Limit and such Look- Through Entity shall acquire no rights in such shares of Class K Preferred Stock. 24 215 (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class K Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class K Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class K Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class K Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class K Preferred Stock in the same or any other related transaction. 11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class K Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class K Preferred Stock acquired in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class K Preferred Stock that is expressly authorized pursuant to Section 11.8(C) of this Article. 25 216 11.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class K Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class K Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class K Preferred Stock in excess of the Look- Through Ownership Limit (in any such event, the Person, Initial Holder or Look- Through Entity that would Beneficially Own shares of Class K Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class K Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look- Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class K Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(E), the Prohibited Transferee shall have no rights in the Class K Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 26 217 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class K Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class K Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class K Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class K Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class K Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class K Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class K Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class K Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 27 218 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class K Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class K Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class K Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class K Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class K Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class K Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class K Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look- Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class K Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. 28 219 (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class K Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class K Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look- Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class K Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 11.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 11.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 11 of this Article, or in the case of an ambiguity in any definition contained in Section 11 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 11.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class K Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 11.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class K Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. 29 220 (C) UNDERWRITERS. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class K Preferred Stock) following the purchase of Class K Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class K Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class K Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class K Preferred Stock purchased in connection with market making activities. 11.9 LEGEND. Each certificate for Class K Preferred Stock shall bear substantially the following legend: "The shares of Class K Convertible Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class K Convertible Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class K Convertible Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class K Convertible Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class K Convertible Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class K Convertible Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class K Convertible Cumulative Preferred Stock) or (ii) the shares of Class K Convertible Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 11.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 30 221 11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class K Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXI of the Charter. 31 222 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Senior Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on February 17, 1999. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LUCY CORDOVA /s/ TROY D. BUTTS - ----------------------------- -------------------------------- Lucy Cordova Troy D. Butts Assistant Secretary Senior Vice President and Chief Financial Officer THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ TROY D. BUTTS -------------------------------- Troy D. Butts Senior Vice President and Chief Financial Officer 32 223 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS I CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 10,000,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share (the "Class A Common Stock"), into a class designated as Class I Cumulative Preferred Stock, par value $.01 per share, and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class I Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 10,000,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 478,277,500 shares immediately prior to the reclassification to 468,277,500 shares immediately after the reclassification. THIRD: The terms of the Class I Cumulative Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class I Cumulative Preferred Stock, par value $.01 per share (the "Class I Preferred Stock") and Ten Million (10,000,000) shall be the authorized number of shares of such Class I Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class I Preferred Stock, the following terms shall have the meanings indicated: 224 "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class I Preferred Stock; provided that, for purposes of paragraph (a) of Section 8 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10(c) of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class I Preferred Stock" shall have the meaning set forth in Section 1 of this Article. 2 225 "Closing Price," when used with respect to a share of any Equity Stock and for any date, shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation, and the Class B Common Stock, $.01 par value per share, of the Corporation and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock or Class B Common Stock shall be reclassified. "Dividend Payment Date" shall mean January 15, April 15, July 15 and October 15 of each year; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each quarterly dividend period commencing on and including, January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class I Preferred Stock shall be redeemed pursuant 3 226 to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class I Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 10(c)(i) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean the date on which shares of Class I Preferred Stock are first issued. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including the day preceding the first January 15, April 15, July 15, or October 15 to occur thereafter. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class I Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class I Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the Secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 7 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class I Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the 4 227 Aggregate Value of all shares of Equity Stock other than Class I Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. "NYSE" shall mean the New York Stock Exchange, Inc. "Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware limited partnership. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class I Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class I Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. "Person" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, limited liability company, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, limited liability company, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. 5 228 "Prohibited Transferee" has the meaning set forth in Section 10(c)(i) of this Article. "Redemption Date" shall have the meaning set forth in paragraph (a) of Section 5 of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class I Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day," when used with respect to the Closing Price of a share of any Equity Stock, shall mean (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class I Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class I Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class I Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by 6 229 operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class I Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class I Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class I Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10(c) of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 8 of this Article. 3. DIVIDENDS. (a) The holders of Class I Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class I Preferred Stock equal to $2.00 per annum (equivalent to 8% per annum of the per share Liquidation Preference (as hereinafter defined)). As of any particular date, such dividends shall be cumulative from the later of (i) the Issue Date or (ii) the first day after the most recent Dividend Period in respective of which dividends have been paid or a sum sufficient for such payment has been set apart for such payment, in each case, whether or not in any Dividend Period or Dividend Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends. Dividends shall be payable quarterly in arrears on each Dividend Payment Date. Each such dividend shall be payable in arrears to the holders of record of the Class I Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the January 1, April 1, July 1 or October 1, as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. All holders of record of shares of Class I Preferred Stock as of any record date shall be entitled to receive the same per share dividend payment, notwithstanding the fact that any of such shares were not outstanding during the entire Dividend Period in respect of which such payment is made. 7 230 (b) Any dividend payable on the Class I Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class I Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class I Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class I Preferred Stock that may be in arrears. (c) So long as any of the shares of Class I Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class I Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class I Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class I Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class I Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class I Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class I Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class I Preferred Stock 8 231 for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, setting apart for payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class I Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class I Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class I Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class I Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class I Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class I Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class I 9 232 Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class I Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class I Preferred Stock shall not be redeemable by the Corporation prior to March 1, 2005, except as set forth in Section 10(b) of this Article. On and after March 1, 2005, the Corporation, at its option, may redeem shares of Class I Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"); provided, however, that in the event of a redemption of shares of Class I Preferred Stock, if the Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of business on such dividend record date, and shall not be payable as part of the redemption price for such shares. In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class I Preferred Stock (other than any portion thereof consisting of accumulated, accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or the Operating Partnership, of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, "capital shares" means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class I Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class I Preferred Stock may be redeemed unless all outstanding shares of Class I Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class I Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class I Preferred Stock. 10 233 (d) If the Corporation shall redeem shares of Class I Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class I Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the place or places at which certificates for such shares are to be surrendered for cash; and (4) the redemption price payable on such Redemption Date, including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be (x) payable as part of the redemption price, or (y) payable on the next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class I Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class I Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class I Preferred Stock of the Corporation shall cease except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required; provided, however, that if the Redemption Date for any shares of Class I Preferred Stock occurs after any dividend record date and on or prior to the related Dividend Payment Date, the full dividend payable on such Dividend Payment Date in respect of such shares of Class I Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class I Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class I Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class 11 234 I Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class I Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class I Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class I Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class I Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class I Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class I Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class I Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class I Preferred Stock. 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class I Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class I Preferred Stock ("Senior Stock"); (b) on a parity with the Class I Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class I Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock or Class K Convertible Cumulative Preferred Stock of the 12 235 Corporation, or (ii) the holders of such class of stock or series and the Class I Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class I Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class I Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class I Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class I Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class I Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class I Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class I Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class I Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class I Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of 13 236 Class I Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class I Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class I Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class I Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class I Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class I Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class I Preferred Stock voting as a single class with the holders of all other classes or series of Parity Stock entitled to vote on such matters, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class I Preferred Stock; provided, however, that the amendment of or supplement to the provisions of the Charter so as to authorize or create, or to increase or decrease the authorized amount of, or to issue any Junior Stock, Class I Preferred Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class I Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class I Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to 14 237 take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class I Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class I Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class I Preferred Stock as a single class on any matter, then the Class I Preferred Stock and such other class or series shall have with respect to such matters one quarter of one vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class I Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class I Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 10. RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (a) (i) LIMITATION ON BENEFICIAL OWNERS. Except as provided in Section 10(h), from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class I Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class I Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class I Preferred Stock in excess of the Look-Through Ownership Limit. (ii) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10(h), from and after the Issue Date (and subject to Section 10(l)), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class I Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class I Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class I Preferred Stock. 15 238 (iii) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10(h), from and after the Issue Date (and subject to Section 10(l)), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class I Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class I Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder Limit, and the Initial Holder shall acquire no rights in such shares of Class I Preferred Stock. (iv) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10(h) from and after the Issue Date (and subject to Section 10(l)), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class I Preferred Stock in excess of the Look-Through Ownership Limit shall be void ab initio as to the Transfer of such shares of Class I Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class I Preferred Stock. (v) TRANSFERS RESULTING IN "CLOSELY HELD" SHARES. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class I Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class I Preferred Stock. (vi) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class I Preferred Stock that is null and void under Sections 10(a)(ii), (iii), (iv), or (v) of this Article because it would, if effective, result in (i) the ownership of Class I Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class I Preferred Stock in the same or any other related transaction. 16 239 (b) REMEDIES FOR BREACH. If the Board of Directors shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10(a) of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class I Preferred Stock in violation of Section 10(a) of this Article (whether or not such violation is intended), the Board of Directors shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class I Preferred Stock acquired in violation of Section 10(a) of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10(a) of this Article, regardless of any action (or non-action) by the Board of Directors (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 10(c) of this Article; provided, further, that the provisions of this Section 10(b) shall be subject to the provisions of Section 10(l) of this Article; provided, further, that the Board of Directors may not exercise such authority in a manner that interferes with any ownership or transfer of Class I Preferred Stock that is expressly authorized pursuant to Section 10(h)(iii) of this Article. (c)(i) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class I Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class I Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class I Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class I Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 10(h) of this Article, such shares of Class I Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the 17 240 exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (ii) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (iii) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class I Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10(c)(v), the Prohibited Transferee shall have no rights in the Class I Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (iv) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class I Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class I Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class I Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class I Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class I Preferred Stock for the benefit of the Charitable Beneficiary. (v) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10(c)(v). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee 18 241 did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10(c)(v) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class I Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class I Preferred Stock on behalf of the Corporation. (vi) PURCHASE RIGHT IN STOCK TRANSFERRED TO TRUSTEE. Shares of Class I Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors or a committee thereof determines in good faith that an Excess Transfer or other event occurred. (vii) REGISTRATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class I Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. (d) NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class I Preferred Stock in violation of Section 10(a) of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10(c) of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. (e) OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class I Preferred Stock will be required to provide certain information as set out below. 19 242 (i) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class I Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class I Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class I Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class I Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class I Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10(e) from the Beneficial Owner. (ii) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class I Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class I Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class I Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. (f) REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10(l) of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. (g) AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 20 243 (h) EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10(a) of this Article. (i) WAIVER OF OWNERSHIP LIMITS. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (ii) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class I Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10(a) of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class I Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (iii) UNDERWRITERS. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class I Preferred Stock) following the purchase of Class I Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class I Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class I Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class I Preferred Stock purchased in connection with market making activities. (i) LEGEND. Each certificate for Class I Preferred Stock shall bear substantially the following legend: "The shares of Class I Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class I Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class I Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class I Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class I Cumulative Preferred 21 244 Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class I Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class I Cumulative Preferred Stock) or (ii) the shares of Class I Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." (j) SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. (k) BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. (l) SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class I Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXII of the Charter. 22 245 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Senior Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on April 21, 1999. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LESLIE OBLAS /s/ JOEL BONDER - ------------------------------ --------------------------------- Leslie Oblas Assistant Secretary Senior Vice President and Chief Financial Officer THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ JOEL BONDER --------------------------------- Senior Vice President and Chief Financial Officer 246 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS L CONVERTIBLE CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 5,000,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share (the "Class A Common Stock"), into a class designated as Class L Convertible Cumulative Preferred Stock, par value $.01 per share, and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class L Convertible Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 5,000,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 480,937,500 shares immediately prior to the reclassification to 475,937,500 shares immediately after the reclassification. THIRD: The terms of the Class L Convertible Cumulative Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class L Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class L Preferred Stock"), and Five Million (5,000,000) shall be the authorized number of shares of such Class L Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class L Preferred Stock, the following terms shall have the meanings indicated: 247 "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class L Preferred Stock; provided that, for purposes of paragraph (a) of Section 9 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class L Preferred Stock" shall have the meaning set forth in Section 1 of this Article. 2 248 "Closing Price" shall mean, when used with respect to a share of any Equity Stock and for any date, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class L Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $46.48 (equivalent to a conversion rate of 0.5379 shares of Class A Common Stock for each share of Class L Preferred Stock). "Dividend Payment Date" shall mean February 28, May 28, August 28, and November 28 of each year; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. 3 249 "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including February 28, May 28, August 28, and November 28 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class L Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Optional Redemption Date or Mandatory Redemption Date, as applicable, with respect to the Class L Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 11.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean May 28, 1999. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including August 27, 1999. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class L Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class L Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. 4 250 "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class L Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class L Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. "NYSE" shall mean the New York Stock Exchange, Inc. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class L Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class L Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit, as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit, as applied to the Initial Holder, and the Look-Through Ownership Limit, as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, "private foundation," within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) a "group," as that term is used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. 5 251 "Prohibited Transferee" has the meaning set forth in Section 11.3(A) of this Article. "Record Date" shall have the meaning set forth in paragraph (a) of Section 3 of this Article. "Redemption Date" shall mean, in the case of any redemption of any shares of Class L Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any shares of Class L Preferred Stock to be redeemed, (i) if the Redemption Date occurs during the period from and including May 28, 2002, to but excluding May 27, 2003, 102.025% of the Liquidation Preference thereof, and (ii) if the Redemption Date occurs on or after May 28, 2003, 100.000% of the Liquidation Preference thereof, plus, in the case of clause (i) or (ii), all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date; provided, however, that if a Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of business on such dividend record date notwithstanding the redemption of such shares, and shall not be payable as part of the redemption price for such shares. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class L Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not 6 252 listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class L Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class L Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class L Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class L Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class L Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class L Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class L Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for that purpose, quarterly cash dividends on the Class L Preferred Stock in an amount per share equal to (i) during the period from the Issue Date through and including May 27, 2002, the greater of $0.50625 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date by reference to the dividend most recently declared on the Class A Common Stock) on the number of shares of Class A 7 253 Common Stock (or portion thereof) into which a share of Class L Preferred Stock is convertible, and (ii) during the period from and after May 28, 2002, the greater of $0.625 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date by reference to the dividend most recently declared on the Class A Common Stock) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class L Preferred Stock is convertible. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on August 28, 1999. Each such dividend shall be payable in arrears to the holders of record of the Class L Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the tenth Business Day immediately preceding such Dividend Payment Date (each a "Record Date"). Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class L Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class L Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class L Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class L Preferred Stock that may be in arrears. (c) So long as any of the shares of Class L Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class L Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class L Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class L Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class L Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. 8 254 (d) So long as any of the shares of Class L Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class L Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class L Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class L Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class L Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class L Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not 9 255 earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class L Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class L Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class L Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class L Preferred Stock and any Parity Stock, as provided in Section 4(a), any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class L Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION (a) Shares of Class L Preferred Stock shall not be redeemable by the Corporation prior to May 28, 2002, except as set forth in Section 11.2 of this Article. On or after May 28, 2002, the Corporation, at its option, may redeem shares of Class L Preferred Stock, in whole or from time to time in part, for cash in an amount equal to the applicable Redemption Price. (b) In the event of any redemption, the Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class L Preferred Stock have not been declared and paid, or declared and set apart for payment, for all preceding Dividend Periods no shares of Class L Preferred Stock may be redeemed unless all outstanding shares of Class L Preferred Stock are simultaneously redeemed, and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class L Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class L Preferred Stock. 10 256 (d) In the event of a redemption, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which has been mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (i) the Redemption Date; (ii) the number of shares of Class L Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the place or places at which certificates for such shares are to be surrendered for cash; and (iv) the Redemption Price payable on such Redemption Date, including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be payable as part of the Redemption Price, or payable on the next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class L Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class L Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class L Preferred Stock of the Corporation shall cease except the right to receive the cash payable upon such redemption, without interest thereon, upon surrender of their certificates if so required. The Corporation's obligation to make available the cash necessary to effect such redemption in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class L Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class L Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class L Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class L Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. 11 257 As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class L Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for the cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class L Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class L Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class L Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class L Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class L Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class L Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class L Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, holders of shares of Class L Preferred Stock shall have the right to convert all or a portion of such shares into shares of Class A Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, each share of Class L Preferred Stock shall, at the option of the holder thereof, be convertible at any time (unless such share is called for redemption, then to and including but not after the close of business on the date immediately prior to the Redemption Date, unless the Corporation shall default in payment due upon redemption thereof), into that number of fully paid and non-assessable shares of Class A Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $25 by the Conversion Price in effect at such time and by surrender of the certificate representing such shares to be converted in the manner provided in subsection (b) of this Section 7.1. (b) In order to convert shares of Class L Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at any office or agency maintained by the Corporation for such purpose, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by 12 258 such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class L Preferred Stock (or such other notice as is acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class L Preferred Stock specified in such notice. Such notice shall also state the name or names, together with address or addresses, in which the certificate or certificates for shares of Class A Common Stock which shall be issuable in such conversion shall be issued. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class L Preferred Stock is registered, each certificate representing a share of Class L Preferred Stock surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation that such taxes have been paid). As promptly as practicable after the surrender of certificates representing such shares of Class L Preferred Stock and the receipt of such notice and instruments of transfer as aforesaid, the Corporation shall issue and shall deliver at such office or agency to such holder, or as designated in such holder's written instructions, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such share or shares of Class L Preferred Stock in accordance with provisions of this Section 7, and a check or cash in respect of (i) the cash amount payable to such holder, if any, referred to in the last paragraph of this subsection (b), and (ii) any fractional interest in a share of Class A Common Stock arising upon such conversion, as provided in paragraph (c) of this Section 7.1. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which certificates representing such shares of Class L Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends (other than dividends on the Class A Common Stock the record date for 13 259 which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class L Preferred Stock at the close of business on a Record Date will be entitled to receive an amount equal to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such Record Date. If the Dividend Adjustment Amount (as defined below) with respect to any shares of Class L Preferred Stock surrendered for conversion is positive, the holders of such shares shall, as of the date of conversion, be entitled to receive a cash payment equal to such Dividend Adjustment Amount. If the Dividend Adjustment Amount with respect to any shares of Class L Preferred Stock surrendered for conversion is negative, such shares must be accompanied by payment of a cash amount equal to the absolute value of such Dividend Adjustment Amount. As used herein, "Dividend Adjustment Amount" shall mean, with respect to any share of Class L Preferred Stock that has been surrendered for conversion, the sum of: (i) the aggregate amount of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid on such share as of the time of such conversion; minus (ii) if such share has been surrendered for conversion during the period between the close of business on any Record Date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) if such share has not been surrendered for conversion during the period between the close of business on any record date for the payment of a dividend on the Class A Common Stock and the opening of business on the corresponding dividend payment date, an amount equal to the product of (A) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and (B) a fraction, the numerator of which is the number of days in the period from and including the date of the most recent dividend payment date for the Class A Common Stock or the Class L Preferred Stock, whichever is later, to but excluding the date of such conversion, and the denominator of which is 90. (c) No fractional shares of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of shares of Class L Preferred Stock. If more than one share of Class L Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class L Preferred Stock so surrendered. In lieu of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of any share of Class L Preferred Stock, the Corporation shall pay to the holder of such shares an amount 14 260 in cash (computed to the nearest cent) equal to the Closing Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion, multiplied by the fractional interest that otherwise would have been deliverable upon conversion of such share. 7.2 ADJUSTMENTS TO CONVERSION PRICE (a) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its Class A Common Stock in shares of Class A Common Stock, (B) subdivide its outstanding shares of Class A Common Stock into a greater number of shares, (C) combine its outstanding shares of Class A Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its outstanding Class A Common Stock (including a reclassification pursuant to a merger or consolidation in which the Corporation is the continuing entity and in which the Class A Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, or securities or other property of another entity), then, in each such case, the Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Class L Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Class A Common Stock or other capital stock of the Corporation which such holder would have owned or been entitled to receive immediately following such action had such share been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this subsection (i) of this Section 7.2(a) shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (i), the holder of any share of Class L Preferred Stock thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock or shares of Class A Common Stock and other capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Class A Common Stock and other capital stock. (ii) If the Corporation shall, after the Issue Date, issue rights, options or warrants to all holders of its outstanding shares of Class A Common Stock entitling them (for a period expiring within 45 days after the record date described below) to subscribe for or purchase shares of Class A Common Stock at a price per share less than the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock (other than pursuant to any stock option, restricted stock or other incentive or benefit plan or stock ownership or purchase plan for the benefit of employees, directors or officers or any dividend 15 261 reinvestment plan of the Corporation in effect at the time hereof or any other similar plan adopted or implemented hereafter), then the Conversion Price in effect immediately prior thereto shall be adjusted so that it shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date by a fraction, the numerator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of shares which the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Class A Common Stock would purchase at such current market price, and the denominator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of additional shares of Class A Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall be made successively whenever any rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants; provided, however, that if all of the shares of Class A Common Stock offered for subscription or purchase are not delivered upon the exercise of such rights, options or warrants, upon the expiration of such rights, options or warrants, the Conversion Price shall be readjusted to the Conversion Price which would have been in effect had the numerator and the denominator of the foregoing fraction and the resulting adjustment been made based upon the number of shares of Class A Common Stock actually delivered upon the exercise of such rights, options or warrants rather than upon the number of shares of Class A Common Stock offered for subscription or purchase. In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of Class A Common Stock at less than such current market price, and in determining the aggregate offering price of such shares of Class A Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants, with the value of such consideration, if other than cash, determined by the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent). (iii) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its outstanding Class A Common Stock any capital stock (other than Class A Common Stock), evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase securities of the Corporation (excluding (A) those referred to in subsections (i) and (ii) of this Section 7.2(a), (B) dividends and distributions paid in cash out of the retained earnings of the Corporation, and (C) distributions upon mergers or consolidations to which subsection (b) of this Section 7.2 applies), then, in each such case, the Conversion Price shall be adjusted to equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date of such distribution by a fraction, the numerator of which shall be the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock, less the fair market value on such record date (determined by the Board or Directors, whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) of 16 262 the portion of the capital stock or assets or the evidences of indebtedness or assets so distributed to the holder of one share of Class A Common Stock or of such subscription rights or warrants applicable to one share of Class A Common Stock, and the denominator of which shall be such current market price per share of Class A Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (iv) For the purpose of any computation under subsections (ii) and (iii) of this Section 7.2(a), the current market price per share of Class A Common Stock on any date shall be the average of the Closing Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination or (B) the period commencing on the date next succeeding the first public announcement of the issuance of such rights or warrants or such distribution through such last full Trading Day prior to the Time of Determination. For purposes of the foregoing, the term "Time of Determination" shall mean the time and date of the earlier of (A) the record date for determining stockholders entitled to receive the rights, warrants or distribution referred to in subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of "ex-dividend" trading on the exchange or market referred to in the definition of "Closing Price." (v) No adjustment in the Conversion Price shall be required to be made unless such adjustment would require an increase or decrease of at least one percent of such price; provided, however, that any adjustment which by reason of this subsection (v) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 7.2 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to the contrary notwithstanding, the Corporation shall be entitled to make such reduction in the Conversion Price, in addition to those required by this Section 7.2, as it shall determine in its discretion to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. Except as set forth in subsections (i), (ii) and (iii) above, the Conversion Price shall not be adjusted for the issuance of Class A Common Stock, or any securities convertible into or exchangeable for Class A Common Stock or carrying the right to purchase any of the foregoing, in exchange for cash, property or services. (vi) The Corporation from time to time may decrease the Conversion Price by any amount for any period of time if the period is at least 20 days and if the decrease is irrevocable during the period. Whenever the Conversion Price is so decreased, the Corporation shall mail to holders of record of shares of Class L Preferred Stock a notice of the decrease at least 15 days before the date the decreased Conversion Price takes effect, and such notice shall state the decreased Conversion Price and the period it will be in effect. 17 263 (b) Notwithstanding any other provision herein to the contrary, in case of any merger or consolidation to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the continuing entity and in which the Class A Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, or the securities or other property of another entity), or in the case of any sale or transfer of all or substantially all of the Corporation's property and assets to another entity, there will be no adjustment of the Conversion Price, and lawful provision shall be made by the entity formed by such consolidation or the entity whose securities, cash or other property will immediately after the merger or consolidation be owned, by virtue of the merger or consolidation, by the holders of Class A Common Stock immediately prior to the merger or consolidation, or the entity which shall have acquired such assets of the Corporation, such that each share of Class L Preferred Stock then outstanding will, without the consent of the holder thereof, become convertible into the kind and amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Class A Common Stock into which such share of Class L Preferred Stock was convertible immediately prior to such merger, consolidation, sale or transfer assuming such holder of Class A Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer. In the case of a cash merger of the Corporation into another entity or any other cash transaction of the type mentioned in this Section 7.2(b), each share of Class L Preferred Stock will thereafter be convertible at the Conversion Price in effect at such time into the same amount of cash per share into which each share of Class L Preferred Stock would have been convertible had such share been converted into Class A Common Stock immediately prior to the effective date of such cash merger or other transaction. The foregoing provisions of this Section 7.2(b) shall similarly apply to successive mergers, consolidations, sales or transfers. (c) If (i) the Corporation shall take any action that would require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the Corporation shall authorize the granting to the holders of the Class A Common Stock generally of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; (iii) there shall be any reorganization or reclassification of the Class A Common Stock (other than an event to which subsection (i) of Section 7.2(a) applies) or any consolidation or merger to which the Corporation is a party or any sale or transfer of all or substantially all of the assets of the Corporation, in each case, for which approval of any stockholders of the Corporation is required; or (iv) there shall be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then, in each such case, the Corporation shall cause to be given to the holders of shares of Class L Preferred Stock and the Transfer Agent as promptly as possible, but in any event at least 15 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock of record to be entitled to such 18 264 dividend, distribution, rights or warrants are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Class A Common Stock of record shall be entitled to exchange their shares of Class A Common Stock for securities, cash or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.2(c). (d) Whenever the Conversion Price is adjusted as herein provided, (i) the Corporation shall promptly file with the Transfer Agent a certificate setting forth the Conversion Price after such adjustment and a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) the Corporation shall mail or cause to be mailed by first class mail, postage prepaid, as soon as practicable to each holder of record of shares of Class L Preferred Stock a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price. (e) In any case in which paragraph (a) of this Section 7.2 shall require that an adjustment be made immediately following a record date or an effective date, the Corporation may elect to defer (but only until the filing by the Corporation with the Transfer Agent of the certificate required by subsection 7.2(d)) (i) issuing to the holder of any share of Class L Preferred Stock converted after such record date or effective date the shares of Class A Common Stock issuable upon such conversion in excess of the shares of Class A Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment, and (ii) paying to such holder any amount of cash in lieu of a fractional share. (f) In the event that at any time, as a result of an adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any share of Class L Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of the Corporation other than shares of Class A Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any share of Class L Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Class A Common Stock contained in this Section 7.2. (g) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Class A Common Stock, for the purpose of effecting conversion of shares of Class L Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class L Preferred Stock not theretofore converted and on or before (and as a condition of) taking any action that 19 265 would cause an adjustment of the Conversion Price resulting in an increase in the number of shares of Class A Common Stock deliverable upon conversion in excess of the number thereof previously reserved and available therefor, the Corporation shall take all such action so required. For purposes of this paragraph (g), the number of shares of Class A Common Stock which shall be deliverable upon the conversion of all outstanding shares of Class L Preferred Stock shall be computed as if at the time of computation all such outstanding shares of Class L Preferred Stock were held by a single holder (and without regard to the Ownership Limit). Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Class A Common Stock deliverable upon conversion of the shares of Class L Preferred Stock, the Corporation shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Class A Common Stock at such adjusted Conversion Price. (h) The Corporation will pay any and all documentary stamp, issue or transfer taxes, and any other similar taxes, payable in respect of the issue or delivery of shares of Class A Common Stock upon conversion of shares of Class L Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Class A Common Stock in a name other than that of the holder of the shares of Class L Preferred Stock to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. (i) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class L Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in the Charter). (j) If the Corporation shall take any action affecting the Class A Common Stock, other than action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class L Preferred Stock, the Board of Directors may, but shall have no obligation to, adjust the Conversion Price for the Class L Preferred Stock to the extent permitted by law in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. 20 266 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class L Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class L Preferred Stock ("Senior Stock"); (b) on a parity with the Class L Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class L Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock or Class K Convertible Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class L Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class L Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class L Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 9. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class L Preferred Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any 21 267 other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class L Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class L Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class L Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class L Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class L Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class L Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class L Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class L Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class L Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class L Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class L Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class L Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class L Preferred Stock voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: 22 268 (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class L Preferred Stock (including any amendment, alteration or repeal effected pursuant to a merger, consolidation or similar transaction) or would convert the Class L Preferred Stock into cash or any other security other than a preferred stock with terms and provisions equivalent to those set forth in these Articles Supplementary; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class L Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class L Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class L Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class L Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class L Preferred Stock as a single class on any matter, then the Class L Preferred Stock and such other class or series shall have with respect to such matters one quarter of one vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class L Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class L Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 23 269 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class L Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class L Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class L Preferred Stock in excess of the Look- Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class L Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class L Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class L Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class L Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class L Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class L Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.8 from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class L Preferred Stock in excess of the Look- Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class L Preferred Stock that would be otherwise Beneficially Owned by such Look- Through Entity in excess of the Look-Through Ownership Limit and such Look- Through Entity shall acquire no rights in such shares of Class L Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being 24 270 "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class L Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class L Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class L Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class L Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class L Preferred Stock in the same or any other related transaction. 11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class L Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class L Preferred Stock acquired in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of 25 271 Class L Preferred Stock that is expressly authorized pursuant to Section 11.8(C) of this Article. 11.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class L Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class L Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class L Preferred Stock in excess of the Look- Through Ownership Limit (in any such event, the Person, Initial Holder or Look- Through Entity that would Beneficially Own shares of Class L Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class L Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look- Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class L Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(E), the Prohibited Transferee shall have no rights in the Class L Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 26 272 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class L Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class L Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class L Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class L Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class L Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class L Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class L Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class L Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 27 273 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class L Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class L Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class L Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class L Preferred Stock shall, upon written request by the Corporation, such request to be made within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class L Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class L Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class L Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look- Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class L Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. 28 274 (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class L Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class L Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class L Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 11.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 11.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 11 of this Article, or in the case of an ambiguity in any definition contained in Section 11 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 11.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class L Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 11.1 of this Article and the pledgee shall not be subject to the 29 275 Ownership Limit with respect to the Class L Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class L Preferred Stock) following the purchase of Class L Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class L Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class L Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class L Preferred Stock purchased in connection with market making activities. 11.9 LEGEND. Each certificate for Class L Preferred Stock shall bear substantially the following legend: "The shares of Class L Convertible Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class L Convertible Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class L Convertible Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class L Convertible Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class L Convertible Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class L Convertible Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class L Convertible Cumulative Preferred Stock) or (ii) the shares of Class L Convertible Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 11.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 30 276 11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look- Through Ownership Limit in the event of a change in law. 11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class L Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXIII of the Charter. (the next page is the signature page) 31 277 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Senior Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on May 28, 1999. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ KATHLEEN HARVEY /s/ TROY D. BUTTS - ------------------------- --------------------------- Kathleen Harvey Troy D. Butts Assistant Secretary Senior Vice President and Chief Financial Officer THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ TROY D. BUTTS --------------------------- Troy D. Butts Senior Vice President and Chief Financial Officer 32 278 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS M CONVERTIBLE CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 1,600,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share (the "Class A Common Stock"), into a class designated as Class M Convertible Cumulative Preferred Stock, par value $.01 per share, and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class M Convertible Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 1,600,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 475,937,500 shares immediately prior to the reclassification to 474,337,500 shares immediately after the reclassification. THIRD: The terms of the Class M Convertible Cumulative Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class M Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class M Preferred Stock"), and One Million, Six Hundred Thousand (1,600,000) shall be the authorized number of shares of such Class M Preferred Stock constituting such class. -1- 279 2. DEFINITIONS. For purposes of the Class M Preferred Stock, the following terms shall have the meanings indicated: "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the product of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class M Preferred Stock; provided that, for purposes of paragraph (a) of Section 9 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class M Preferred Stock" shall have the meaning set forth in Section 1 of this Article. -2- 280 "Closing Price" shall mean, when used with respect to a share of any Equity Stock and for any date, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class M Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $44.00 (equivalent to a conversion rate of approximately 0.5681818 shares of Class A Common Stock for each share of Class M Preferred Stock). "Dividend Payment Date" shall mean January 13, April 13, July 13 and October 13 of each year; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 13, April 13, July 13 and October 13 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class M -3- 281 Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class M Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 11.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean January 13, 2000. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including April 12, 2000. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class M Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class M Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class M Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity -4- 282 Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class M Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. "NYSE" shall mean the New York Stock Exchange, Inc. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class M Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class M Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit, as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit, as applied to the Initial Holder, and the Look-Through Ownership Limit, as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, "private foundation," within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) a "group," as that term is used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 11.3(A) of this Article. "Record Date" shall have the meaning set forth in paragraph (a) of Section 3 of this Article. -5- 283 "Redemption Date" shall mean, in the case of any redemption of any shares of Class M Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any shares of Class M Preferred Stock to be redeemed, (i) if the Redemption Date occurs during the period from and including January 13, 2003, to but excluding January 13, 2004, 102% of the Liquidation Preference thereof, and (ii) if the Redemption Date occurs on or after January 13, 2004, 100% of the Liquidation Preference thereof, plus, in the case of clause (i) or (ii), all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class M Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. -6- 284 "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class M Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class M Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class M Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class M Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class M Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class M Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class M Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for that purpose, quarterly cash dividends on the Class M Preferred Stock in an amount per share equal to (i) during the period from the Issue Date through and including January 13, 2003, the greater of $0.53125 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date by reference to the dividend most recently declared on the Class A Common Stock) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class M Preferred Stock is then convertible, and (ii) during the period from and after January 13, 2003, the greater of $0.578125 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date by reference to the dividend most recently declared on the Class A Common Stock) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class M Preferred Stock is then convertible. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on April 13, 2000. Each such dividend shall be payable in arrears to the holders of record of the Class M Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the tenth Business Day immediately preceding such Dividend Payment -7- 285 Date (each a "Record Date"). Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class M Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class M Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class M Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class M Preferred Stock that may be in arrears. (c) So long as any of the shares of Class M Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class M Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class M Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class M Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class M Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class M Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the -8- 286 Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class M Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class M Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class M Preferred Stock shall be entitled to receive the greater of (i) Twenty-Five Dollars ($25) per share of Class M Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, or (ii) the amount that would be payable to the holders of Class M Preferred Stock if they had converted all outstanding shares of Class M Preferred Stock into shares of Common Stock immediately prior to such liquidation, dissolution or winding up; but such holders shall not be entitled to any further payment. Until the holders of the Class M Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class M Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class M Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class M Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a -9- 287 consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class M Preferred Stock and any Parity Stock, as provided in Section 4(a), any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class M Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class M Preferred Stock shall not be redeemable by the Corporation prior to January 13, 2003, except as set forth in Section 11.2 of this Article. On and after January 13, 2003, except as set forth in paragraph (e) below, the Corporation, at its option, may redeem shares of Class M Preferred Stock, in whole but not in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Class M Preferred Stock, if the Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of business on such dividend record date notwithstanding the redemption of such shares, and shall not be payable as part of the redemption price for such shares. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class M Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class M Preferred Stock may be redeemed unless all outstanding shares of Class M Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class M Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class M Preferred Stock. (d) If the Corporation shall redeem shares of Class M Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect -10- 288 therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which has been mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (i) the Redemption Date; (ii) the place or places at which certificates for such shares are to be surrendered for cash; and (iii) the redemption price payable on such Redemption Date, including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be payable as part of the redemption price, or payable on the next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class M Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class M Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class M Preferred Stock of the Corporation shall cease except the right to receive the cash payable upon such redemption, without interest thereon, upon surrender of their certificates if so required; provided, however, that if the Redemption Date for any shares of Class M Preferred Stock occurs after any dividend record date and on or prior to the related Dividend Payment Date, the full dividend payable on such Dividend Payment Date in respect of such shares of Class M Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect such redemption in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class M Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class M Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class M Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class M Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class M Preferred Stock to be so redeemed (properly endorsed -11- 289 or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. 6. STATUS OF REACQUIRED STOCK. All shares of Class M Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class M Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class M Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, except as set forth in Section 7.2(i) of this Article, holders of shares of Class M Preferred Stock shall have the right to convert all or a portion of such shares into shares of Class A Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, each share of Class M Preferred Stock shall, at the option of the holder thereof, be convertible at any time (unless such share is called for redemption, then to and including but not after the close of business on the date immediately prior to the Redemption Date, unless the Corporation shall default in payment due upon redemption thereof), into that number of fully paid and non-assessable shares of Class A Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $25 by the Conversion Price in effect at such time and by surrender of the certificate representing such shares to be converted in the manner provided in subsection (b) of this Section 7.1. (b) In order to convert shares of Class M Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at any office or agency maintained by the Corporation for such purpose, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class M Preferred Stock (or such other notice as is acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class M Preferred Stock specified in such notice. Such notice shall also state the name or names, together with address or addresses, in which the certificate or certificates for shares of Class A Common Stock which shall be issuable in such conversion shall be issued. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class M Preferred Stock is registered, each certificate representing a share of Class M Preferred Stock surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the -12 290 Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation that such taxes have been paid). As promptly as practicable after the surrender of certificates representing such shares of Class M Preferred Stock and the receipt of such notice, instruments of transfer and funds, if any, as aforesaid, the Corporation shall issue and shall deliver at such office or agency to such holder, or as designated in such holder's written instructions, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such share or shares of Class M Preferred Stock in accordance with provisions of this Section 7, and a check or cash in respect of (i) the cash amount payable to such holder, if any, referred to in the last paragraph of this subsection (b), and (ii) any fractional interest in a share of Class A Common Stock arising upon such conversion, as provided in paragraph (c) of this Section 7.1. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which certificates representing such shares of Class M Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends (other than dividends on the Class A Common Stock the record date for which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class M Preferred Stock at the close of business on a Record Date will be entitled to receive an amount equal to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such Record Date. In addition to any such dividend, if the Dividend Adjustment Amount (as defined below) with respect to any shares of Class M Preferred Stock surrendered for conversion is positive, the holders of such shares shall, as of the date of conversion, be entitled to receive a cash payment equal to the Dividend Adjustment Amount. If the Dividend Adjustment Amount with respect to any shares of Class M Preferred Stock surrendered for conversion is negative, such shares must be accompanied by payment of a cash amount equal to the absolute value of the Dividend Adjustment Amount. As used herein, -13- 291 the "Dividend Adjustment Amount" shall mean, with respect to any share of Class M Preferred Stock that has been surrendered for conversion, the sum of: (i) the aggregate amount of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid on such share as of the time of such conversion; minus (ii) if such share has been surrendered for conversion during the period between the close of business on any Record Date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) an amount equal to the product of (A) the number (which may be a fraction) of shares of Class A Common Stock into which a share of Class M Preferred Stock is then convertible, multiplied by (B) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and if the date of such conversion is not a record date for the payment of a dividend on the Class A Common Stock, multiplied by (C) a fraction, the numerator of which is the number of days in the period from and including the date of the most recent record date for the payment of a dividend on the Class A Common Stock to but excluding the date of such conversion, and the denominator of which is 90. (c) No fractional shares of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of shares of Class M Preferred Stock. If more than one share of Class M Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class M Preferred Stock so surrendered. In lieu of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of any share of Class M Preferred Stock, the Corporation shall pay to the holder of such shares an amount in cash (computed to the nearest cent) equal to the Closing Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion, multiplied by the fractional interest that otherwise would have been deliverable upon conversion of such share. 7.2 ADJUSTMENTS TO CONVERSION PRICE (a) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its Class A Common Stock in shares of Class A Common Stock, (B) subdivide its outstanding shares of Class A Common Stock into a greater number of shares, (C) combine its outstanding shares of Class A Common Stock into a smaller number of shares or (D) -14- 292 issue any shares of capital stock by reclassification of its outstanding Class A Common Stock, then, in each such case, the Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Class M Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Class A Common Stock or other capital stock of the Corporation which such holder would have owned or been entitled to receive immediately following such action had such share been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this subsection (i) of this Section 7.2(a) shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (i), the holder of any share of Class M Preferred Stock thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock or shares of Class A Common Stock and other capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Class A Common Stock and other capital stock. (ii) If the Corporation shall, after the Issue Date, issue rights, options or warrants to all holders of its outstanding shares of Class A Common Stock entitling them (for a period expiring within 45 days after the record date described below) to subscribe for or purchase shares of Class A Common Stock at a price per share less than the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock (other than pursuant to any stock option, restricted stock or other incentive or benefit plan or stock ownership or purchase plan for the benefit of employees, directors or officers or any dividend reinvestment plan of the Corporation in effect at the time hereof or any other similar plan adopted or implemented hereafter), then the Conversion Price in effect immediately prior thereto shall be adjusted so that it shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date by a fraction, the numerator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of shares which the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Class A Common Stock would purchase at such current market price, and the denominator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of additional shares of Class A Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall be made successively whenever any rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants; provided, however, that if all of the shares of Class A Common Stock offered for subscription or purchase are not delivered upon the exercise of such rights, options or warrants, upon the expiration of such rights, options or warrants, the Conversion Price shall be readjusted to the Conversion Price which would have been in effect had the numerator and the denominator of the foregoing fraction and the resulting adjustment been made based upon the number of shares of Class A Common -15- 293 Stock actually delivered upon the exercise of such rights, options or warrants rather than upon the number of shares of Class A Common Stock offered for subscription or purchase. In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of Class A Common Stock at less than such current market price, and in determining the aggregate offering price of such shares of Class A Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants, with the value of such consideration, if other than cash, determined by the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent). (iii) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its outstanding Class A Common Stock any capital stock (other than Class A Common Stock), evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase securities of the Corporation (excluding (A) those referred to in subsections (i) and (ii) of this Section 7.2(a), (B) dividends and distributions paid in cash out of the retained earnings of the Corporation, and (C) distributions upon mergers or consolidations to which subsection (b) of this Section 7.2 applies), then, in each such case, the Conversion Price shall be adjusted to equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date of such distribution by a fraction, the numerator of which shall be the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock, less the fair market value on such record date (determined by the Board or Directors, whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) of the portion of the capital stock or assets or the evidences of indebtedness or assets so distributed to the holder of one share of Class A Common Stock or of such subscription rights or warrants applicable to one share of Class A Common Stock, and the denominator of which shall be such current market price per share of Class A Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (iv) For the purpose of any computation under subsections (ii) and (iii) of this Section 7.2(a), the current market price per share of Class A Common Stock on any date shall be the average of the Closing Price of the Class A Common Stock for the shorter of (A) 10 consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination or (B) the period commencing on the date next succeeding the first public announcement of the issuance of such rights or warrants or such distribution through such last full Trading Day prior to the Time of Determination. For purposes of the foregoing, the term "Time of Determination" shall mean the time and date of the earlier of (A) the record date for determining stockholders entitled to receive the rights, warrants or distribution referred to in subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of "ex-dividend" trading on the exchange or market referred to in the definition of "Closing Price." -16- 294 (v) No adjustment in the Conversion Price shall be required to be made unless such adjustment would require an increase or decrease of at least one percent of such price; provided, however, that any adjustment which by reason of this subsection (v) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 7.2 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to the contrary notwithstanding, the Corporation shall be entitled to make such reduction in the Conversion Price, in addition to those required by this Section 7.2, as it shall determine in its discretion to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. Except as set forth in subsections (i), (ii) and (iii) above, the Conversion Price shall not be adjusted for the issuance of Class A Common Stock, or any securities convertible into or exchangeable for Class A Common Stock or carrying the right to purchase any of the foregoing, in exchange for cash, property or services. (vi) The Corporation from time to time may decrease the Conversion Price by any amount for any period of time if the period is at least 20 days and if the decrease is irrevocable during the period. Whenever the Conversion Price is so decreased, the Corporation shall mail to holders of record of shares of Class M Preferred Stock a notice of the decrease at least 15 days before the date the decreased Conversion Price takes effect, and such notice shall state the decreased Conversion Price and the period it will be in effect. (b) Notwithstanding any other provision herein to the contrary, in case of any merger or consolidation to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the continuing entity and in which the Class A Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, or the securities or other property of another entity), or in the case of any sale or transfer of all or substantially all of the Corporation's property and assets to another entity, there will be no adjustment of the Conversion Price, and lawful provision shall be made by the entity formed by such consolidation or the entity whose securities, cash or other property will immediately after the merger or consolidation be owned, by virtue of the merger or consolidation, by the holders of Class A Common Stock immediately prior to the merger or consolidation, or the entity which shall have acquired such assets of the Corporation, such that each share of Class M Preferred Stock then outstanding will, without the consent of the holder thereof, become convertible into the kind and amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Class A Common Stock into which such share of Class M Preferred Stock was convertible immediately prior to such merger, consolidation, sale or transfer (without regard to any Ownership Restrictions as defined in Article IV of the Charter) assuming such holder of Class A Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer. In the case of a cash merger of the Corporation into another entity or any other cash transaction of the type mentioned in this -17- 295 Section 7.2(b), each share of Class M Preferred Stock will thereafter be convertible at the Conversion Price in effect at such time into the same amount of cash per share into which each share of Class M Preferred Stock would have been convertible had (without regard to any Ownership Restrictions as defined in Article IV of the Charter) such share been converted into Class A Common Stock immediately prior to the effective date of such cash merger or other transaction. The foregoing provisions of this Section 7.2(b) shall similarly apply to successive mergers, consolidations, sales or transfers. (c) If (i) the Corporation shall take any action that would require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the Corporation shall authorize the granting to the holders of the Class A Common Stock generally of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; (iii) there shall be any reorganization or reclassification of the Class A Common Stock (other than an event to which subsection (i) of Section 7.2(a) applies) or any consolidation or merger to which the Corporation is a party or any sale or transfer of all or substantially all of the assets of the Corporation, in each case, for which approval of any stockholders of the Corporation is required; or (iv) there shall be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then, in each such case, the Corporation shall cause to be given to the holders of shares of Class M Preferred Stock and the Transfer Agent as promptly as possible, but in any event at least 15 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Class A Common Stock of record shall be entitled to exchange their shares of Class A Common Stock for securities, cash or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.2(c). (d) Whenever the Conversion Price is adjusted as herein provided, (i) the Corporation shall promptly file with the Transfer Agent a certificate setting forth the Conversion Price after such adjustment and a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) the Corporation shall mail or cause to be mailed by first class mail, postage prepaid, as soon as practicable to each holder of record of shares of Class M Preferred Stock a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price and the effective date thereof. (e) In any case in which paragraph (a) of this Section 7.2 shall require that an adjustment be made immediately following a record date or an effective date, the Corporation -18- 296 may elect to defer (but only until the filing by the Corporation with the Transfer Agent of the certificate required by subsection 7.2(d)) (i) issuing to the holder of any share of Class M Preferred Stock converted after such record date or effective date the shares of Class A Common Stock issuable upon such conversion in excess of the shares of Class A Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment, and (ii) paying to such holder any amount of cash in lieu of a fractional share. (f) In the event that at any time, as a result of an adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any share of Class M Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of the Corporation other than shares of Class A Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any share of Class M Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Class A Common Stock contained in this Section 7.2. (g) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Class A Common Stock, for the purpose of effecting conversion of shares of Class M Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class M Preferred Stock not theretofore converted and on or before (and as a condition of) taking any action that would cause an adjustment of the Conversion Price resulting in an increase in the number of shares of Class A Common Stock deliverable upon conversion in excess of the number thereof previously reserved and available therefor, the Corporation shall take all such action so required. For purposes of this paragraph (g), the number of shares of Class A Common Stock which shall be deliverable upon the conversion of all outstanding shares of Class M Preferred Stock shall be computed as if at the time of computation all such outstanding shares of Class M Preferred Stock were held by a single holder (and without regard to the Ownership Limit). Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Class A Common Stock deliverable upon conversion of the shares of Class M Preferred Stock, the Corporation shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Class A Common Stock at such adjusted Conversion Price. (h) The Corporation will pay any and all documentary stamp, issue or transfer taxes, and any other similar taxes, payable in respect of the issue or delivery of shares of Class A Common Stock upon conversion of shares of Class M Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Class A Common Stock in a name other than that of the holder of the shares of Class M Preferred Stock to be converted, and no -19- 297 such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. (i) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class M Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in Article IV of the Charter), after taking into account any applicable waivers. This limitation shall not, however, be taken into account in determining any amounts to which the holders of any shares of Class M Preferred Stock may be entitled under Sections 3, 4 or 5. (j) If the Corporation shall take any action affecting the Class A Common Stock, other than an action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class M Preferred Stock, the Board of Directors may, but shall have no obligation to, adjust the Conversion Price for the Class M Preferred Stock to the extent permitted by law in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class M Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class M Preferred Stock ("Senior Stock"); (b) on a parity with the Class M Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class M Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock or Class L Convertible Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class M Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and -20- 298 (c) junior to the Class M Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class M Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 9. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class M Preferred Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class M Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class M Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class M Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class M Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class M Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class M Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class M Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class M Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class M Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the -21- 299 stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class M Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class M Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class M Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class M Preferred Stock voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class M Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class M Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class M Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class M Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class M Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class M Preferred Stock as a single class on any matter, then the Class M Preferred Stock and such other class or series shall have with respect to such matters one quarter of one -22- 300 vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class M Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class M Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 11.1. RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class M Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class M Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class M Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class M Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class M Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class M Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class M Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class M Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class M Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.8 from and after the Issue Date (and subject to Section 11.12), any -23- 301 Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class M Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class M Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class M Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class M Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class M Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class M Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class M Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class M Preferred Stock in the same or any other related transaction. 11.2. REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class M Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class M Preferred Stock acquired -24- 302 in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class M Preferred Stock that is expressly authorized pursuant to Section 11.8(C) of this Article. 11.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class M Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class M Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class M Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class M Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class M Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class M Preferred -25- 303 Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(E), the Prohibited Transferee shall have no rights in the Class M Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class M Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class M Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class M Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class M Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class M Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class M Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class M Preferred Stock on behalf of the Corporation. -26- 304 (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class M Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class M Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4. NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class M Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5. OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class M Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of shares of Class M Preferred Stock convertible into more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Equity Stock shall upon written request by the Corporation, such request to be made within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class M Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class M Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class M Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership -27- 305 Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class M Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class M Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class M Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class M Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 11.6. REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 11.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 11.7. AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 11 of this Article, or in the case of an ambiguity in any definition contained in Section 11 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 11.8. EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. -28- 306 (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class M Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 11.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class M Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class M Preferred Stock) following the purchase of Class M Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class M Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class M Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class M Preferred Stock purchased in connection with market making activities. 11.9. LEGEND. Each certificate for Class M Preferred Stock shall bear substantially the following legend: "The shares of Class M Convertible Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class M Convertible Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class M Convertible Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class M Convertible Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class M Convertible Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class M Convertible Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class M Convertible Cumulative Preferred Stock) or (ii) the shares of Class M Convertible Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 11.10. SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable -29- 307 by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 11.11. BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 11.12. SETTLEMENT. Nothing in this Section 11 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class M Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXIV of the Charter. -30- 308 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President, General Counsel and Secretary and witnessed by its Assistant Secretary on January , 2000. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY - ------------------- --------------------------------------------- Barb Foster Joel Bonder Assistant Secretary Executive Vice President, General Counsel and Secretary THE UNDERSIGNED, Executive Vice President, General Counsel and Secretary of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. --------------------------------------------- Joel Bonder Executive Vice President, General Counsel and Secretary -31- EX-3.2 3 BYLAWS 1 EXHIBIT 3.2 {As Adopted on January 19, 2000} ================================================================================ AMENDED AND RESTATED BY-LAWS OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY ================================================================================ -1- 2 TABLE OF CONTENTS
Page ARTICLE I. STOCKHOLDERS 5 SECTION 1.01. Annual Meeting 5 SECTION 1.02. Special Meeting 5 SECTION 1.03. Place of Meetings 5 SECTION 1.04. Notice of Meetings; Waiver of Notice 5 SECTION 1.05. Quorum; Voting 6 SECTION 1.06. Adjournments 6 SECTION 1.07. General Right to Vote; Proxies 6 SECTION 1.08. List of Stockholders 7 SECTION 1.09. Conduct of Voting 7 SECTION 1.10. Meeting by Conference Telephone 7 ARTICLE II. BOARD OF DIRECTORS 7 SECTION 2.01. Function of Directors 7 SECTION 2.02. Qualification and Number of Directors 8 SECTION 2.03. Election and Tenure of Directors 8 SECTION 2.04. Removal of Director 8 SECTION 2.05. Vacancy on Board of Directors 8 SECTION 2.06. Regular Meetings 8 SECTION 2.07. Special Meetings 9 SECTION 2.08. Notice of Meeting 9 SECTION 2.09. Quorum; Action by Directors 9 SECTION 2.10. Meeting by Conference Telephone 9 SECTION 2.11. Compensation 10 SECTION 2.12. Resignation 10 SECTION 2.13. Presumption of Assent 10 ARTICLE III. COMMITTEES 10 SECTION 3.01. Committees 10 SECTION 3.02. Committee Procedure 10 ARTICLE IV. OFFICERS 11 SECTION 4.01. Executive and Other Officers 11 SECTION 4.02. Chairman of the Board 11 SECTION 4.03. Vice Chairman of the Board 11
-2- 3 SECTION 4.04. President 11 SECTION 4.05. Vice-Presidents 12 SECTION 4.06. Secretary 12 SECTION 4.07. Treasurer 12 SECTION 4.08. Assistant and Subordinate Officers 12 SECTION 4.09. Election, Tenure and Removal of Officers 13 SECTION 4.10. Compensation 13 ARTICLE V. DIVISIONAL TITLES 13 SECTION 5.01. Conferring Divisional Titles 13 SECTION 5.02. Effect of Divisional Titles 13 ARTICLE VI. STOCK 10 SECTION 6.01. Certificates for Stock 13 SECTION 6.02. Transfers 14 SECTION 6.03. Record Dates or Closing of Transfer Books 14 SECTION 6.04. Stock Ledger 14 SECTION 6.05. Certification of Beneficial Owners 14 SECTION 6.06. Lost Stock Certificates 14 SECTION 6.07. Fractional Share Interests or Scrip 14 ARTICLE VII. FINANCE 16 SECTION 7.01. Checks, Drafts, Etc. 16 SECTION 7.02. Annual Statement of Affairs 16 SECTION 7.03. Fiscal Year 16 SECTION 7.04. Dividends 16 SECTION 7.05. Bonds 16 ARTICLE VIII. INDEMNIFICATION 16 SECTION 8.01. Procedure 16 SECTION 8.02. Exclusivity, Etc. 17 SECTION 8.03. Severability; Definitions 17 ARTICLE IX. SUNDRY PROVISIONS 17 SECTION 9.01. Books and Records 17 SECTION 9.02. Corporate Seal 18 SECTION 9.03. Voting Stock in Other Corporations 18 SECTION 9.04. Mail 18 SECTION 9.05. Contracts and Agreements 18 SECTION 9.06. Resident Agent; Principal Office 18
-3- 4 SECTION 9.07. Amendments 18 SECTION 9.08. Reliance 19
-4- 5 AMENDED AND RESTATED BY-LAWS OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY ARTICLE I. STOCKHOLDERS SECTION 1.01. ANNUAL MEETING. The Corporation shall hold an annual meeting of its stockholders to elect directors and transact any other business within its powers, either at 9:00 a.m. on the third Wednesday of April in each year if not a legal holiday, or at such other time on such other day falling on or before the 30th day thereafter as shall be set by the Board of Directors. Except as the Charter or statute provides otherwise, any business may be considered at an annual meeting without the purpose of the meeting having been specified in the notice. Failure to hold an annual meeting does not invalidate the Corporation's existence or affect any otherwise valid corporate acts. SECTION 1.02. SPECIAL MEETING. At any time in the interval between annual meetings, a special meeting of the stockholders may be called by the Chairman of the Board, the Vice Chairman of the Board or the President or by a majority of the Board of Directors by vote at a meeting or in writing (addressed to the Secretary of the Corporation) with or without a meeting. Special meetings of the stockholders shall be called by the Secretary at the request of stockholders only on the written request of stockholders entitled to cast at least 25% of all the votes entitled to be cast at the meeting. A request for a special meeting shall state the purpose of the meeting and the matters proposed to be acted on at it. The Secretary shall inform the stockholders who make the request of the reasonably estimated costs of preparing and mailing a notice of the meeting and, on payment of these costs to the Corporation, notify each stockholder entitled to notice of the meeting. The Board of Directors shall have sole power to fix the date and time of the special meeting. Unless requested by stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting, a special meeting need not be called to consider any matter which is substantially the same as a matter voted on at any special meeting of stockholders held in the preceding 12 months. SECTION 1.03. PLACE OF MEETINGS. Unless the Charter provides otherwise, meetings of stockholders shall be held at such place as is set from time to time by the Board of Directors. SECTION 1.04. NOTICE OF MEETINGS; WAIVER OF NOTICE. Not less than ten nor more than 90 days before each stockholders' meeting, the Secretary shall give written notice of the -5- 6 meeting to each stockholder entitled to vote at the meeting and each other stockholder entitled to notice of the meeting. The notice shall state the time and place of the meeting and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to him or her, left at his or her residence or usual place of business, or mailed to him or her at his or her address as it appears on the records of the Corporation or transmitted to the stockholder by electronic mail to any electronic mail address of the stockholder or by any other electronic means. Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if he or she before or after the meeting signs a waiver of the notice which is filed with the records of stockholders' meetings, or is present at the meeting in person or by proxy. SECTION 1.05. QUORUM; VOTING. Unless any statute or the Charter provides otherwise, at a meeting of stockholders the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting constitutes a quorum, and a majority of all the votes cast at a meeting at which a quorum is present is sufficient to approve any matter which properly comes before the meeting, except that a plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director. SECTION 1.06. ADJOURNMENTS. Whether or not a quorum is present, a meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice by a majority vote of the stockholders present in person or by proxy to a date not more than 120 days after the original record date. Any business which might have been transacted at the meeting as originally notified may be deferred and transacted at any such adjourned meeting at which a quorum shall be present. SECTION 1.07. GENERAL RIGHT TO VOTE; PROXIES. Unless the Charter provides for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders; however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors, each share of stock may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A stockholder may vote the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person to act as proxy. Signing may be accomplished by the stockholder or the stockholder's authorized agent signing the writing or causing the stockholder's signature to be affixed to the writing by any reasonable means, including facsimile signature. A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization by a telegram, cablegram, datagram, electronic mail or any other electronic or telephonic means to the person authorized to act as proxy or to any other person authorized to receive the proxy authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. Unless a proxy provides otherwise, it is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for so long as it is coupled with an interest. The -6- 7 interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities. SECTION 1.08. LIST OF STOCKHOLDERS. At each meeting of stockholders, a full, true and complete list of all stockholders entitled to vote at such meeting, showing the number and class of shares held by each and certified by the transfer agent for such class or by the Secretary, shall be furnished by the Secretary. SECTION 1.09. CONDUCT OF VOTING. At all meetings of stockholders, unless the voting is conducted by inspectors, the proxies and ballots shall be received, and all questions touching the qualification of voters and the validity of proxies, the acceptance or rejection of votes and procedures for the conduct of business not otherwise specified by these By-Laws, the Charter or law, shall be decided or determined by the chairman of the meeting. If demanded by stockholders, present in person or by proxy, entitled to cast 10% in number of votes entitled to be cast, or if ordered by the chairman of the meeting, the vote upon any election or question shall be taken by ballot. Before any meeting of the stockholders, the Board of Directors may appoint persons to act as inspectors of election at the meeting and any adjournment thereof. If no inspectors of election are so appointed, the chairman of the meeting may appoint inspectors of election at the meeting. The number of inspectors shall be either one or three. If inspectors are appointed at a meeting on the request of stockholders, the holders of a majority of shares present in person or by proxy shall determine whether one or three inspectors are to be appointed. No candidate for election as a director at a meeting shall serve as an inspector thereat. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and upon the request of any stockholder shall, appoint a person to fill that vacancy. The inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; receive votes, ballots or consents; hear and determine all challenges and questions in any way arising in connection with the right to vote; count and tabulate all votes or consents; determine when polls shall close; determine the result; and do any other acts that may be proper to conduct the election or vote with fairness to all stockholders. Unless so demanded or ordered, no vote need be by ballot and voting need not be conducted by inspectors. SECTION 1.10. MEETING BY CONFERENCE TELEPHONE. Stockholders may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at a meeting. ARTICLE II. BOARD OF DIRECTORS SECTION 2.01. FUNCTION OF DIRECTORS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. All powers of the Corporation may be exercised by or under authority of the Board of Directors, except as conferred on or reserved to the stockholders by statute or by the Charter or By-Laws. -7- 8 SECTION 2.02. QUALIFICATION AND NUMBER OF DIRECTORS. Each director shall be a natural person at least 18 years of age. The Corporation shall have at least three directors. The Corporation shall have the number of directors provided in the Charter until changed as herein provided. A majority of the entire Board of Directors may alter the number of directors set by the Charter to not exceeding 9 (plus such additional number as may needed to satisfy the right of the holders of any class of stock of the Corporation to demand nomination of a director) nor less than the minimum number then permitted herein, but the action may not affect the tenure of office of any director. SECTION 2.03. ELECTION AND TENURE OF DIRECTORS. Subject to the rights of the holders of any class of stock separately entitled to elect one or more directors, at each annual meeting, the stockholders shall elect directors to hold office until the next annual meeting and until their successors are elected and qualify. SECTION 2.04. REMOVAL OF DIRECTOR. Any or all of the directors may be removed, with or without cause by the affirmative vote of a majority of all the votes entitled to be cast for the election of directors.(1) SECTION 2.05. VACANCY ON BOARD OF DIRECTORS. Subject to the rights of the holders of any class of stock separately entitled to elect one or more directors, the stockholders may elect a successor to fill a vacancy on the Board of Directors which results from the removal of a director. A director elected by the stockholders to fill a vacancy which results from the removal of a director serves for the balance of the term of the removed director. Subject to the rights of the holders of any class of stock separately entitled to elect one or more directors, a majority of the remaining directors, whether or not sufficient to constitute a quorum, may fill a vacancy on the Board of Directors which results from any cause except an increase in the number of directors, and a majority of the entire Board of Directors may fill a vacancy which results from an increase in the number of directors. A director elected by the Board of Directors to fill a vacancy serves until the next annual meeting of stockholders and until his or her successor is elected and qualifies. SECTION 2.06. REGULAR MEETINGS. After each meeting of stockholders at which directors shall have been elected, the Board of Directors shall meet as soon thereafter as practicable for the purpose of organization and the transaction of other business. In the event that no other time and place are specified by resolution of the Board of Directors or announced by the President or the Chairman of the Board at such stockholders meeting, the Board of Directors shall meet immediately following the close of, and at the place of, such stockholders meeting. Any other regular meeting of the Board of Directors shall be held on such date and time and at such place as may be designated from time to time by the Board of Directors. No notice of such - ------------ 1 Under Article VI, Section 6 of the Charter, this section of the By-Laws may not be amended without the approval of 2/3 of the stockholders. -8- 9 meeting following a stockholders meeting or any other regular meeting shall be necessary if held as hereinabove provided. SECTION 2.07. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President or by a majority of the Board of Directors by vote at a meeting, or in writing with or without a meeting. A special meeting of the Board of Directors shall be held on such date and at any place as may be designated from time to time by the Board of Directors. In the absence of designation such meeting shall be held at such place as may be designated in the call. SECTION 2.08. NOTICE OF MEETING. Except as provided in Section 2.06, the Secretary shall give notice to each director of each regular and special meeting of the Board of Directors. The notice shall state the time and place of the meeting. Notice is given to a director when it is delivered personally to him or her, left at his or her residence or usual place of business, or sent by telegraph, facsimile transmission or telephone, at least 24 hours before the time of the meeting or, in the alternative by mail to his or her address as it shall appear on the records of the Corporation, at least 72 hours before the time of the meeting. Unless these By-Laws or a resolution of the Board of Directors provides otherwise, the notice need not state the business to be transacted at or the purposes of any regular or special meeting of the Board of Directors. No notice of any meeting of the Board of Directors need be given to any director who attends except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened, or to any director who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. Any meeting of the Board of Directors, regular or special, may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement. SECTION 2.09. QUORUM; ACTION BY DIRECTORS. A majority of the entire Board of Directors shall constitute a quorum for the transaction of business. In the absence of a quorum, the directors present by majority vote and without notice other than by announcement may adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Unless statute or the Charter or By-Laws requires a greater proportion, the action of a majority of the directors present at a meeting at which a quorum is present is action of the Board of Directors. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting, if a unanimous written consent which sets forth the action is signed by each member of the Board of Directors and filed with the minutes of proceedings of the Board of Directors. SECTION 2.10. MEETING BY CONFERENCE TELEPHONE. Members of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at a meeting. -9- 10 SECTION 2.11. COMPENSATION. By resolution of the Board of Directors a fixed sum and expenses, if any, for attendance at each regular or special meeting of the Board of Directors or of committees thereof, and other compensation for their services as such or on committees of the Board of Directors, may be paid to directors. Directors who are full-time employees of the Corporation need not be paid for attendance at meetings of the Board of Directors or committees thereof for which fees are paid to other directors. A director who serves the Corporation in any other capacity also may receive compensation for such other services, pursuant to a resolution of the directors. SECTION 2.12. RESIGNATION. Any director may resign at any time by sending a written notice of such resignation to the home office of the Corporation addressed to the Chairman of the Board or the President. Unless otherwise specified therein such resignation shall take effect upon receipt thereof by the Chairman of the Board or the President. SECTION 2.13. PRESUMPTION OF ASSENT. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his or her dissent or abstention shall be entered in the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who votes in favor of such action or fails to make his dissent known at the meeting. ARTICLE III. COMMITTEES SECTION 3.01. COMMITTEES. The Board of Directors may appoint from among its members an Executive Committee and other committees composed of one or more directors and delegate to these committees any of the powers of the Board of Directors, except the power to authorize dividends on stock, elect directors, issue stock other than as provided in the next sentence, recommend to the stockholders any action which requires stockholder approval, amend these By-Laws, or approve any merger or share exchange which does not require stockholder approval. If the Board of Directors has given general authorization for the issuance of stock providing for or establishing a method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including all terms and conditions required or permitted to be established or authorized by the Board of Directors. SECTION 3.02. COMMITTEE PROCEDURE. Each committee may fix rules of procedure for its business. A majority of the members of a committee shall constitute a quorum for the transaction of business and the act of a majority of those present at a meeting at which a quorum -10- 11 is present shall be the act of the committee. The members of a committee present at any meeting, whether or not they constitute a quorum, may appoint a director to act in the place of an absent member. Any action required or permitted to be taken at a meeting of a committee may be taken without a meeting, if an unanimous written consent which sets forth the action is signed by each member of the committee and filed with the minutes of the committee. The members of a committee may conduct any meeting thereof by conference telephone in accordance with the provisions of Section 2.10. ARTICLE IV. OFFICERS SECTION 4.01. EXECUTIVE AND OTHER OFFICERS. The Corporation shall have a President, a Secretary, and a Treasurer. It may also have a Chairman of the Board and a Vice Chairman of the Board. The Board of Directors shall designate who shall serve as chief executive officer, who shall have general supervision of the business and affairs of the Corporation, and may designate a chief operating officer, who shall have supervision of the operations of the Corporation. In the absence of any designation the Chairman of the Board, if there be one, shall serve as chief executive officer, and the President shall serve as chief operating officer. In the absence of the Chairman of the Board, or if there be none, the President shall be the chief executive officer. The same person may hold both offices. The Corporation may also have one or more Vice-Presidents, assistant officers, and subordinate officers as may be established by the Board of Directors. A person may hold more than one office in the Corporation except that no person may serve concurrently as both President and Vice-President of the Corporation. The Chairman of the Board and the Vice Chairman of the Board shall be directors, and the other officers may be directors. SECTION 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one be elected, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. Unless otherwise specified by the Board of Directors, he or she shall be the chief executive officer of the Corporation. In general, he or she shall perform such duties as are customarily performed by the chief executive officer of a corporation, may perform any duties of the President and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors. SECTION 4.03. VICE CHAIRMAN OF THE BOARD. Unless otherwise provided by resolution of the Board of Directors, the Vice Chairman of the Board, in the absence of the Chairman of the Board, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present, and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors. SECTION 4.04. PRESIDENT. Unless otherwise specified by the Board of Directors, the President shall be the chief operating officer of the Corporation and perform the duties customarily performed by chief operating officers. He or she may execute, in the name of the Corporation, all authorized deeds, mortgages, bonds, contracts or other instruments, except in -11- 12 cases in which the signing and execution thereof shall have been expressly delegated to some other officer or agent of the Corporation. In general, he or she shall perform such other duties customarily performed by a president of a corporation and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors or the chief executive officer of the Corporation. SECTION 4.05. VICE-PRESIDENTS. The Vice-President or Vice-Presidents, at the request of the chief executive officer or the President, or in the President's absence or during his or her inability to act, shall perform the duties and exercise the functions of the President, and when so acting shall have the powers of the President. If there be more than one Vice-President, the Board of Directors may determine which one or more of the Vice-Presidents shall perform any of such duties or exercise any of such functions, or if such determination is not made by the Board of Directors, the chief executive officer, or the President may make such determination; otherwise any of the Vice-Presidents may perform any of such duties or exercise any of such functions. Each Vice-President shall perform such other duties and have such other powers, and have such additional descriptive designations in their titles (if any), as are from time to time assigned to them by the Board of Directors, the chief executive officer, or the President. SECTION 4.06. SECRETARY. The Secretary shall keep the minutes of the meetings of the stockholders, of the Board of Directors and of any committees, in books provided for the purpose; he or she shall see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; he or she shall be custodian of the records of the Corporation; he or she may witness any document on behalf of the Corporation, the execution of which is duly authorized, see that the corporate seal is affixed where such document is required or desired to be under its seal, and, when so affixed, may attest the same. In general, he or she shall perform such other duties customarily performed by a secretary of a corporation, and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors, the chief executive officer, or the President. SECTION 4.07. TREASURER. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors; he or she shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation. In general, he or she shall perform such other duties customarily performed by a treasurer of a corporation, and shall perform such other duties and have such other powers as are from time to time assigned to him or her by the Board of Directors, the chief executive officer, or the President. SECTION 4.08. ASSISTANT AND SUBORDINATE OFFICERS. The assistant and subordinate officers of the Corporation are all officers below the office of Vice-President, Secretary, or Treasurer. The assistant or subordinate officers shall have such duties as are from time to time assigned to them by the Board of Directors, the chief executive officer, or the President. -12- 13 SECTION 4.09. ELECTION, TENURE AND REMOVAL OF OFFICERS. The Board of Directors shall elect the officers of the Corporation. The Board of Directors may from time to time authorize any committee or officer to appoint assistant and subordinate officers. Election or appointment of an officer, employee or agent shall not of itself create contract rights. All officers shall be appointed to hold their offices, respectively, during the pleasure of the Board of Directors. The Board of Directors (or, as to any assistant or subordinate officer, any committee or officer authorized by the Board of Directors) may remove an officer at any time. The removal of an officer does not prejudice any of his or her contract rights. The Board of Directors (or, as to any assistant or subordinate officer, any committee or officer authorized by the Board of Directors) may fill a vacancy which occurs in any office for the unexpired portion of the term. SECTION 4.10. COMPENSATION. The Board of Directors shall have power to fix the salaries and other compensation and remuneration, of whatever kind, of all officers of the Corporation. No officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the Corporation. The Board of Directors may authorize any committee or officer, upon whom the power of appointing assistant and subordinate officers may have been conferred, to fix the salaries, compensation and remuneration of such assistant and subordinate officers. ARTICLE V. DIVISIONAL TITLES SECTION 5.01. CONFERRING DIVISIONAL TITLES. The Board of Directors may from time to time confer upon any employee of a division of the Corporation the title of President, Vice President, Treasurer or Controller of such division or any other title or titles deemed appropriate, or may authorize the Chairman of the Board or the President to do so. Any such titles so conferred may be discontinued and withdrawn at any time by the Board of Directors, or by the Chairman of the Board or the President if so authorized by the Board of Directors. Any employee of a division designated by such a divisional title shall have the powers and duties with respect to such division as shall be prescribed by the Board of Directors, the Chairman of the Board or the President. SECTION 5.02. EFFECT OF DIVISIONAL TITLES. The conferring of divisional titles shall not create an office of the Corporation under Article IV unless specifically designated as such by the Board of Directors; but any person who is an officer of the Corporation may also have a divisional title. ARTICLE VI. STOCK SECTION 6.01. CERTIFICATES FOR STOCK. Each stockholder is entitled to certificates which represent and certify the shares of stock he or she holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or -13- 14 other person to whom it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement of any restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, of the differences in the relative rights and preferences between the shares of each series of a preferred or special class in series which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of subsequent series of a preferred or special class of stock or (b) a statement which provides in substance that the Corporation will furnish a full statement of such information to any stockholder on request and without charge. Such request may be made to the Secretary or to its transfer agent. Except as provided in the Maryland Uniform Commercial Code - Investment Securities, the fact that a stock certificate does not contain or refer to a restriction on transferability that is adopted after the date of issuance does not mean that the restriction is invalid or unenforceable. It shall be in such form, not inconsistent with law or with the Charter, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairman of the Board, the President, or a Vice-President, and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A certificate may not be issued until the stock represented by it is fully paid. SECTION 6.02. TRANSFERS. The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock; and may appoint transfer agents and registrars thereof. The duties of transfer agent and registrar may be combined. SECTION 6.03. RECORD DATES OR CLOSING OF TRANSFER BOOKS. The Board of Directors may, and shall have the sole power to, set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to request a special meeting of stockholders, notice of a meeting of stockholders, vote at a meeting of stockholders, receive a dividend, or be allotted other rights. The record date may not be prior to the close of business on the day the record date is fixed nor, subject to Section 1.06, more than 90 days before the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than 20 days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten days before the date of the meeting. Any shares of the Corporation's own stock acquired by the Corporation between the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total number of outstanding shares entitled to be voted at the meeting. -14- 15 SECTION 6.04. STOCK LEDGER. The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock, or, if none, at the principal office in the State of Maryland or the principal executive offices of the Corporation. SECTION 6.05. CERTIFICATION OF BENEFICIAL OWNERS. The Board of Directors may adopt by resolution a procedure by which a stockholder of the Corporation may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may certify; the purpose for which the certification may be made; the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of a certification which complies with the procedure adopted by the Board of Directors in accordance with this Section, the person specified in the certification is, for the purpose set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification. SECTION 6.06. LOST STOCK CERTIFICATES. The Board of Directors may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation. In their discretion, the Board of Directors or such officer or officers may require the owner of the certificate to give bond, with sufficient surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate save upon the order of some court having jurisdiction in the premises. SECTION 6.07. FRACTIONAL SHARE INTERESTS OR SCRIP. The Corporation may, but shall not be obliged to, issue fractional shares of stock, eliminate a fractional interest by rounding off to a full share of stock, arrange for the disposition of a fractional interest by the person entitled to it, pay cash for the fair value of a fractional share of stock determined as of the time when the person entitled to receive it is determined, or issue scrip or other evidence of ownership aggregating a full share for a certificate which represents the share; but such scrip or other evidence of ownership shall not, unless otherwise provided, entitle the holder to exercise any voting rights, to receive dividends thereon or to participate in any of the assets of the Corporation in the event of liquidation. The Board of Directors may impose any reasonable condition on the issuance of scrip or other evidence of ownership, and may cause such scrip or other evidence of ownership to be issued subject to the condition that it shall become void if not exchanged for a certificate representing a full share of stock before a specified date or subject to the condition that -15- 16 the shares for which such scrip or other evidence of indebtedness is exchangeable may be sold by the Corporation and the proceeds thereof distributed to the holders of such scrip or other evidence of indebtedness, or subject to a provision of forfeiture of such proceeds to the Corporation if not claimed within a period of not less than three years from the date the scrip or other evidence of ownership was originally issued. ARTICLE VII. FINANCE SECTION 7.01. CHECKS, DRAFTS, ETC. All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall, unless otherwise provided by resolution of the Board of Directors, be signed by the Chairman of the Board, the President, a Vice-President, an Assistant Vice-President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary. SECTION 7.02. ANNUAL STATEMENT OF AFFAIRS. The President, chief accounting officer or such other executive officer designated by the Board of Directors by resolution shall prepare annually a full and correct statement of the affairs of the Corporation, to include a balance sheet and a financial statement of operations for the preceding fiscal year. The statement of affairs shall be submitted at the annual meeting of the stockholders and, within 20 days after the meeting, placed on file at the Corporation's principal office. SECTION 7.03. FISCAL YEAR. The fiscal year of the Corporation shall be the 12 calendar months period ending December 31 in each year, unless otherwise provided by the Board of Directors. SECTION 7.04. DIVIDENDS. If declared by the Board of Directors at any meeting thereof, the Corporation may pay dividends on its shares in cash, property, or in shares of the capital stock of the Corporation, unless such dividend is contrary to law or to a restriction contained in the Charter. SECTION 7.05. BONDS. The Board of Directors may require any officer, agent or employee of the Corporation to give a bond to the Corporation, conditioned upon the faithful discharge of his or her duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. ARTICLE VIII. INDEMNIFICATION SECTION 8.01. PROCEDURE. Any indemnification, or payment of expenses in advance of the final disposition of any proceeding, shall be made promptly, and in any event within 60 days, upon the written request of the director or officer entitled to seek indemnification (the "Indemnified Party"). The right to indemnification and advances hereunder shall be enforceable by the Indemnified Party in any court of competent jurisdiction, if (i) the -16- 17 Corporation denies such request, in whole or in part, or (ii) no disposition thereof is made within 60 days. The Indemnified Party's costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be reimbursed by the Corporation. It shall be a defense to any action for advance for expenses that (a) a determination has been made that the facts then known to those making the determination would preclude indemnification or (b) the Corporation has not received both (i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation by the Indemnified Party of such Indemnified Party's good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. SECTION 8.02. EXCLUSIVITY, ETC. The indemnification and advance of expenses provided by the Charter and these By-Laws shall not be deemed exclusive of any other rights to which a person seeking indemnification or advance of expenses may be entitled under any law (common or statutory), or any agreement, vote of stockholders or disinterested directors or other provision that is consistent with law, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, shall continue in respect of all events occurring while a person was a director or officer after such person has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. The Corporation shall not be liable for any payment under this By-Law in connection with a claim made by a director or officer to the extent such director or officer has otherwise actually received payment under insurance policy, agreement, vote or otherwise, of the amounts otherwise indemnifiable hereunder. All rights to indemnification and advance of expenses under the Charter of the Corporation and hereunder shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this By-Law is in effect. Nothing herein shall prevent the amendment of this By-Law, provided that no such amendment shall diminish the rights of any person hereunder with respect to events occurring or claims made before its adoption or as to claims made after its adoption in respect of events occurring before its adoption. Any repeal or modification of this By-Law shall not in any way diminish any rights to indemnification or advance of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this By-Law or any provision hereof is in force. SECTION 8.03. SEVERABILITY; DEFINITIONS. The invalidity or unenforceability of any provision of this Article VIII shall not affect the validity or enforceability of any other provision hereof. The phrase "this By-Law" in this Article VIII means this Article VIII in its entirety. ARTICLE IX. SUNDRY PROVISIONS SECTION 9.01. BOOKS AND RECORDS. The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any executive or other committee when exercising -17- 18 any of the powers of the Board of Directors. The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of these By-Laws shall be kept at the principal office of the Corporation. SECTION 9.02. CORPORATE SEAL. The Board of Directors shall provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place the word "(seal)" adjacent to the signature of the person authorized to sign the document on behalf of the Corporation. SECTION 9.03. VOTING STOCK IN OTHER CORPORATIONS. Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chairman of the Board, the President, a Vice-President, or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution. SECTION 9.04. MAIL. Any notice or other document which is required by these By-Laws to be mailed shall be deposited in the United States mails, postage prepaid. SECTION 9.05. CONTRACTS AND AGREEMENTS. To the extent permitted by applicable law, and except as otherwise prescribed by the Charter or these By-Laws, the Board of Directors may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer. SECTION 9.06. RESIDENT AGENT; PRINCIPAL OFFICE. The initial name and address of the resident agent of the Corporation and the initial address of the principal office of the Corporation in the State of Maryland shall be as set forth in the Charter. The Corporation may change its resident agent or principal office from time to time by filing with the Maryland State Department of Assessments and Taxation (the "Department") a resolution of the Board of Directors authorizing the change, and the Corporation may change from time to time the address of its resident agent by filing with the Department a statement of the change executed by the President or any Vice-President. SECTION 9.07. AMENDMENTS. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors, when such -18- 19 power is conferred upon the Board of Directors by the Charter, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal By-Laws is conferred upon the Board of Directors by the Charter it shall not divest or limit the power of the stockholders to adopt, amend or repeal By-Laws.(2) SECTION 9.08. RELIANCE. Each director of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion report or statement, including financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person as to a matter which the director reasonably believes to be within the person's professional or expert competence or by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director believes the committee to merit confidence. - ------------- (2) Under Article VI, Section 6 of the Charter, this section of the By-Laws may not be amended without the approval of 2/3 of the stockholders. -19- EX-10.9 4 8TH AMENDMENT TO 3RD AMENDED/RESTATED AGREEMENT 1 EXHIBIT 10.9 EIGHTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P. This EIGHTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of December 14, 1999 (this "Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the "General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware limited partnership (the "Partnership"), pursuant to the authority conferred on the General Partner by Section 7.3.C(7) of the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994, as amended and/or supplemented from time to time (the "Agreement"). Capitalized terms used, but not otherwise defined herein, shall have the respective meanings ascribed thereto in the Agreement. WHEREAS, pursuant to Section 4.2.A of the Agreement, the General Partner is authorized to determine the designations, preferences and relative, participating, optional or other special rights, powers and duties of Partnership Preferred Units. NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: (1) The Agreement is hereby amended by the addition of a new exhibit, entitled "Exhibit T," in the form attached hereto, which shall be attached to and made a part of the Agreement. (2) Except as specifically amended hereby, the terms, covenants, provisions and conditions of the Agreement shall remain unmodified and continue in full force and effect and, except as amended hereby, all of the terms, covenants, provisions and conditions of the Agreement are hereby ratified and confirmed in all respects. IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above. THE GENERAL PARTNER: AIMCO-GP, INC. By: /s/ PETER KOMPANIEZ --------------------------------- Name: Title: 2 EXHIBIT T PARTNERSHIP UNIT DESIGNATION OF THE CLASS FOUR PARTNERSHIP PREFERRED UNITS OF AIMCO PROPERTIES, L.P. 1. NUMBER OF UNITS AND DESIGNATION. A class of Partnership Preferred Units is hereby designated as "Class Four Partnership Preferred Units," and the number of Partnership Preferred Units constituting such class shall be 5,100,000. 2. DEFINITIONS. Capitalized terms used and not otherwise defined herein shall have the meanings assigned thereto in the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P. as amended, supplemented or restated from time to time (the "Agreement"), as modified by this Partnership Unit Designation and the defined terms used herein. For purposes of this Partnership Unit Designation, the following terms shall have the respective meanings ascribed below: "Adjustment Factor" means 1.0; provided, however, that in the event that: (i) the Previous General Partner (a) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares in REIT Shares, (b) splits or subdivides its outstanding REIT Shares or (c) effects a reverse stock split or otherwise combines its outstanding REIT Shares into a smaller number of REIT Shares, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction, (i) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such time) and (ii) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination; (ii) the Previous General Partner distributes any rights, options or warrants to all holders of its REIT Shares to subscribe for or to purchase or to otherwise acquire REIT Shares (or other securities or rights convertible into, exchangeable for or exercisable for REIT Shares) at a price per share less than the Value of a REIT Share on the record date for such distribution (each a "Distributed Right"), then the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction (a) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date plus the maximum number of REIT Shares purchasable under such Distributed Rights and (b) the denominator of which shall be the number of REIT Shares issued and outstanding on the record date plus a fraction (1) the numerator of which is the maximum number of REIT Shares purchasable under such Distributed Rights times the minimum purchase price per REIT Share under such Distributed Rights and (2) the denominator of which is the Value of a REIT Share as of the record date; provided, however, that, if any such Distributed Rights expire or become no longer exercisable, then the Adjustment Factor shall be adjusted, effective retroactive to the date of distribution of the Distributed Rights, to reflect a reduced maximum number of REIT Shares or any change in the minimum purchase price for the purposes of the above fraction; and T-1 3 (iii) the Previous General Partner shall, by dividend or otherwise, distribute to all holders of its REIT Shares evidences of its indebtedness or assets (including securities, but excluding any dividend or distribution referred to in subsection (i) above), which evidences of indebtedness or assets relate to assets not received by the Previous General Partner, the General Partner and/or the Special Limited Partner pursuant to a pro rata distribution by the Partnership, then the Adjustment Factor shall be adjusted to equal the amount determined by multiplying the Adjustment Factor in effect immediately prior to the close of business on the date fixed for determination of shareholders entitled to receive such distribution by a fraction (i) the numerator shall be such Value of a REIT Share on the date fixed for such determination and (ii) the denominator shall be the Value of a REIT Share on the dates fixed for such determination less the then fair market value (as determined by the General Partner, whose determination shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed applicable to one REIT Share. Any adjustments to the Adjustment Factor shall become effective immediately after the effective date of such event, retroactive to the record date, if any, for such event. "Assignee" shall mean a Person to whom one or more Preferred Units have been Transferred in a manner permitted under the Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5 of the Agreement. "Cash Amount" shall mean, with respect to any Tendered Units, cash in an amount equal to the sum of (x) the product of (i) the number of Tendered Units, multiplied by (ii) the Liquidation Preference for a Preferred Unit, plus, (y) if positive, the product of (i) the number of Tendered Units, multiplied by (ii) the Liquidation Preference for a Preferred Unit (excluding any accumulated, accrued or unpaid distributions), multiplied by (iii) the quotient obtained by dividing (a) the amount by which the Market Value of a Common Share, calculated as of the date of receipt by the General Partner of a Notice of Redemption for such Tendered Units, exceeds $45, by (b) $45. "Class Four Partnership Preferred Unit" or "Preferred Unit" shall mean a Partnership Preferred Unit with the designations, preferences and relative, participating, optional or other special rights, powers and duties as are set forth in this Partnership Unit Designation. "Common Shares" shall mean the shares of Class A Common Stock of the Previous General Partner. "Common Shares Amount" shall mean, with respect to any Tendered Units, a number of Common Shares equal to the quotient obtained by dividing (i) the Cash Amount for such Tendered Units, by (ii) the Market Value of a Common Share calculated as of the date of receipt by the General Partner of a Notice of Redemption for such Tendered Units. "Conversion Price" shall mean, as of any date, the quotient obtained by dividing $45 by the Adjustment Factor in effect as of such date. "Current Market Price" of a share of any Equity Stock shall mean the closing price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, on such day, in either case as reported on the principal national securities exchange on which such securities are listed or admitted for trading, or, if such security is not quoted on any national securities exchange, on the NASDAQ National Market or if such security is not quoted on the NASDAQ National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for each security on such T-2 4 day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any New York Stock Exchange or National Association of Securities Dealers, Inc. member firm regularly making a market in such security selected for such purpose by the Chief Executive Officer of the General Partner or the Board of Directors of the General Partner or if any class or series of securities are not publicly traded, the fair value of the shares of such class as determined reasonably and in good faith by the Board of Directors of the General Partner. "Cut-Off Date" shall mean the fifth (5th) Business Day after the General Partner's receipt of a Notice of Redemption. "Declination" shall have the meaning set forth in Section 6(f) of this Partnership Unit Designation. "Distribution Payment Date" shall have the meaning set forth in Section 4(a) of this Partnership Unit Designation. "Equity Stock" shall mean one or more shares of any class of capital stock of the Previous General Partner. Internal Rate of Return" shall mean, as of any determination date, the effective discount rate under which the present value of the Inflows associated with an outstanding Class Four Partnership Preferred Unit equals $25. For purposes of calculation of Internal Rate of Return, "Inflows" shall mean (a) all distributions (whether paid in cash or property) that have been received in respect of such unit, (b) the cash payment in respect of distributions payable on such unit pursuant to Section 7(b)(iii) hereof if such unit were converted to Partnership Common Units on the determination date, and (c) the amount by which the Market Value of a REIT Share, as of the determination date, exceeds the Conversion Price then in effect. For purposes of calculating the amounts of any Inflows, all distributions received in property shall be deemed to have a value equal to the Market Value of such distributions as of the date such distribution is received. Neither the fact of any transfer of any units of the Class Four Partnership Preferred Units nor the amount of any consideration received by the holder thereof or paid by any successor holder in connection with any transfer shall affect the calculation of Internal Rate of Return. "Junior Partnership Units" shall have the meaning set forth in Section 3(c) of this Partnership Unit Designation. "Liquidation Preference" shall have the meaning set forth in Section 5(a) of this Partnership Unit Designation. "Majority in Interest of the Limited Partners" means Limited Partners (other than (i) the Special Limited Partner and (ii) any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by the (a) General Partner or (b) any REIT as to which the General Partner is a "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))) holding more than fifty percent (50%) of the outstanding Partnership Common Units, Class I High Performance Partnership Units, Class Four Partnership Preferred Units and all other outstanding classes of Partnership Units held by all Limited Partners (other than (i) the Special Limited Partner and (ii) any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by (a) the General Partner or (b) any REIT as to which the General Partner is a "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))). T-3 5 "Market Value" shall mean, as of any calculation date and with respect to any share of stock, the average of the daily market prices for ten (10) consecutive trading days (or twenty (20) consecutive Trading Days for purposes of calculating "Internal Rate of Return") immediately preceding the calculation date. The market price for any such trading day shall be: (i) if the shares are listed or admitted to trading on any securities exchange or The Nasdaq Stock Market's National Market System, the closing price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices on such day, in either case as reported in the principal consolidated transaction reporting system, (ii) if the shares are not listed or admitted to trading on any securities exchange or The Nasdaq Stock Market's National Market System, the last reported sale price on such day or, if no sale takes place on such day, the average of the closing bid and asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or (iii) if the shares are not listed or admitted to trading on any securities exchange or The Nasdaq Stock Market's National Market System and no such last reported sale price or closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more than ten (10) days prior to the date in question) for which prices have been so reported; provided, however, that, if there are no bid and asked prices reported during the ten (10) days prior to the date in question, the Market Value of the shares shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate; provided, further, that the General Partner is authorized to adjust the market price for any trading day as may be necessary, in its judgment, to reflect an event that occurs at any time after the commencement of such ten day period that would unfairly distort the Market Value, including, without limitation, a stock dividend, split, subdivision, reverse stock split, or share combination. "Notice of Redemption" shall mean a Notice of Redemption in the form of Annex I to this Partnership Unit Designation. "Parity Partnership Units" shall have the meaning set forth in Section 3(b) of this Partnership Unit Designation. "Partnership" shall mean AIMCO Properties, L.P., a Delaware limited partnership. "Primary Offering Notice" shall have the meaning set forth in Section 6(h)(4) of this Partnership Unit Designation. "Public Offering Funding" shall have the meaning set forth in Section 6(f)(2) of this Partnership Unit Designation. "Redemption" shall have the meaning set forth in Section 6(b) of this Partnership Unit Designation. T-4 6 "Registrable Shares" shall have the meaning set forth in Section 6(f)(2) of this Partnership Unit Designation. "Senior Partnership Units" shall have the meaning set forth in Section 3(a) of this Partnership Unit Designation. "Single Funding Notice" shall have the meaning set forth in Section 6(f)(3) of this Partnership Unit Designation. "Specified Redemption Date" shall mean, with respect to any Redemption, the later of (a) the tenth (10th) Business Day after the receipt by the General Partner of a Notice of Redemption or (b) in the case of a Declination followed by a Public Offering Funding, the Business Day next following the date of the closing of the Public Offering Funding; provided, however, that the Specified Redemption Date, as well as the closing of a Redemption, or an acquisition of Tendered Units by the Previous General Partner pursuant to Section 5 hereof, on any Specified Redemption Date, may be deferred, in the General Partner's sole and absolute discretion, for such time (but in any event not more than one hundred fifty (150) days in the aggregate) as may reasonably be required to effect, as applicable, (i) a Public Offering Funding or other necessary funding arrangements, (ii) compliance with the Securities Act or other law (including, but not limited to, (a) state "blue sky" or other securities laws and (b) the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and (iii) satisfaction or waiver of other commercially reasonable and customary closing conditions and requirements for a transaction of such nature. "Tendering Party" shall have the meaning set forth in Section 6(b) hereof. "Tendered Units" shall have the meaning set forth in Section 6(b) hereof. "Trading Day" shall mean, when used with respect to the Closing Price of a share of any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer Agent" shall mean such transfer agent as may be designated by the Partnership or its designee as the transfer agent for the Class Four Partnership Preferred Units; provided, that if the Partnership has not designated a transfer agent then the Partnership shall act as the transfer agent for the Class Four Partnership Preferred Units. 3. RANKING. Any class or series of Partnership Units of the Partnership shall be deemed to rank: (a) prior or senior to the Class Four Partnership Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of distributions and of amounts T-5 7 distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class Four Partnership Preferred Units (the Partnership Units referred to in this paragraph being hereinafter referred to, collectively, as "Senior Partnership Units"); (b) on a parity with the Class Four Partnership Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the distribution rates, distribution payment dates or redemption or liquidation prices per unit or other denomination thereof be different from those of the Class Four Partnership Preferred Units if (i) such class or series of Partnership Units shall be Class B Partnership Preferred Units, Class C Partnership Preferred Units, Class D Partnership Preferred Units, Class G Partnership Preferred Units, Class H Partnership Preferred Units, Class I Partnership Preferred Units, Class J Partnership Preferred Units, Class K Partnership Preferred Units, Class L Partnership Preferred Units, Class One Partnership Preferred Units or Class Two Partnership Preferred Units or (ii) the holders of such class or series of Partnership Units and the Class Four Partnership Preferred Units shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid distributions per unit or other denomination or liquidation preferences, without preference or priority one over the other (the Partnership Units referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Partnership Units"); and (c) junior to the Class Four Partnership Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such class or series of Partnership Units shall be Partnership Common Units or Class I High Performance Partnership Units or (ii) the holders of Class Four Partnership Preferred Units shall be entitled to receipt of distributions or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of such class or series of Partnership Units (the Partnership Units referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Partnership Units"). 4. QUARTERLY CASH DISTRIBUTIONS. (a) Holders of Preferred Units will be entitled to receive, when and as declared by the General Partner, quarterly cash distributions at the rate of $0.50 per Preferred Unit. Any such distributions will be cumulative from the date of original issue, whether or not in any distribution period or periods such distributions have been declared, and shall be payable quarterly on February 15, May 15, August 15 and November 15 of each year (or, if not a Business Day, the next succeeding Business Day) (each a "Distribution Payment Date"), commencing on the first such date occurring after the date of original issue. If the Preferred Units are issued on any day other than a Distribution Payment Date, the first distribution payable on such Preferred Units will be prorated for the portion of the quarterly period that such Preferred Units are outstanding on the basis of twelve 30-day months and a 360-day year. Distributions will be payable in arrears to holders of record as they appear on the records of the Partnership at the close of business on February 1, May 1, August 1 or November 1, as the case may be, immediately preceding each Distribution Payment Date. Holders of Preferred Units will not be entitled to receive any distributions in excess of cumulative distributions on the Preferred Units. No interest, or sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on the Preferred Units that may be in arrears. Holders of any Preferred Units that are issued after the date of original issuance will be entitled to receive the same distributions as holders of any Preferred Units issued on the date of original issuance. T-6 8 (b) When distributions are not paid in full upon the Preferred Units or any Parity Partnership Units, or a sum sufficient for such payment is not set apart, all distributions declared upon the Preferred Units and any Parity Partnership Units shall be declared ratably in proportion to the respective amounts of distributions accumulated and unpaid on the Preferred Units and accumulated and unpaid on such Parity Partnership Units. Except as set forth in the preceding sentence, unless distributions on the Preferred Units equal to the full amount of accumulated and unpaid distributions have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment, for all past distribution periods, no distributions shall be declared or paid or set apart for payment by the Partnership with respect to any Parity Partnership Units. (c) Unless full cumulative distributions (including all accumulated, accrued and unpaid distributions) on the Preferred Units have been declared and paid, or declared and set apart for payment, for all past distribution periods, no distributions (other than distributions paid in Junior Partnership Units or options, warrants or rights to subscribe for or purchase Junior Partnership Units) may be declared or paid or set apart for payment by the Partnership and no other distribution of cash or other property may be declared or made, directly or indirectly, by the Partnership with respect to any Junior Partnership Units, nor shall any Junior Partnership Units be redeemed, purchased or otherwise acquired (except for a redemption, purchase or other acquisition of Partnership Common Units made for purposes of an employee incentive or benefit plan of the Partnership or any affiliate thereof, including, without limitation, the Previous General Partner and its affiliates) for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Junior Partnership Units), directly or indirectly, by the Partnership (except by conversion into or exchange for Junior Partnership Units, or options, warrants or rights to subscribe for or purchase Junior Partnership Units), nor shall any other cash or other property be paid or distributed to or for the benefit of holders of Junior Partnership Units. (d) Notwithstanding the foregoing provisions of this Section 4, the Partnership shall not be prohibited from (i) declaring or paying or setting apart for payment any distribution on any Parity Partnership Units or (ii) redeeming, purchasing or otherwise acquiring any Parity Partnership Units, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary to maintain the Previous General Partner's qualification as a REIT. 5. LIQUIDATION PREFERENCE. (a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Partnership, before any allocation of income or gain by the Partnership shall be made to or set apart for the holders of any Junior Partnership Units, to the extent possible, the holders of Preferred Units shall be entitled to be allocated income and gain to effectively enable them to receive a liquidation preference (the "Liquidation Preference") of (i) $25 per Preferred Unit, plus (ii) accumulated, accrued and unpaid distributions (whether or not earned or declared) to the date of final distribution to such holders; but such holders shall not be entitled to any further allocation of income or gain. Until all holders of the Preferred Units have been paid the Liquidation Preference in full, no allocation of income or gain will be made to any holder of Junior Units upon the liquidation, dissolution or winding up of the Partnership. (b) If, upon any liquidation, dissolution or winding up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of Preferred Partnership Units shall be insufficient to pay in full the Liquidation Preference and liquidating payments on any Parity Partnership Units, then following certain allocations made by the Partnership, such assets, or the T-7 9 proceeds thereof, shall be distributed among the holders of Preferred Units and any such Parity Partnership Units ratably in the same proportion as the respective amounts that would be payable on such Preferred Units and any such Parity Partnership Units if all amounts payable thereon were paid in full. (c) A voluntary or involuntary liquidation, dissolution or winding up of the Partnership will not include a consolidation or merger of the Partnership with one or more partnerships, corporations or other entities, or a sale or transfer of all or substantially all of the Partnership's assets. (d) Upon any liquidation, dissolution or winding up of the Partnership, after all allocations shall have been made in full to the holders of Preferred Units and any Parity Partnership Units to enable them to receive their respective liquidation preferences, any Junior Partnership Units shall be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Preferred Units and any Parity Partnership Units shall not be entitled to share therein. 6. REDEMPTION. (a) Except as set forth in Section 6(l) hereof, the Preferred Units may not be redeemed at the option of the Partnership, and will not be required to be redeemed or repurchased by the Partnership or the Previous General Partner except if a holder of a Preferred Unit effects a Redemption, as provided for in Section 6(b) hereof. The Partnership or the Previous General Partner may purchase Preferred Units from time to time in the open market, by tender or exchange offer, in privately negotiated purchases or otherwise. (b) On or after the first (1st) anniversary of becoming a holder of Preferred Units, a Qualifying Party shall have the right (subject to the terms and conditions set forth herein) to require the Partnership to redeem all or a portion of the Preferred Units held by such Qualifying Party (any Preferred Units tendered for Redemption being hereafter "Tendered Units") in exchange (a "Redemption") for Common Shares issuable on, or the Cash Amount payable on, the Specified Redemption Date, as determined by the Partnership in its sole discretion. Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the General Partner by the Qualifying Party when exercising the Redemption right (the "Tendering Party"). (c) If the Partnership elects to redeem Tendered Units for Common Shares rather than cash, then the Partnership shall direct the Previous General Partner to issue and deliver such Common Shares to the Tendering Party pursuant to the terms set forth in this Section 6, in which case, (i) the Previous General Partner, acting as a distinct legal entity, shall assume directly the obligation with respect thereto and shall satisfy the Tendering Party's exercise of its Redemption right, and (ii) such transaction shall be treated, for federal income tax purposes, as a transfer by the Tendering Party of such Tendered Units to the Previous General Partner in exchange for Common Shares. In making such election to cause the Previous General Partner to acquire Tendered Units, the Partnership shall act in a fair, equitable and reasonable manner that neither prefers one group or class of Tendering Parties over another nor discriminates against a group or class of Tendering Parties. If the Partnership elects to redeem any number of Tendered Units for Common Shares, rather than cash, on the Specified Redemption Date, the Tendering Party shall sell such number of the Tendered Units to the Previous General Partner in exchange for a number of Common Shares equal to the Common Shares Amount for such number of Tendered Units. The Tendering Party shall submit (i) such information, certification or affidavit as the Previous General Partner may reasonably require in connection with the application of the Ownership Limit and other restrictions and limitations of the Charter to any such T-8 10 acquisition and (ii) such written representations, investment letters, legal opinions or other instruments necessary, in the Previous General Partner's view, to effect compliance with the Securities Act. The Common Shares shall be delivered by the Previous General Partner as duly authorized, validly issued, fully paid and non-assessable shares, free of any pledge, lien, encumbrance or restriction other than the Ownership Limit and other restrictions provided in the Charter, the Bylaws of the Previous General Partner, the Securities Act and relevant state securities or "blue sky" laws. Neither any Tendering Party whose Tendered Units are acquired by the Previous General Partner pursuant to this Section 6, any Partner, any Assignee nor any other interested Person shall have any right to require or cause the Previous General Partner or the General Partner to register, qualify or list any REIT Shares owned or held by such Person, whether or not such Common Shares are issued pursuant to this Section 6, with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange; provided, however, that this limitation shall not be in derogation of any registration or similar rights granted pursuant to any other written agreement between the Previous General Partner and any such Person. Notwithstanding any delay in such delivery, the Tendering Party shall be deemed the owner of such Common Shares for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise rights, as of the Specified Redemption Date. Common Shares issued upon an acquisition of the Tendered Units by the Previous General Partner pursuant to this Section 6 may contain such legends regarding restrictions under the Securities Act and applicable state securities laws as the Previous General Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws. (d) The Partnership shall have no obligation to effect any redemption unless and until a Tendering Party has given the Partnership a Notice of Redemption. Each Notice of Redemption shall be sent by hand delivery or by first class mail, postage prepaid, to AIMCO Properties, L.P., c/o AIMCO-GP, Inc., Colorado Center, Tower Two, 2000 South Colorado Boulevard, Suite 2-1000, Denver, Colorado 80222, Attention: Investor Relations, or to such other address as the Partnership shall specify in writing by delivery to the holders of the Preferred Units in the same manner as that set forth above for delivery of the Notice of Redemption. At any time prior to the Specified Redemption Date for any Redemption, any holder may revoke its Notice of Redemption. (e) A Tendering Party shall have no right to receive distributions with respect to any Tendered Units (other than the Cash Amount) paid after delivery of the Notice of Redemption, whether or not the record date for such distribution precedes or coincides with such delivery of the Notice of Redemption. If the Partnership elects to redeem any number of Tendered Units for cash, the Cash Amount for such number of Tendered Units shall be delivered as a certified check payable to the Tendering Party or, in the General Partner's sole and absolute discretion, in immediately available funds. (f) In the event that the Partnership declines to cause the Previous General Partner to acquire all of the Tendered Units from the Tendering Party in exchange for Common Shares pursuant to this Section 6 following receipt of a Notice of Redemption (a "Declination"): (1) The Previous General Partner or the General Partner shall give notice of such Declination to the Tendering Party on or before the close of business on the Cut-Off Date. (2) The Partnership may elect to raise funds for the payment of the Cash Amount either (a) by requiring that the Previous General Partner contribute such funds from the proceeds of a registered public offering (a "Public Offering Funding") by the Previous General Partner of a number of Common Shares T-9 11 ("Registrable Shares") equal to the Common Shares Amount with respect to the Tendered Units or (b) from any other sources (including, but not limited to, the sale of any Property and the incurrence of additional Debt) available to the Partnership. (3) Promptly upon the General Partner's receipt of the Notice of Redemption and the Previous General Partner or the General Partner giving notice of the Partnership's Declination, the General Partner shall give notice (a "Single Funding Notice") to all Qualifying Parties then holding Preferred Units and having Redemption rights pursuant to this Section 6 and require that all such Qualifying Parties elect whether or not to effect a Redemption of their Preferred Units to be funded through such Public Offering Funding. In the event that any such Qualifying Party elects to effect such a Redemption, it shall give notice thereof and of the number of Preferred Units to be made subject thereon in writing to the General Partner within ten (10) Business Days after receipt of the Single Funding Notice, and such Qualifying Party shall be treated as a Tendering Party for all purposes of this Section 6. In the event that a Qualifying Party does not so elect, it shall be deemed to have waived its right to effect a Redemption for the next twelve months; provided, however, that the Previous General Partner shall not be required to acquire Preferred Units pursuant to this Section 6(f) more than twice within any twelve-month period. Any proceeds from a Public Offering Funding that are in excess of the Cash Amount shall be for the sole benefit of the Previous General Partner and/or the General Partner. The General Partner and/or the Special Limited Partner shall make a Capital Contribution of such amounts to the Partnership for an additional General Partner Interest and/or Limited Partner Interest. Any such contribution shall entitle the General Partner and the Special Limited Partner, as the case may be, to an equitable Percentage Interest adjustment. (g) Notwithstanding the provisions of this Section 6, the Previous General Partner shall not, under any circumstances, elect to acquire Tendered Units in exchange for the Common Shares if such exchange would be prohibited under the Charter. (h) Notwithstanding anything herein to the contrary, with respect to any Redemption pursuant to this Section 6: (1) All Preferred Units acquired by the Previous General Partner pursuant to this Section 6 hereof shall be contributed by the Previous General Partner to either or both of the General Partner and the Special Limited Partner in such proportions as the Previous General Partner, the General Partner and the Special Limited Partner shall determine. (2) Subject to the Ownership Limit, no Tendering Party may effect a Redemption for less than five hundred (500) Preferred Units or, if such Tendering Party holds (as a Limited Partner or, economically, as an Assignee) less than five hundred (500) Preferred Units, all of the Preferred Units held by such Tendering Party. (3) Each Tendering Party (a) may effect a Redemption only once in each fiscal quarter of a Twelve-Month Period and (b) may not effect a Redemption during the period after the Partnership Record Date with respect to a distribution and T-10 12 before the record date established by the Previous General Partner for a distribution to its shareholders of some or all of its portion of such Partnership distribution. (4) Notwithstanding anything herein to the contrary, with respect to any Redemption or acquisition of Tendered Units by the Previous General Partner pursuant to this Section 6, in the event that the Previous General Partner or the General Partner gives notice to all Limited Partners (but excluding any Assignees) then owning Partnership Interests (a "Primary Offering Notice") that the Previous General Partner desires to effect a primary offering of its equity securities then, unless the Previous General Partner and the General Partner otherwise consent, commencement of the actions denoted in Section 6(f) hereof as to a Public Offering Funding with respect to any Notice of Redemption thereafter received, whether or not the Tendering Party is a Limited Partner, may be delayed until the earlier of (a) the completion of the primary offering or (b) ninety (90) days following the giving of the Primary Offering Notice. (5) Without the Consent of the Previous General Partner, no Tendering Party may effect a Redemption within ninety (90) days following the closing of any prior Public Offering Funding. (6) The consummation of such Redemption shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended. (7) The Tendering Party shall continue to own (subject, in the case of an Assignee, to the provision of Section 11.5 of the Agreement) all Preferred Units subject to any Redemption, and be treated as a Limited Partner or an Assignee, as applicable, with respect to such Preferred Units for all purposes of the Agreement, until such Preferred Units are either paid for by the Partnership pursuant to this Section 6 or transferred to the Previous General Partner (or directly to the General Partner or Special Limited Partner) and paid for, by the issuance of the REIT Shares, pursuant to this Section 6 on the Specified Redemption Date. Until a Specified Redemption Date and an acquisition of the Tendered Units by the Previous General Partner pursuant to this Section 6, the Tendering Party shall have no rights as a shareholder of the Previous General Partner with respect to the REIT Shares issuable in connection with such acquisition. For purposes of determining compliance with the restrictions set forth in this Section 6(h), all Partnership Common Units and Partnership Preferred Units, including Preferred Units, beneficially owned by a Related Party of a Tendering Party shall be considered to be owned or held by such Tendering Party. (i) In connection with an exercise of Redemption rights pursuant to this Section 6, the Tendering Party shall submit the following to the General Partner, in addition to the Notice of Redemption: (1) A written affidavit, dated the same date as the Notice of Redemp tion, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of Common Shares and any other classes or shares of the Previous General Partner by (i) such Tendering Party and (ii) any T-11 13 Related Party and (b) representing that, after giving effect to the Redemption, neither the Tendering Party nor any Related Party will own Common Shares in excess of the Ownership Limit; (2) A written representation that neither the Tendering Party nor any Related Party has any intention to acquire any additional Common Shares or any other class of shares of the Previous General Partner prior to the closing of the Redemption on the Specified Redemption Date; and (3) An undertaking to certify, at and as a condition to the closing of the Redemption on the Specified Redemption Date, that either (a) the actual and constructive ownership of Common Shares or any other class of shares of the Previous General Partner by the Tendering Party and any Related Party remain unchanged from that disclosed in the affidavit required by Section 6(i)(a) or (b)) after giving effect to the Redemption, neither the Tendering Party nor any Related Party shall own Common Shares or other shares of the Previous General Partner in violation of the Ownership Limit. (j) On or after the Specific Redemption Date, each holder of Preferred Units shall surrender to the Partnership the certificate evidencing such holder's Preferred Units, at the address to which a Notice of Redemption is required to be sent. Upon such surrender of a certificate, the Partnership shall thereupon pay the former holder thereof the applicable Cash Amount and/or deliver Common Shares for the Preferred Units evidenced thereby. From and after the Specific Redemption Date (i) distributions with respect to the Preferred Units shall cease to accumulate, (ii) the Preferred Units shall no longer be deemed outstanding, (iii) the holders thereof shall cease to be Partners to the extent of their interest in such Preferred Units, and (iv) all rights whatsoever with respect to the Preferred Units shall terminate, except the right of the holders of the Preferred Units to receive Cash Amount and/or Common Shares therefor, without interest or any sum of money in lieu of interest thereon, upon surrender of their certificates therefor. (k) Notwithstanding the provisions of this Section 6, the Tendering Parties (i) shall not be entitled to elect or effect a Redemption where the Redemption would consist of less than all the Preferred Units held by Partners and, to the extent that the aggregate Percentage Interests of the Limited Partners would be reduced, as a result of the Redemption, to less than one percent (1%) and (ii) shall have no rights under the Agreement that would otherwise be prohibited under the Charter. To the extent that any attempted Redemption would be in violation of this Section 6(k), it shall be null and void ab initio, and the Tendering Party shall not acquire any rights or economic interests in Common Shares otherwise issuable by the Previous General Partner hereunder. (l) Notwithstanding any other provision of the Agreement, on and after the date on which the aggregate Percentage Interests of the Limited Partners (other than the Special Limited Partner) are less than one percent (1%), the Partnership shall have the right, but not the obligation, from time to time and at any time to redeem any and all outstanding Limited Partner Interests (other than the Special Limited Partner's Limited Partner Interest) by treating any Limited Partner as a Tendering Party who has delivered a Notice of Redemption pursuant to this Section 6 for the amount of Preferred Units to be specified by the General Partner, in its sole and absolute discretion, by notice to such Limited Partner that the Partnership has elected to exercise its rights under this Section 6(l). Such notice given by the General Partner to a Limited Partner pursuant to this Section 6(l) shall be treated as if it were a Notice of Redemption delivered to the General Partner by such Limited Partner. For purposes of this Section 6(l), (a) any Limited Partner (whether or not eligible to be a Tendering T-12 14 Party) may, in the General Partner's sole and absolute discretion, be treated as a Tendering Party and (b) the provisions of Sections 6(f)(1), 6(h)(2), 6(h)(3) and 6(h)(5) hereof shall not apply, but the remainder of this Section shall apply, mutatis mutandis. 7. CONVERSION. (a) (i) Subject to and upon compliance with the provisions of this Section 7, a holder of Class Four Partnership Preferred Units shall have the right, at such holder's option, to convert such units, in whole or in part, into the number of Partnership Common Units per Class Four Partnership Preferred Unit obtained by dividing the Liquidation Preference (excluding any accumulated, accrued and unpaid distributions) per Class Four Partnership Preferred Unit by the Conversion Price in effect at the time and on the date provided for in subparagraph (b)(iv) of this Section 7. In order to exercise the conversion right, the holder of each Class Four Partnership Preferred Unit to be converted shall surrender the certificate representing such unit, duly endorsed or assigned to the Partnership or in blank, at the office of the Transfer Agent, accompanied by written notice to the Partnership that the holder thereof elects to convert such Class Four Partnership Preferred Unit. (ii) With respect to any Class Four Partnership Preferred Units that have been issued and outstanding for at least two (2) years, if, as of any date, the Internal Rate of Return exceeds 12.5%, then the Partnership shall have the right, but not the obligation, to cause such Class Four Partnership Preferred Units to be converted, in whole or in part, into the number of Partnership Common Units per Class Four Partnership Preferred Unit obtained by dividing the Liquidation Preference (excluding any accumulated, accrued and unpaid distributions) per Class Four Partnership Preferred Unit by the Conversion Price in effect at the time and on the date provided for in subparagraph (b)(iv) of this Section 7. In order to exercise the conversion right, the Partnership shall send notice of such conversion to each holder of record of Class Four Partnership Preferred Units no later than five Business Days after a date on which the Internal Rate of Return exceeds 12.5%. Such notice shall be provided by facsimile or, if facsimile is not available, then by first class mail, postage prepaid, at such holders' address as the same appears on the records of the Partnership. Any notice which was transmitted or mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date received by the holder. Each such notice shall state, as appropriate: (1) the date of conversion, which date may be any date within one business day following the date on which the notice is transmitted or mailed; (2) the number of units of Class Four Partnership Preferred Units to be converted and, if fewer than all such units held by such holder are to be converted, the number of such units to be converted; and (3) the then current Conversion Price. Upon receiving such notice of conversion, each such holder shall promptly surrender the certificates representing such Class Four Partnership Preferred Units as are being converted on the conversion date, duly endorsed or assigned to the Partnership or in blank, at the office of the Transfer Agent; provided, however, that the failure to so surrender any such certificates shall not in any way affect the validity of the conversion of the underlying Class Four Partnership Preferred Units into Partnership Common Units. (b) (i) Unless the Partnership Common Units issuable on conversion are to be issued in the same name as the name in which such Class Four Partnership Preferred Units are registered, each such unit surrendered following conversion shall be accompanied by instruments of transfer, in form satisfactory to the Partnership, duly executed by the holder or such holder's duly authorized representative, and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Partnership demonstrating that such taxes have been paid). (ii) A holder of Class Four Partnership Preferred Units shall, as of the date of the conversion of such units to Partnership Common Units, be entitled to receive a cash payment in T-13 15 respect of any distributions (whether or not earned or declared) that are accumulated, accrued and unpaid thereon as of the time of such conversion, provided, however, that payment in respect of any distributions on such units that has been declared but for which the Distribution Payment Date has not yet been reached shall be payable as of such Distribution Payment Date. Except as provided above, the Partnership shall make no payment or allowance for unpaid distributions, whether or nor in arrears, on converted units. (iii) As promptly as practicable after the surrender of certificates for Class Four Partnership Preferred Units as aforesaid, and in any event no later than three business days after the date of such surrender, the Partnership shall issue and deliver at such office to such holder, or send on such holders' written order, a certificate or certificates for the number of full Partnership Common Units issuable upon the conversion of such Class Four Partnership Preferred Units in accordance with the provisions of this Section 7, and any fractional interest in respect of a Partnership Common Unit arising upon such conversion shall be settled as provided in paragraph (c) of this Section 7. (iv) Each conversion shall be deemed to have been effected (x) in the case of a conversion pursuant to subparagraph (a)(i) of this Section 7 immediately prior to the close of business on the date on which the certificates for Class Four Partnership Preferred Units shall have been surrendered and such notice received by the Partnership as provided in subparagraph (a)(i) of this Section 7, and (y) in the case of a conversion pursuant to subparagraph (a)(ii) of this Section 7, immediately prior to the close of business on the date identified as the conversion date in the notice of conversion sent by the Partnership pursuant to subparagraph (a)(ii) of this Section 7; and, in the case of (x) or (y), the person or persons in whose name or names any certificate or certificates for Partnership Common Units shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the units represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the transfer books of the Partnership shall be closed on that date, in which event such person or persons shall be deemed to become such holder or holders of record at the close of business on the next succeeding day on which such transfer books are open, but such conversion shall be at the Conversion Price in effect on the date in the notice of conversion sent by the Partnership as aforesaid. (c) No fractional Partnership Common Units or scrip representing fractions of a Partnership Common Unit shall be issued upon conversion of the Class Four Partnership Preferred Units. Instead of any fractional interest in a Partnership Common Unit that would otherwise be deliverable upon the conversion of Class Four Partnership Preferred Units, the Partnership shall pay to the holder of such units an amount of cash equal to the product of (i) such fraction and (ii) the value of a REIT Share as of the date of conversion. If more than one of any holder's units shall be converted at one time, the number of full Partnership Common Units issuable upon conversion thereof shall be computed on the basis of the aggregate number of Class Four Partnership Preferred Units so converted. (d) If the Partnership shall be a party to any transaction (including with limitation a merger, consolidation, statutory exchange, sale of all or substantially all of the Partnership's assets or recapitalization of the Partnership Common Units, but excluding any transaction as to which a charge in the Adjustment Factor would be effected) (each of the foregoing being referred to herein as a "Transaction"), in each case, as a result of which Partnership Common Units shall be converted into the right to receive securities or other property (including cash or any combination thereof), each Class Four Partnership Preferred Unit which is not converted into the right to receive securities or other property in connection with such Transaction shall thereupon be convertible into the kind and amount of securities and other property (including cash or any combination thereof) receivable upon such consummation by a holder of that number of Partnership Common Units into which Class Four T-14 16 Partnership Preferred Units were convertible immediately prior to such Transaction. The Partnership shall not be a party to any transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (d), and it shall not consent or agree to the occurrence of any Transaction until the Partnership has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Class Four Partnership Preferred Units that will contain provisions enabling the holders of the Class Four Partnership Preferred Units that remain outstanding after such Transaction to convert into the consideration received by holders of Partnership Common Units at the Conversion Price in effect immediately prior to such Transaction. The provisions of this Paragraph (d) shall apply to successive Transactions. (e) Whenever the Conversion Price is adjusted as herein provided (whether pursuant to paragraph (d) of this Section 7 or as a result of a change in the Adjustment Factor), the General Partner shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after delivery of such certificate, the General Partner shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to each holder of Class Four Partnership Preferred Units at such holder's address as shown on the records of the Partnership. (f) In any case in which an adjustment to the Adjustment Factor shall become effective immediately after the effective date of an event, retroactive to the record date, if any, for such event, the Partnership may defer until the occurrence of such event (A) issuing to the holder of any Class Four Partnership Preferred Units converted after such record date and before the occurrence of such event the additional Partnership Common Units issuable upon such conversion by reason of the adjustment required by such event over and above the Partnership Common Units issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of any fraction pursuant to Section 7(c). (g) There shall be no adjustment of the Conversion Price in case of the issuance of any unit of the Partnership except as specifically set forth in the definition of "Adjustment Factor" or in this Section 7. In addition, notwithstanding any other provision contained in the definition of "Adjustment Factor" or in this Section 7, there shall be no adjustment of the Conversion Price upon the payment of any cash distributions on any units of the Partnership. (h) If the Partnership shall take any action affecting the Partnership Common Units, other than action described in the definition of "Adjustment Factor" or in this Section 7 that, in the opinion of the General Partner would materially adversely affect the conversion rights of the holders of Class Four Partnership Preferred Units, the Conversion Price for the Class Four Partnership Preferred Units may be adjusted, to the extent permitted by law in such manner, if any, and at such time as the General Partner, in its sole discretion, may determine to be equitable under the circumstances. (i) The Partnership will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Partnership Common Units or other securities or property on conversion of Class Four Partnership Preferred Units pursuant hereto; provided, however, that the Partnership shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of Partnership Common Units or other securities or property in a name other than that of the holder of the Class Four Partnership Preferred T-15 17 Units to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Partnership the amount of any such tax or established, to the reasonable satisfaction of the Partnership, that such tax has been paid. (j) In addition to any other adjustment required hereby, to the extent permitted by law, the Partnership from time to time may decrease the Conversion Price by any amount, permanently or for a period of at least twenty Business Days, if the decrease is irrevocable during the period. (k) For purposes of the definition of "Twelve-Month Period" in the Agreement, any holder of Class Four Partnership Preferred Units that have been converted to Partnership Common Units shall be deemed to have acquired such Partnership Common Units when such Class Four Partnership Units were acquired. 8. STATUS OF REACQUIRED UNITS. All Preferred Units which shall have been issued and reacquired in any manner by the Partnership shall be deemed cancelled and no longer outstanding. 9. GENERAL. The ownership of the Preferred Units shall be evidenced by one or more certificates in the form of Annex II hereto. The General Partner shall amend Exhibit A to the Agreement from time to time to the extent necessary to reflect accurately the issuance of, and subsequent redemption, or any other event having an effect on the ownership of, the Preferred Units. 10. ALLOCATIONS OF INCOME AND LOSS. For each taxable year, each holder of Preferred Units will be allocated a portion of the Net Income and Net Loss of the Partnership equal to the portion of the Net Income and Net Loss of the Partnership that would be allocated to such holder pursuant to Article 6 of the Agreement if such holder held a number of Partnership Common Units equal to (i) the number of Preferred Units held by such holder, multiplied by (ii) 0.625. Upon liquidation, dissolution or winding up of the Partnership, the Partnership shall endeavor to allocate income and gain to the holders of the Preferred Units such that the Capital Accounts related to the Preferred Units are equal to their Liquidation Preference. 11. VOTING RIGHTS. Except as otherwise required by applicable law or in the Agreement, the holders of the Preferred Units will have the same voting rights as holders of the Partnership Common Units. As long as any Preferred Units are outstanding, for purposes of determining the Consent of Limited Partners under the Agreement, the "Majority In Interest of the Limited Partners" shall have the meaning set forth in Section 2 hereof. As long as any Preferred Units are outstanding, in addition to any other vote or consent of partners required by law or by the Agreement, the affirmative vote or consent of holders of at least 50% of the outstanding Preferred Units will be necessary for effecting any amendment of any of the provisions of the Partnership Unit Designation of the Preferred Units that materially and adversely affects the rights or preferences of the holders of the Preferred Units. The creation or issuance of any class or series of Partnership Units, including, without limitation, any Partnership Units that may have rights junior to, on a parity with, or senior or superior to the Preferred Units, will not be deemed to materially and adversely affect the rights or preferences of the holders of Preferred Units. T-16 18 With respect to the exercise of the above-described voting rights, each Preferred Unit will have one (1) vote per Preferred Unit. 12. RESTRICTIONS ON TRANSFER. Preferred Units are subject to the same restrictions on transfer applicable to Common Units, as set forth in the Agreement. T-17 19 ANNEX I TO EXHIBIT T NOTICE OF REDEMPTION To: AIMCO Properties, L.P. c/o AIMCO-GP, Inc. Colorado Center, Tower Two 2000 South Colorado Boulevard, Suite 2-1000 Denver, Colorado 80222 Attention: Investor Relations The undersigned Limited Partner or Assignee hereby irrevocably tenders for redemption Class Four Partnership Preferred Units in AIMCO Properties, L.P. in accordance with the terms of the Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994, as it may be amended and supplemented from time to time (the "Agreement"). All capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Partnership Unit Designation of the Class Four Partnership Preferred Units. The undersigned Limited Partner or Assignee: (a) if the Partnership elects to redeem such Class Four Partnership Preferred Units for Common Shares rather than cash, hereby irrevocably transfers, assigns, contributes and sets over to the Previous General Partner all of the undersigned Limited Partner's or Assignee's right, title and interest in and to such Class Four Partnership Preferred Units; (b) undertakes (i) to surrender such Class Four Partnership Preferred Units and any certificate therefor at the closing of the Redemption contemplated hereby and (ii) to furnish to the Previous General Partner, prior to the Specified Redemption Date: (1) A written affidavit, dated the same date as this Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of Common Shares by (i) the undersigned Limited Partner or Assignee and (ii) any Related Party and (b) representing that, after giving effect to the Redemp tion, neither the undersigned Limited Partner or Assignee nor any Related Party will own Common Shares in excess of the Ownership Limit; (2) A written representation that neither the undersigned Limited Partner or Assignee nor any Related Party has any intention to acquire any additional Common Shares prior to the closing of the Redemp tion contemplated hereby on the Specified Redemption Date; and (3) An undertaking to certify, at and as a condition to the closing of the Redemption contemplated hereby on the Specified Redemption Date, that either (a) the actual and constructive ownership of Common Shares by the undersigned Limited Partner or Assignee and any Related Party remain unchanged from that disclosed in the affidavit required by paragraph (1) above, or (b) after giving effect to the Redemption contem plated hereby, neither the undersigned Limited Partner or Assignee nor any T-I-1 20 Related Party shall own Common Shares in violation of the Ownership Limit. (c) directs that the certificate representing the Common Shares, or the certified check representing the Cash Amount, in either case, deliverable upon the closing of the Redemption contemplated hereby be delivered to the address specified below; (d) represents, warrants, certifies and agrees that: (i) the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, good, marketable and unencumbered title to such Preferred Units, free and clear of the rights or interests of any other person or entity; (ii) the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, the full right, power and authority to tender and surrender such Preferred Units as provided herein; and (iii) the undersigned Limited Partner or Assignee has obtained the consent or approval of all persons and entities, if any, having the right to consent to or approve such tender and surren der. Dated: __________________ Name of Limited Partner or Assignee: -------------------------------------------- -------------------------------------------- (Signature of Limited Partner or Assignee) -------------------------------------------- (Street Address) -------------------------------------------- (City) (State) (Zip Code) Signature Guaranteed by: -------------------------------------------- (continued on next page) T-I-2 21 Issue check payable to or Certificates in the name of: ------------------------------------------ Please insert social security or identifying number: ----------------------------------- NOTICE: THE SIGNATURE OF THIS NOTICE OF REDEMPTION MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE FOR THE CLASS FOUR PREFERRED UNITS WHICH ARE BEING REDEEMED IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITU TION, (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions), WITH MEMBER SHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC RULE 17Ad-15. T-I-3 22 ANNEX II TO EXHIBIT T FORM OF UNIT CERTIFICATE OF CLASS FOUR PARTNERSHIP PREFERRED UNITS [THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION,]1 THE LIMITED PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., DATED AS OF JULY 29, 1994, AS IT MAY BE AMENDED AND/OR SUPPLEMENTED FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED FROM AIMCO-GP, INC, THE GENERAL PARTNER, AT ITS PRINCIPAL EXECUTIVE OFFICE. Certificate Number --------- AIMCO PROPERTIES, L.P. FORMED UNDER THE LAWS OF THE STATE OF DELAWARE This certifies that ------------------------------------------------------------ is the owner of ---------------------------------------------------------------- CLASS FOUR PARTNERSHIP PREFERRED UNITS OF AIMCO PROPERTIES, L.P., transferable on the books of the Partnership in person or by duly authorized attorney on the surrender of this Certificate properly endorsed. This Certificate and the Class Four Partnership Preferred Units represented hereby are issued and shall be held subject to all of the provisions of the Agreement of Limited Partnership of AIMCO Properties, L.P., as the same may be amended and/or supplemented from time to time. IN WITNESS WHEREOF, the undersigned has signed this Certificate. Dated: By --------------------------- - ------------ 1 Not required if Units are issued pursuant to a current and effective registra tion statement under the Act. T-II-1 23 ASSIGNMENT For Value Received, ____________________________ hereby sells, assigns and transfers unto _____________________________________________________________ ________________________________________________________________________________ ______________________ Class Four Partnership Preferred Unit(s) represented by the within Certificate, and does hereby irrevocably constitute and appoint the General Partner of AIMCO Properties, L.P. as its Attorney to transfer said Class Four Partnership Preferred Unit(s) on the books of AIMCO Properties, L.P. with full power of substitution in the premises. Dated: ____________________ By: ------------------------------ Name: Signature Guaranteed by: --------------------------------- NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITU TION, (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions), WITH MEMBER SHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC RULE 17Ad-15. T-II-2 EX-10.10 5 9TH AMENDMENT TO 3RD AMENDED/RESTATED AGREEMENT 1 EXHIBIT 10.10 NINTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P. THIS NINTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of December 21, 1999 (this "Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the "General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware limited partnership (the "Partnership"), pursuant to the authority conferred on the General Partner by Section 7.3.C(7) of the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994 (the "Agreement"). Capitalized terms used, but not otherwise defined herein, shall have the respective meanings ascribed thereto in the Agreement. WHEREAS, on March 22, 1999, the Partnership entered into several agreements with the Regency Windsor Companies, whereby the Partnership agreed to offer Class Three Partnership Preferred Units (the "Partnership Preferred Units"), with the designations, preferences and other rights, terms and provisions set forth herein to partners of certain limited partnerships affiliated with the Regency Windsor Companies; and WHEREAS, pursuant to Section 4.2.A of the Agreement, the General Partner is authorized to determine the designations, preferences and relative, participating, optional or other special rights, powers and duties of such Partnership Preferred Units. NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: i. The Agreement is hereby amended by the addition of a new exhibit, entitled "Exhibit U", in the form attached hereto, which shall be attached to and made a part of the Agreement. ii. Except as specifically amended hereby, the terms, covenants, provisions and conditions of the Agreement shall remain unmodified and continue in full force and effect and, except as amended hereby, all of the terms, covenants, provisions and conditions of the Agreement are hereby ratified and confirmed in all respects. 2 IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above. GENERAL PARTNER: AIMCO-GP, INC. By: /s/ PETER K. KOMPANIEZ ---------------------------------------- Name: Peter K. Kompaniez Title: President and Vice Chairman 2 3 EXHIBIT "U" PARTNERSHIP UNIT DESIGNATION OF THE CLASS THREE PARTNERSHIP PREFERRED UNITS OF AIMCO PROPERTIES, L.P. 1. NUMBER OF UNITS AND DESIGNATION. A class of Partnership Preferred Units is hereby designated as "Class Three Partnership Preferred Units," and the number of Partnership Preferred Units constituting such class shall be three million (3,000,000). 2. DEFINITIONS. Capitalized terms used and not otherwise defined herein shall have the meanings assigned thereto in the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P. as amended, supplemented or restated from time to time (the "Agreement"), as modified by this Partnership Unit Designation and the defined terms used herein. For purposes of this Partnership Unit Designation, the following terms shall have the respective meanings ascribed below: "Assignee" shall mean a Person to whom one or more Preferred Units have been Transferred in a manner permitted under the Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5 of the Agreement. "Cash Amount" shall mean, with respect to any Tendered Unit, cash in an amount equal to the Liquidation Preference of such Tendered Unit. "Class Three Partnership Preferred Unit" or "Preferred Unit" shall mean a Partnership Preferred Unit with the designations, preferences and relative, participating, optional or other special rights, powers and duties as are set forth in this Partnership Unit Designation. "Cut-Off Date" shall mean the fifth (5th) Business Day after the General Partner's receipt of a Notice of Redemption. "Declination" shall have the meaning set forth in Section 6(f) of this Partnership Unit Designation. "Distribution Payment Date" shall have the meaning set forth of Section 4(b) of this Partnership Unit Designation. "Distribution Rate" shall mean 9.5%, subject to adjustment as provided in Section 4(a) of this Partnership Unit Designation. U-1 4 "Dividend Yield" shall mean, as of any calculation date and with respect to any class or series of capital stock, the quotient obtained by dividing (i) the aggregate dollar amount of dividends payable on one share of such class or series of capital stock, in accordance with its terms, for the 12 month period ending on the dividend payment date immediately preceding such calculation date, by (ii) the Market Value of one share of such stock as of such calculation date. "Junior Partnership Units" shall have the meaning set forth in Section 3(c) of this Partnership Unit Designation. "Liquidation Preference" shall have the meaning set forth in Section 5(a) of this Partnership Unit Designation. "Majority in Interest of the Limited Partners" means Limited Partners (other than (i) the Special Limited Partner and (ii) any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by the (a) General Partner or (b) any REIT as to which the General Partner is a "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))) holding more than fifty percent (50%) of the outstanding Partnership Common Units, Class I High Performance Partnership Units, Class I Partnership Preferred Units, Class One Partnership Preferred Units, Class Two Partnership Preferred Units, Class Three Partnership Preferred Units and Class Four Partnership Preferred Units held by all Limited Partners (other than (i) the Special Limited Partner and (ii) any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by (a) the General Partner or (b) any REIT as to which the General Partner is a "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))). "Market Value" shall mean, as of any calculation date and with respect to any share of stock, the average of the daily market prices for ten (10) consecutive trading days immediately preceding the calculation date. The market price for any such trading day shall be: (i) if the shares are listed or admitted to trading on any securities exchange or The Nasdaq Stock Market's National Market System, the closing price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices on such day, in either case as reported in the principal consolidated transaction reporting system, (ii) if the shares are not listed or admitted to trading on any securities exchange or The Nasdaq Stock Market's National Market System, the last reported sale price on such day or, if no sale takes place on such day, the average of the closing bid and asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or (iii) if the shares are not listed or admitted to trading on any securities exchange or The Nasdaq Stock Market's National Market System and no such last reported sale price or closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more than ten (10) days prior to the date in question) for which prices have been so reported; U-2 5 provided, however, that, if there are no bid and asked prices reported during the ten (10) days prior to the date in question, the Market Value of the shares shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate; provided, further, that the General Partner is authorized to adjust the market price for any trading day as may be necessary, in its judgment, to reflect an event that occurs at any time after the commencement of such ten day period that would unfairly distort the Market Value, including, without limitation, a stock dividend, split, subdivision, reverse stock split, or share combination. "Notice of Redemption" shall mean a Notice of Redemption in the form of Annex I to this Partnership Unit Designation. "Parity Partnership Units" shall have the meaning set forth in Section 3(b) of this Partnership Unit Designation. "Partnership" shall mean AIMCO Properties, L.P., a Delaware limited partnership. "Previous General Partner" shall mean Apartment Investment and Management Company, a Maryland corporation. "Primary Offering Notice" shall have the meaning set forth in Section 6(h)(4) of this Partnership Unit Designation. "Public Offering Funding" shall have the meaning set forth in Section 6(f)(2) of this Partnership Unit Designation. "Qualifying Preferred Stock" shall mean any class or series of non-convertible perpetual preferred stock that (i) has been issued by a corporation that has elected to be taxed as a REIT, (ii) has a fixed rate of distributions or dividends, (iii) has a fixed liquidation preference (and which entitles the holder thereof to no payments other than the payment of distributions at a fixed rate and the payment of a fixed liquidation preference), (iv) is listed on the New York Stock Exchange, (v) cannot be redeemed at the option of the issuer for the first five years after issuance of such class or series of preferred stock and that, at the Reset Date (or, if applicable, as of the date the calculation of the Weighted Average of Preferred Stock Dividend Yields is being made for purposes hereof in respect of such Reset Date) cannot be so redeemed and (vi) is issued by an issuer the unsecured debt of which has an average rating from Moody's Investors Services, Inc., Standard & Poors Rating Services or Duff & Phelps Credit Rating Co. in a category that is one rating category below the average rating, as of such date, of the Previous General Partner's unsecured debt. "Redemption" shall have the meaning set forth in Section 6(b)(i) of this Partnership Unit Designation. "Registrable Shares" shall have the meaning set forth in Section 6(f)(2) of this Partnership Unit Designation. U-3 6 "REIT Shares Amount" shall mean, with respect to any Tendered Units, a number of REIT Shares equal to the quotient obtained by dividing (i) the Cash Amount for such Tendered Units, by (ii) the Market Value of a REIT Share as of the fifth (5th) Business Day prior to the date of receipt by the General Partner of a Notice of Redemption for such Tendered Units. "Reset Date" shall mean December 21, 2004 and every fifth anniversary of such date that occurs thereafter. "Senior Partnership Units" shall have the meaning set forth in Section 3(a) of this Partnership Unit Designation. "Single Funding Notice" shall have the meaning set forth in Section 6(f)(3) of this Partnership Unit Designation. "Specified Redemption Date" shall mean, with respect to any Redemption, the later of (a) the tenth (10th) Business Day after the receipt by the General Partner of a Notice of Redemption or (b) in the case of a Declination followed by a Public Offering Funding, the Business Day next following the date of the closing of the Public Offering Funding; provided, however, that the Specified Redemption Date, as well as the closing of a Redemption, or an acquisition of Tendered Units by the Previous General Partner pursuant to Section 6 hereof, on any Specified Redemption Date, may be deferred, in the General Partner's sole and absolute discretion, for such time (but in any event not more than one hundred fifty (150) days in the aggregate) as may reasonably be required to effect, as applicable, (i) a Public Offering Funding or other necessary funding arrangements, (ii) compliance with the Securities Act or other law (including, but not limited to, (a) state "blue sky" or other securities laws and (b) the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and (iii) satisfaction or waiver of other commercially reasonable and customary closing conditions and requirements for a transaction of such nature. "Tendering Party" shall have the meaning set forth in Section 6(b) of this Partnership Unit Designation. "Tendered Units" shall have the meaning set forth in Section 6(b) of this Partnership Unit Designation. "Weighted Average of Preferred Stock Dividend Yields" shall mean, as of any date of calculation, the average of the Dividend Yields, as of such date, of each Qualifying Preferred Stock (other than a Qualifying Preferred Stock issued by the Previous General Partner) that has been outstanding during the entire year immediately preceding the date of calculation. Each such class of Qualifying Preferred Stock (except Qualifying Preferred Stock of the Previous General Partner) shall be weighted for its total market value. 3. RANKING. Any class or series of Partnership Units of the Partnership shall be deemed to rank: U-4 7 a. prior or senior to the Class Three Partnership Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class Three Partnership Preferred Units (the partnership units being hereinafter referred to, collectively, as "Senior Partnership Units"); b. on a parity with the Class Three Partnership Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the distribution rates, distribution payment dates or redemption or liquidation prices per unit or other denomination thereof be different from those of the Class Three Partnership Preferred Units (i) if such class or series of partnership units shall be Class B Partnership Preferred Units, Class C Partnership Preferred Units, Class D Partnership Preferred Units, Class G Partnership Preferred Units, Class H Partnership Preferred Units, Class J Partnership Preferred Units or Class One Partnership Preferred Units or (ii) if the holders of such class or series of partnership units and the Class Three Partnership Preferred Units shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid distributions per unit or other denomination or liquidation preferences, without preference or priority one over the other (the partnership units referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Partnership Units"); and c. junior to the Class Three Partnership Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, (i) if such class or series of partnership units shall be Partnership Common Units or Class I High Performance Partnership Units or (ii) if the holders of Class Three Partnership Preferred Units shall be entitled to receipt of distributions or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of such class or series of Partnership Units (the partnership units referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Partnership Units"). 4. QUARTERLY CASH DISTRIBUTIONS. a. The "Quarterly Distribution Amount," as of any date, shall be equal to (i) the Distribution Rate then in effect, multiplied by (ii) $25, and divided by (iii) four. Holders of Preferred Units will be entitled to receive, when and as declared by the General Partner, quarterly cash distributions in an amount per Preferred Unit equal to the Quarterly Distribution Amount in effect as of the date such distribution is declared by the General Partner, and no more. On each Reset Date, the Distribution Rate thereafter in effect shall be adjusted by the General Partner to equal the lesser of (i) the Distribution Rate in effect immediately prior to such Reset Date or (ii) the Dividend Yield of the class of Qualifying Preferred Stock most recently issued by the Previous General Partner or, if there is no class of Qualifying Preferred Stock of the Previous General Partner outstanding as of any Reset Date, the Weighted Average of Preferred Stock Dividend Yields, calculated as of the end of the calendar quarter immediately preceding such Reset Date; provided, further, that if for any reason there are no classes of Qualifying Preferred Stock of the type described in the definition of "Weighted Average of Preferred Stock Dividend Yields" outstanding on any Reset Date and the reference to the Weighted Average of Preferred Stock Dividend Yields would otherwise be determinative of the U-5 8 calculation of the adjusted Distribution Rate on such Reset Date, the adjusted Distribution Rate for the succeeding five (5) year period shall be the Distribution Rate in effect immediately prior to such Reset Date. Upon any such adjustment of the Distribution Rate, the General Partner shall send a notice describing such adjustment to the holders of the Preferred Units at their respective addresses, as set forth on Exhibit A to the Agreement. b. Any such distributions will be cumulative from the date of original issue, whether or not in any distribution period or periods such distributions have been declared, and shall be payable quarterly on February 15, May 15, August 15 and November 15 of each year (or, if not a Business Day, the next succeeding Business Day) (each a "Distribution Payment Date"), commencing on the first such date occurring after the date of original issue. If the Preferred Units are issued on any day other than a Distribution Payment Date, the first distribution payable on such Preferred Units will be prorated for the portion of the quarterly period that such Preferred Units are outstanding on the basis of twelve 30-day months and a 360-day year. Distributions will be payable in arrears to holders of record as they appear on the records of the Partnership at the close of business on the February 1, May 1, August 1 or November 1, as the case may be, immediately preceding each Distribution Payment Date. If the Preferred Units are issued other than on a record date for the payment of distributions to the holders of Preferred Units, the Quarterly Distribution Amount shall, for any quarter in which the Distribution Rate changes on any Reset Date, be appropriately prorated based on the portions of such quarter during which the different Distribution Rates were in effect, on the basis of twelve 30-day months and a 360-day year. Holders of Preferred Units will not be entitled to receive any distributions in excess of cumulative distributions on the Preferred Units. No interest, or sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on the Preferred Units that may be in arrears. Holders of any Preferred Units that are issued after the date of original issuance will be entitled to receive the same distributions as holders of any Preferred Units issued on the date of original issuance. c. When distributions are not paid in full upon the Preferred Units or any Parity Partnership Units, or a sum sufficient for such payment is not set apart, all distributions declared upon the Preferred Units and any Parity Partnership Units shall be declared ratably in proportion to the respective amounts of distributions accumulated and unpaid on the Preferred Units and accumulated and unpaid on such Parity Partnership Units. Except as set forth in the preceding sentence, unless distributions on the Preferred Units equal to the full amount of accumulated and unpaid distributions have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment, for all past distribution periods, no distributions shall be declared or paid or set apart for payment by the Partnership with respect to any Parity Partnership Units. U-6 9 d. Unless full cumulative distributions (including all accumulated, accrued and unpaid distributions) on the Preferred Units have been declared and paid, or declared and set apart for payment, for all past distribution periods, no distributions (other than distributions paid in Junior Partnership Units or options, warrants or rights to subscribe for or purchase Junior Partnership Units) may be declared or paid or set apart for payment by the Partnership and no other distribution of cash or other property may be declared or made, directly or indirectly, by the Partnership with respect to any Junior Partnership Units, nor shall any Junior Partnership Units be redeemed, purchased or otherwise acquired (except for a redemption, purchase or other acquisition of Partnership Common Units made for purposes of an employee incentive or benefit plan of the Partnership or any affiliate thereof, including, without limitation, Previous General Partner and its affiliates) for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Junior Partnership Units), directly or indirectly, by the Partnership (except by conversion into or exchange for Junior Partnership Units, or options, warrants or rights to subscribe for or purchase Junior Partnership Units), nor shall any other cash or other property be paid or distributed to or for the benefit of holders of Junior Partnership Units. e. Notwithstanding the foregoing provisions of this Section 4, the Partnership shall not be prohibited from (i) declaring or paying or setting apart for payment any distribution on any Parity Partnership Units or (ii) redeeming, purchasing or otherwise acquiring any Parity Partnership Units, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary to maintain the Previous General Partner's qualification as a REIT. 5. LIQUIDATION PREFERENCE. a. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Partnership, before any allocation of income or gain by the Partnership shall be made to or set apart for the holders of any Junior Partnership Units, to the extent possible, the holders of Preferred Units shall be entitled to be allocated income and gain to the extent necessary to enable them to receive a liquidation preference (the "Liquidation Preference") per Preferred Unit equal to the sum of (i) $25 plus (ii) any accumulated, accrued and unpaid distributions (whether or not earned or declared) to the date of final distribution to such holders; but such holders will not be entitled to any further payment or allocation. Until all holders of the Preferred Units have been paid the Liquidation Preference in full, no allocation of income or gain will be made to any holder of Junior Partnership Units upon the liquidation, dissolution or winding up of the Partnership. b. If, upon any voluntary or involuntary liquidation, dissolution or winding up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of Preferred Units shall be insufficient to pay in full the Liquidation Preference and liquidating payments on any Parity Partnership Units, then following appropriate allocations of Partnership income, gain, deduction and loss, such assets, or the proceeds thereof, shall be distributed among the holders of Preferred Units and any such Parity Partnership Units ratably in the same proportion as the respective amounts that would be payable on such Preferred Units and any such Parity Partnership Units if all amounts payable thereon were paid in full. c. A voluntary or involuntary liquidation, dissolution or winding up of the Partnership will not include a consolidation or merger of the Partnership with one or more partnerships, U-7 10 corporations or other entities, or a sale or transfer of all or substantially all of the Partnership's assets. d. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Partnership, after all allocations shall have been made in full to the holders of Preferred Units and any Parity Partnership Units to the extent necessary to enable them to receive their respective liquidation preferences, any Junior Partnership Units shall be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Preferred Units and any Parity Partnership Units shall not be entitled to share therein. 6. REDEMPTION. a. Except as set forth in Section 6(l) hereof, the Preferred Units may not be redeemed at the option of the Partnership, and will not be required to be redeemed or repurchased by the Partnership or the Previous General Partner except if a holder of a Preferred Unit effects a Redemption, as provided for in Section 6(b) hereof. The Partnership or the Previous General Partner may purchase Preferred Units from time to time in the open market, by tender or exchange offer, in privately negotiated purchases or otherwise. b. On or after the first (1st) anniversary of becoming a holder of Preferred Units, a Qualifying Party shall have the right (subject to the terms and conditions set forth herein) to require the Partnership to redeem all or a portion of the Preferred Units held by such Qualifying Party (such Preferred Units being hereafter "Tendered Units") in exchange (a "Redemption") for REIT Shares issuable on, or the Cash Amount payable on, the Specified Redemption Date, as determined by the Partnership in its sole discretion. Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the General Partner by the Qualifying Party when exercising the Redemption right (the "Tendering Party"). c. If the Partnership elects to redeem Tendered Units for REIT Shares rather than cash, then the Partnership shall direct the Previous General Partner to issue and deliver such REIT Shares to the Tendering Party pursuant to the terms set forth in this Section 6, in which case, (i) the Previous General Partner, acting as a distinct legal entity, shall assume directly the obligation with respect thereto and shall satisfy the Tendering Party's exercise of its Redemption right, and (ii) such transaction shall be treated, for Federal income tax purposes, as a transfer by the Tendering Party of such Tendered Units to the Previous General Partner in exchange for REIT Shares. In making such election to cause the Previous General Partner to acquire Tendered Units, the Partnership shall act in a fair, equitable and reasonable manner that neither prefers one group or class of Tendering Parties over another nor discriminates against a group or class of Tendering Parties. If the Partnership elects to redeem any number of Tendered Units for REIT Shares, rather than cash, on the Specified Redemption Date, the Tendering Party shall sell such number of the Tendered Units to the Previous General Partner in exchange for a number of REIT Shares equal to the REIT Shares Amount for such number of the Tendered Units. The Tendering Party shall submit (i) such information, certification or affidavit as the Previous General Partner may reasonably require in connection with the application of the Ownership Limit and other restrictions and limitations of the Charter to any such acquisition and (ii) such written representations, investment letters, legal opinions or other instruments necessary, in the Previous General Partner's view, to effect compliance with the Securities Act. The REIT Shares U-8 11 shall be delivered by the Previous General Partner as duly authorized, validly issued, fully paid and accessible REIT Shares, free of any pledge, lien, encumbrance or restriction, other than the Ownership Limit and other restrictions provided in the Charter, the Bylaws of the Previous General Partner, the Securities Act and relevant state securities or "blue sky" laws. Neither any Tendering Party whose Tendered Units are acquired by the Previous General Partner pursuant to this Section 6, any Partner, any Assignee nor any other interested Person shall have any right to require or cause the Previous General Partner or the General Partner to register, qualify or list any REIT Shares owned or held by such Person, whether or not such REIT Shares are issued pursuant to this Section 6, with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange; provided, however, that this limitation shall not be in derogation of any registration or similar rights granted pursuant to any other written agreement between the Previous General Partner and any such Person. Notwithstanding any delay in such delivery, the Tendering Party shall be deemed the owner of such REIT Shares for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise rights, as of the Specified Redemption Date. REIT Shares issued upon an acquisition of the Tendered Units by the Previous General Partner pursuant to this Section 6 may contain such legends regarding restrictions under the Securities Act and applicable state securities laws as the Previous General Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws. d. The Partnership shall have no obligation to effect any redemption unless and until a Tendering Party has given the Partnership a Notice of Redemption. Each Notice of Redemption shall be sent by hand delivery or by first class mail, postage prepaid, to AIMCO Properties, L.P., c/o AIMCO-GP, Inc., Tower Two, 2000 South Colorado Boulevard, Suites 2-1000, Denver, Colorado 80222, Attention: Investor Relations, or to such other address as the Partnership shall specify in writing by delivery to the holders of the Preferred Units in the same manner as that set forth above for delivery of the Notice of Redemption. At any time prior to the Specified Redemption Date for any Redemption, any holder may revoke its Notice of Redemption. e. A Tendering Party shall have no right to receive distributions with respect to any Tendered Units (other than the Cash Amount) paid after delivery of the Notice of Redemption, whether or not the record date for such distribution precedes or coincides with such delivery of the Notice of Redemption. If the Partnership elects to redeem any number of Tendered Units for cash, the Cash Amount for such number of Tendered Units shall be delivered as a certified check payable to the Tendering Party or, in the General Partner's sole and absolute discretion, in immediately available funds. f. In the event that the Partnership declines to cause the Previous General Partner to acquire all of the Tendered Units from the Tendering Party in exchange for REIT Shares pursuant to this Section 6 following receipt of a Notice of Redemption (a "Declination"): (1) The Previous General Partner or the General Partner shall give notice of such Declination to the Tendering Party on or before the close of business on the Cut-Off Date. (2) The Partnership may elect to raise funds for the payment of the Cash Amount either (a) by requiring that the Previous General Partner contribute such funds from the U-9 12 proceeds of a registered public offering (a "Public Offering Funding") by the Previous General Partner of a number of REIT Shares ("Registrable Shares") equal to the REIT Shares Amount with respect to the Tendered Units or (b) from any other sources (including, but not limited to, the sale of any Property and the incurrence of additional Debt) available to the Partnership. (3) Promptly upon the General Partner's receipt of the Notice of Redemption and the Previous General Partner or the General Partner giving notice of the Partnership's Declination, the General Partner shall give notice (a "Single Funding Notice") to all Qualifying Parties then holding Preferred Units and having Redemption rights pursuant to this Section 6 and require that all such Qualifying Parties elect whether or not to effect a Redemption of their Preferred Units to be funded through such Public Offering Funding. In the event that any such Qualifying Party elects to effect such a Redemption, it shall give notice thereof and of the number of Preferred Units to be made subject thereon in writing to the General Partner within ten (10) Business Days after receipt of the Single Funding Notice, and such Qualifying Party shall be treated as a Tendering Party for all purposes of this Section 6. In the event that a Qualifying Party does not so elect, it shall be deemed to have waived its right to effect a Redemption for the next twelve months; provided, however, that the Previous General Partner shall not be required to acquire Preferred Units pursuant to this Section 6(f) more than twice within any twelve-month period. Any proceeds from a Public Offering Funding that are in excess of the Cash Amount shall be for the sole benefit of the Previous General Partner and/or the General Partner. The General Partner and/or the Special Limited Partner shall make a Capital Contribution of such amounts to the Partnership for an additional General Partner Interest and/or Limited Partner Interest. Any such contribution shall entitle the General Partner and the Special Limited Partner, as the case may be, to an equitable Percentage Interest adjustment. g. Notwithstanding the provisions of this Section 6, the Previous General Partner shall not, under any circumstances, elect to acquire Tendered Units in exchange for REIT Shares if such exchange would be prohibited under the Charter. h. Notwithstanding anything herein to the contrary, with respect to any Redemption pursuant to this Section 6: (1) All Preferred Units acquired by the Previous General Partner pursuant to this Section 6 hereof shall be contributed by the Previous General Partner to either or both of the General Partner and the Special Limited Partner in such proportions as the Previous General Partner, the General Partner and the Special Limited Partner shall determine. Any Preferred Units so contributed to the General Partner shall automatically, and without further action required, be converted into and deemed to be a General Partner Interest comprised of an equal number of Partnership Common Units. Any Preferred Units so contributed to the Special Limited Partner shall be converted into Partnership Common Units. (2) Subject to the Ownership Limit, no Tendering Party may effect a Redemption for less than five hundred (500) Preferred Units or, if such Tendering Party holds (as a Limited Partner or, economically, as an Assignee) less than five hundred (500) Preferred Units, all of the Preferred Units held by such Tendering Party. U-10 13 (3) No Tendering Party may (a) effect a Redemption more than once in any fiscal quarter of a Twelve-Month Period or (b) effect a Redemption during the period after the Partnership Record Date with respect to a distribution and before the record date established by the Previous General Partner for a distribution to its shareholders of some or all of its portion of such Partnership distribution. (4) Notwithstanding anything herein to the contrary, with respect to any Redemption or acquisition of Tendered Units by the Previous General Partner pursuant to this Section 6, in the event that the Previous General Partner or the General Partner gives notice to all Limited Partners (but excluding any Assignees) then owning Partnership Interests (a "Primary Offering Notice") that the Previous General Partner desires to effect a primary offering of its equity securities then, unless the Previous General Partner and the General Partner otherwise consent, commencement of the actions denoted in Section 6(f) hereof as to a Public Offering Funding with respect to any Notice of Redemption thereafter received, whether or not the Tendering Party is a Limited Partner, may be delayed until the earlier of (a) the completion of the primary offering or (b) ninety (90) days following the giving of the Primary Offering Notice. (5) Without the Consent of the Previous General Partner, no Tendering Party may effect a Redemption within ninety (90) days following the closing of any prior Public Offering Funding. (6) The consummation of such Redemption shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. (7) The Tendering Party shall continue to own (subject, in the case of an Assignee, to the provision of Section 11.5 of the Agreement) all Preferred Units subject to any Redemption, and be treated as a Limited Partner or an Assignee, as applicable, with respect to such Preferred Units for all purposes of the Agreement, until such Preferred Units are either paid for by the Partnership pursuant to this Section 6 or transferred to the Previous General Partner (or directly to the General Partner or Special Limited Partner) and paid for, by the issuance of the REIT Shares, pursuant to this Section 6 on the Specified Redemption Date. Until a Specified Redemption Date and an acquisition of the Tendered Units by the Previous General Partner pursuant to this Section 6, the Tendering Party shall have no rights as a shareholder of the Previous General Partner with respect to the REIT Shares issuable in connection with such acquisition. For purposes of determining compliance with the restrictions set forth in this Section 6(h), all Partnership Common Units and Partnership Preferred Units, including Preferred Units, beneficially owned by a Related Party of a Tendering Party shall be considered to be owned or held by such Tendering Party. i. In connection with an exercise of Redemption rights pursuant to this Section 6, the Tendering Party shall submit the following to the General Partner, in addition to the Notice of Redemption: U-11 14 (1) A written affidavit, dated the same date as the Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares and any other classes or shares of the Previous General Partner by (i) such Tendering Party and (ii) any Related Party and (b) representing that, after giving effect to the Redemption, neither the Tendering Party nor any Related Party will own REIT Shares in excess of the Ownership Limit; (2) A written representation that neither the Tendering Party nor any Related Party has any intention to acquire any additional REIT Shares or any other class of shares of the Previous General Partner prior to the closing of the Redemption on the Specified Redemption Date; and (3) An undertaking to certify, at and as a condition to the closing of the Redemption on the Specified Redemption Date, that either (a) the actual and constructive ownership of REIT Shares or any other class of shares of the Previous General Partner by the Tendering Party and any Related Party remain unchanged from that disclosed in the affidavit required by Section 6(i)(a) or (b)) after giving effect to the Redemption, neither the Tendering Party nor any Related Party shall own REIT Shares or other shares of the Previous General Partner in violation of the Ownership Limit. j. On or after the Specific Redemption Date, each holder of Preferred Units shall surrender to the Partnership the certificate evidencing such holder's Preferred Units, at the address to which a Notice of Redemption is required to be sent. Upon such surrender of a certificate, the Partnership shall thereupon pay the former holder thereof the applicable Cash Amount and/or deliver REIT Shares for the Preferred Units evidenced thereby. From and after the Specific Redemption Date (i) distributions with respect to the Preferred Units shall cease to accumulate, (ii) the Preferred Units shall no longer be deemed outstanding, (iii) the holders thereof shall cease to be Partners to the extent of their interest in such Preferred Units, and (iv) all rights whatsoever with respect to the Preferred Units shall terminate, except the right of the holders of the Preferred Units to receive Cash Amount and/or REIT Shares therefor, without interest or any sum of money in lieu of interest thereon, upon surrender of their certificates therefor. k. Notwithstanding the provisions of this Section 6, the Tendering Parties (i) shall not be entitled to elect or effect a Redemption where the Redemption would consist of less than all the Preferred Units held by Partners and, to the extent that the aggregate Percentage Interests of the Limited Partners would be reduced, as a result of the Redemption, to less than one percent (1%) and (ii) shall have no rights under the Agreement that would otherwise be prohibited under the Charter. To the extent that any attempted Redemption would be in violation of this Section 6(k), it shall be null and void ab initio, and the Tendering Party shall not acquire any rights or economic interests in REIT Shares otherwise issuable by the Previous General Partner hereunder. l. Notwithstanding any other provision of the Agreement, on and after the date on which the aggregate Percentage Interests of the Limited Partners (other than the Special Limited Partner) are less than one percent (1%), the Partnership shall have the right, but not the obligation, from time to time and at any time to redeem any and all outstanding Limited Partner Interests (other than the Special Limited Partner's Limited Partner Interest) by treating any Limited Partner as a Tendering Party who has delivered a Notice of Redemption pursuant to this Section 6 for the amount of Preferred Units U-12 15 to be specified by the General Partner, in its sole and absolute discretion, by notice to such Limited Partner that the Partnership has elected to exercise its rights under this Section 6(l). Such notice given by the General Partner to a Limited Partner pursuant to this Section 6(l) shall be treated as if it were a Notice of Redemption delivered to the General Partner by such Limited Partner. For purposes of this Section 6(l), (a) any Limited Partner (whether or not eligible to be a Tendering Party) may, in the General Partner's sole and absolute discretion, be treated as a Tendering Party and (b) the provisions of Sections 6(f)(1), 6(h)(2), 6(h)(3) and 6(h)(5) hereof shall not apply, but the remainder of this Section shall apply, mutatis mutandis. 7. STATUS OF REACQUIRED UNITS. All Preferred Units which shall have been issued and reacquired in any manner by the Partnership shall be deemed cancelled and no longer outstanding. 8. GENERAL. The ownership of the Preferred Units shall be evidenced by one or more certificates in the form of Annex II hereto. The General Partner shall amend Exhibit A to the Agreement from time to time to the extent necessary to reflect accurately the issuance of, and subsequent redemption, or any other event having an effect on the ownership of, the Class Three Partnership Preferred Units. 9. ALLOCATIONS OF INCOME AND LOSS. Subject to the terms of Section 5 hereof, for each taxable year, (i) each holder of Preferred Units will be allocated, to the extent possible, net income of the Partnership in an amount equal to the distributions made on such holder's Preferred Units during such taxable year, and (ii) each holder of Preferred Units will be allocated its pro rata share, based on the portion of outstanding Preferred Units held by it, of any net loss of the Partnership that is not allocated to holders of Partnership Common Units or other interests in the Partnership. 10. VOTING RIGHTS. Except as otherwise required by applicable law or in the Agreement, the holders of the Preferred Units will have the same voting rights as holders of the Partnership Common Units. So long as any Preferred Units are outstanding, for purposes of determining the Consent of Limited Partners under the Agreement, the "Majority in Interest of the Limited Partners" shall have the meaning set forth in Section 2 hereof. As long as my Preferred Units are outstanding, in addition to any other vote or consent of partners required by law or by the Agreement, the affirmative vote or consent of holders of at least 50% of the outstanding Preferred Units will be necessary for effecting any amendment of any of the provisions of the Partnership Unit Designation of the Preferred Units that materially and adversely affects the rights or preferences of the holders of the Preferred Units. The creation or issuance of any class or series of Partnership units, including, without limitation, any Partnership units that may have rights junior to, on a parity with, or senior or superior to the Preferred Units, will not be deemed to have a material adverse effect on the rights or preferences of the holders of Preferred Units. With respect to the exercise of the above described voting rights, each Preferred Unit will have one (1) vote per Preferred Unit. U-13 16 11. RESTRICTIONS ON TRANSFER. Preferred Units are subject to the same restrictions on transfer as are, and the holders of Preferred Units shall be entitled to the same rights of transfer as are, applicable to Common Units as set forth in the Agreement. U-14 17 ANNEX I TO EXHIBIT U NOTICE OF REDEMPTION To: AIMCO Properties, L.P. c/o AIMCO-GP, Inc. Tower Two 2000 South Colorado Boulevard, Suite 2-1000 Denver, Colorado 80222 Attention: Investor Relations The undersigned Limited Partner or Assignee hereby irrevocably tenders for redemption Class Three Partnership Preferred Units in AIMCO Properties, L.P. in accordance with the terms of the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994, as it may be amended and supplemented from time to time (the "Agreement"). All capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Partnership Unit Designation of the Class Three Partnership Preferred Units. The undersigned Limited Partner or Assignee: (a) if the Partnership elects to redeem such Class Three Partnership Preferred Units for REIT Shares rather than cash, hereby irrevocably transfers, assigns, contributes and sets over to Previous General Partner all of the undersigned Limited Partner's or Assignee's right, title and interest in and to such Class Three Partnership Preferred Units; (b) undertakes (i) to surrender such Class Three Partnership Preferred Units and any certificate therefor at the closing of the Redemption contemplated hereby and (ii) to furnish to Previous General Partner, prior to the Specified Redemption Date: (1) A written affidavit, dated the same date as this Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) the undersigned Limited Partner or Assignee and (ii) any Related Party and (b) representing that, after giving effect to the Redemp tion, neither the undersigned Limited Partner or Assignee nor any Related Party will own REIT Shares in excess of the Ownership Limit; (2) A written representation that neither the undersigned Limited Partner or Assignee nor any Related Party has any intention to acquire any additional REIT Shares prior to the closing of the Redemption contemplated hereby on the Specified Redemption Date; and (3) An undertaking to certify, at and as a condition to the closing of the Redemption contemplated hereby on the Specified Redemption U-15 18 Date, that either (a) the actual and constructive ownership of REIT Shares by the undersigned Limited Partner or Assignee and any Related Party remain unchanged from that disclosed in the affidavit required by paragraph (1) above, or (b) after giving effect to the Redemption contemplated hereby, neither the undersigned Limited Partner or Assignee nor any Related Party shall own REIT Shares in violation of the Ownership Limit. (c) directs that the certificate representing the REIT Shares, or the certified check representing the Cash Amount, in either case, deliverable upon the closing of the Redemption contemplated hereby be delivered to the address specified below; (d) represents, warrants, certifies and agrees that: (i) the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, good, marketable and unencumbered title to such Preferred Units, free and clear of the rights or interests of any other person or entity; (ii) the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, the full right, power and authority to tender and surrender such Preferred Units as provided herein; and (iii) the undersigned Limited Partner or Assignee has obtained the consent or approval of all persons and entities, if any, having the right to consent to or approve such tender and surrender. Dated: ------------------ Name of Limited Partner or Assignee: ------------------------------------------ ------------------------------------------ (Signature of Limited Partner or Assignee) ------------------------------------------ (Street Address) ------------------------------------------ (City) (State) (Zip Code) (continued on the next page) U-16 19 Issue check payable to or Certificates in the name of: ------------------------------------ Please insert social security or identifying number: ------------------------------------ Signature Guaranteed by: ------------------------------------ NOTICE: THE SIGNATURE OF THIS NOTICE OF REDEMPTION MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE FOR THE CLASS THREE PREFERRED UNITS WHICH ARE BEING REDEEMED IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions), WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC RULE 17Ad-15. U-17 20 ANNEX II TO EXHIBIT U FORM OF UNIT CERTIFICATE OF CLASS THREE PARTNERSHIP PREFERRED UNITS THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE LIMITED PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., DATED AS OF JULY 29, 1994, AS IT MAY BE AMENDED AND/OR SUPPLE- MENTED FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED FROM AIMCO- GP, INC, THE GENERAL PARTNER, AT ITS PRINCIPAL EXECUTIVE OFFICE. Certificate Number -------- AIMCO PROPERTIES, L.P. FORMED UNDER THE LAWS OF THE STATE OF DELAWARE This certifies that ------------------------------------------------------------ is the owner of ---------------------------------------------------------------- CLASS THREE PARTNERSHIP PREFERRED UNITS OF AIMCO PROPERTIES, L.P., transferable on the books of the Partnership in person or by duly authorized attorney on the surrender of this Certificate properly endorsed. This Certificate and the Class Three Partnership Preferred Units represented hereby are issued and shall be held subject to all of the provisions of the Agreement of Limited Partnership of AIMCO Properties, L.P., as the same may be amended and/or supplemented from time to time. IN WITNESS WHEREOF, the undersigned has signed this Certificate. Dated: By ------------------------------- U-18 21 ASSIGNMENT For Value Received, ________________________________ hereby sells, assigns and transfers unto ______________________ Class Three Partnership Preferred Unit(s) represented by the within Certificate, and does hereby irrevocably constitute and appoint the General Partner of AIMCO Properties, L.P. as its Attorney to transfer said Class Three Partnership Preferred Unit(s) on the books of AIMCO Properties, L.P. with full power of substitution in the premises. Dated: --------------------- By: ------------------------------ Name: Signature Guaranteed by: ---------------------------------- NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions), WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC RULE 17Ad-15. U-19 EX-10.11 6 10TH AMENDMENT TO 3RD AMENDED/RESTATED AGREEMENT 1 EXHIBIT 10.11 TENTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P. This TENTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of December 21, 1999 (this "Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the "General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware limited partnership (the "Partnership"), pursuant to the authority conferred on the General Partner by Section 7.3.C(7) of the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994, as amended and/or supplemented from time to time (the "Agreement"). Capitalized terms used, but not otherwise defined herein, shall have the respective meanings ascribed thereto in the Agreement. WHEREAS, pursuant to Section 4.2.A of the Agreement, the General Partner is authorized to determine the designations, preferences and relative, participating, optional or other special rights, powers and duties of Partnership Preferred Units. NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: (1) The Agreement is hereby amended by the addition of a new exhibit, entitled "Exhibit V," in the form attached hereto, which shall be attached to and made a part of the Agreement. (2) Except as specifically amended hereby, the terms, covenants, provisions and conditions of the Agreement shall remain unmodified and continue in full force and effect and, except as amended hereby, all of the terms, covenants, provisions and conditions of the Agreement are hereby ratified and confirmed in all respects. IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above. THE GENERAL PARTNER: AIMCO-GP, INC. By: /s/ PETER KOMPANIEZ -------------------------------- Name: Title: 2 EXHIBIT V PARTNERSHIP UNIT DESIGNATION OF THE CLASS FIVE PARTNERSHIP PREFERRED UNITS OF AIMCO PROPERTIES, L.P. 1. NUMBER OF UNITS AND DESIGNATION. A class of Partnership Preferred Units is hereby designated as "Class Five Partnership Preferred Units," and the number of Partnership Preferred Units constituting such class shall be 150,000. 2. DEFINITIONS. Capitalized terms used and not otherwise defined herein shall have the meanings assigned thereto in the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P. as amended, supplemented or restated from time to time (the "Agreement"), as modified by this Partnership Unit Designation and the defined terms used herein. For purposes of this Partnership Unit Designation, the following terms shall have the respective meanings ascribed below: "Assignee" shall mean a Person to whom one or more Class Five Partnership Preferred Units have been Transferred in a manner permitted under the Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5 of the Agreement. "Class Five Partnership Preferred Unit" shall mean a Partnership Preferred Unit with the designations, preferences and relative, participating, optional or other special rights, powers and duties as are set forth in this Partnership Unit Designation. "Fair Market Value" shall mean, at any time and with respect to any Class Five Partnership Preferred Units, the greater of (i) that portion of the capital account balance of the holder of such Class Five Partnership Preferred Units at that time attributable solely to such Class Five Partnership Preferred Units, or (ii) zero. Majority in Interest of the Limited Partners" means Limited Partners (other than (i) the Special Limited Partner and (ii) any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by the (a) General Partner or (b) any REIT as to which the General Partner is a "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))) holding more than fifty percent (50%) of the outstanding Partnership Common Units, Class I High Performance Partnership Units, Class Four Partnership Preferred Units, Class Five Partnership Preferred Units, and all other outstanding classes of Partnership Units held by all Limited Partners (other than (i) the Special Limited Partner and (ii) any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by (a) the General Partner or (b) any REIT as to which the General Partner is a "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2))). "Notice of Redemption" shall mean a Notice of Redemption in the form of Annex I to this Partnership Unit Designation. V-1 3 "Partnership" shall mean AIMCO Properties, L.P., a Delaware limited partnership. "Transfer Agent" shall mean such transfer agent as may be designated by the Partnership or its designee as the transfer agent for the Class Five Partnership Preferred Units; provided, that if the Partnership has not designated a transfer agent, then the Partnership shall act as the Transfer Agent for the Class Five Partnership Preferred Units. 3. CASH DISTRIBUTIONS. At any time that the Partnership pays cash distributions to holders of Partnership Common Units, the Partnership shall pay cash distributions to holders of the Class Five Partnership Preferred Units in an amount per Class Five Partnership Preferred Unit equal to the per unit distribution on the Partnership Common Units; provided, that distributions upon liquidation of the Partnership shall be made in accordance with Section 13.2 of the Agreement. Holders of Class Five Partnership Preferred Units will not be entitled to receive any other distributions. If a record date is established by the General Partner for the payment of distributions in respect of Partnership Common Units, the same date shall be the record date for payment of distributions in respect of the Class Five Partnership Preferred Units. With respect to the first distribution paid to holders of Class Five Partnership Preferred Units after the initial issuance thereof, such distribution shall be pro rated based on the portion of the period in respect of which such distribution is paid that such that such Class Five Partnership Preferred Units were outstanding. 4. REDEMPTION. (a) The Class Five Partnership Preferred Units may be redeemed at the option of the Partnership at any time at a redemption price payable in cash equal to the Fair Market Value of such Class Five Partnership Preferred Units. (b) The redemption date shall be selected by the Partnership, shall be specified in a notice of redemption, and shall be not less than 5 days nor more than 60 days after the date notice of redemption is sent by the Partnership. (c) If the Partnership shall redeem Class Five Partnership Preferred Units, notice of such redemption shall be given to each holder of record of the Class Five Partnership Preferred Units to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the records of the Partnership. Neither the failure to mail any notice required by this paragraph (c), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which has been mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (i) the redemption date; (ii) the place or places at which certificates for such shares are to be surrendered for cash; and (iii) the redemption price payable on such redemption date. Notice having been mailed as aforesaid, from and after the redemption date (unless the Partnership shall fail to make available the amount of cash necessary to effect such redemption), (i) such Class Five Partnership Preferred Units shall no longer be deemed to be outstanding, and (ii) all rights of the holders thereof as holders of Class Five Partnership Preferred Units shall cease except the right to receive the cash payable upon such redemption, without interest thereon, upon surrender of their certificates if so required. As promptly as practicable after the surrender in accordance with such notice of the certificates for any V-2 4 such Class Five Partnership Preferred Units to be so redeemed (properly endorsed or assigned for transfer, if the Partnership shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. 5. CONVERSION. (a) Subject to and upon compliance with the provisions of this Section 5, on or after December 21, 2000, a holder of Class Five Partnership Preferred Units shall have the right, at such holder's option, to convert such units, in whole or in part, into the number of Partnership Common Units obtained by dividing (i) the Fair Market Value of the Class Five Partnership Preferred Units converted, by (ii) the value of a REIT Share (assuming, for such purpose, that the Valuation Date is the date of conversion of such units). In order to exercise the conversion right, the holder of each Class Five Partnership Preferred Unit to be converted shall surrender the certificate representing such unit, duly endorsed or assigned to the Partnership or in blank at the office of the Transfer Agent, accompanied by written notice to the Partnership that the holder thereof elects to covert such Class Five Partnership Preferred Unit. (b) (i) Unless the Partnership Common Units issuable on conversion are to be issued in the same name as the name in which such Class Five Partnership Preferred Units are registered, each such unit surrendered following conversion shall be accompanied by instruments of transfer, in form satisfactory to the Partnership, duly executed by the holder or such holder's duly authorized representa tive, and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Partnership demonstrating that such taxes have been paid). (ii) As promptly as practicable after the surrender of certificates for Class Five Partnership Preferred Units as aforesaid, and in any event no later than three business days after the date of such surrender, the Partnership shall issue and deliver at such office to such holder, or send on such holders' written order, a certificate or certificates for the number of full Partnership Common Units issuable upon the conversion of such Class Five Partnership Preferred Units in accordance with the provisions of this Section 5, and any fractional interest in respect of a Partnership Common Unit arising upon such conversion shall be settled as provided in paragraph (c) of this Section 5. (iii) Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for Class Five Partnership Preferred Units shall have been surrendered to the Partnership for conversion as provided in paragraph (a) of this Section 5; and the person or persons in whose name or names any certificate or certificates for Partnership Common Units shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the units represented thereby at such time on such date unless the transfer books of the Partnership shall be closed on that date, in which event such person or persons shall be deemed to become such holder or holders of record at the close of business on the next succeeding day on which such transfer books are open. (c) No fractional Partnership Common Units or scrip representing fractions of a Partnership Common Unit shall be issued upon conversion of the Class Five Partnership Preferred Units. Instead of any fractional interest in a Partnership Common Unit that would otherwise be deliverable upon the conversion of Class Five Partnership Preferred Units, the Partnership shall pay to the holder of such V-3 5 units an amount of cash equal to the Fair Market Value of such fractional interest as of the date of conversion. If more than one of any holder's units shall be converted at one time, the number of full Partnership Common Units issuable upon conversion thereof shall be computed on the basis of the aggregate number of Class Five Partnership Preferred Units so converted. (d) If the Partnership shall be a party to any transaction (including with limitation a merger, consolidation, statutory exchange, sale of all or substantially all of the Partnership's assets or recapitalization of the Partnership Common Units, but excluding any transaction as to which a change in the Adjustment Factor would be effected) (each of the foregoing being referred to herein as a "Transaction"), in each case, as a result of which Partnership Common Units shall be converted into the right to receive securities or other property (including cash or any combination thereof), each Class Five Partnership Preferred Unit which is not converted into the right to receive securities or other property in connection with such Transaction shall thereupon be convertible into the kind and amount of securities and other property (including cash or any combination thereof) receivable upon such consummation by a holder of that number of Partnership Common Units into which a Class Five Partnership Preferred Unit was convertible immediately prior to such Transaction. The Partnership shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (d), and it shall not consent or agree to the occurrence of any Transaction until the Partnership has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Class Five Partnership Preferred Units that will contain provisions enabling the holders of Class Five Partnership Preferred Units that remain outstanding after such Transaction to convert into the consideration received by holders of Partnership Common Units at the conversion price in effect immediately prior to such Transaction. The provisions of this paragraph (d) shall apply to successive Transactions. (e) The Partnership will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Partnership Common Units or other securities or property on conversion of Class Five Partnership Preferred Units pursuant hereto; provided, however, that the Partnership shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of Partnership Common Units or other securities or property in a name other than that of the holder of the Class Five Partnership Preferred Units to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Partnership the amount of any such tax or established, to the reasonable satisfaction of the Partnership, that such tax has been paid. 6. STATUS OF REACQUIRED UNITS. All Class Five Partnership Preferred Units which shall have been issued and reacquired in any manner by the Partnership shall be deemed cancelled and no longer outstanding. 7. GENERAL. The ownership of the Class Five Partnership Preferred Units shall be evidenced by one or more certificates in the form of Annex II hereto. The General Partner shall amend Exhibit A to the Agreement from time to time to the extent necessary to reflect accurately the issuance of, and subsequent redemption, or any other event having an effect on the ownership of, the Class Five Partnership Preferred Units. V-4 6 8. ALLOCATIONS OF INCOME AND LOSS; CAPITAL ACCOUNTS. Upon initial issuance, the capital account balance attributable to the Class Five Partnership Preferred Units shall be zero. Thereafter, for each Fiscal Year, the Class Five Partnership Preferred Units shall be allocated a portion of the Net Income and Net Loss of the Partnership equal to the portion of the Net Income and Net Loss of the Partnership that would be allocated to such Class Five Partnership Preferred Units pursuant to Article 6 of the Agreement if the Class Five Partnership Preferred Units were Partnership Common Units. In addition, (i) not more than 60 days prior to a redemption of Class Five Partnership Preferred Units pursuant to Section 4 hereof and (ii) at any time after December 21, 2001, upon (x) a sale of substantially all of the assets of the Partnership or a liquidation, dissolution, or winding up of the Partnership or (y) in the event the Gross Asset Value of any Partnership Asset is adjusted pursuant to subsection (b) or (c) of the definition of "Gross Asset Value" in the Agreement, to the extent possible, the Partnership shall first allocate Partnership gain (and, to the extent necessary, gross income) among the Class Five Partnership Preferred Units (the "Special Allocation") in an amount equal to that necessary to permit each Class Five Partnership Preferred Unit to receive, upon a liquidation, dissolution, or winding up of the Partnership pursuant to Section 13.2 of the Agreement, an amount of assets of the Partnership equal to the amount of assets that would be receivable with respect to a Partnership Common Unit, as determined on a per unit basis. Notwithstanding the foregoing, the Class Five Partnership Preferred Units shall not be entitled to receive, and shall not receive, the Special Allocation unless and until the Class I High Performance Partnership Units have been allocated the full amount of Partnership income and gain required under Section 5 of the Partnership Unit Designation for the Class I High Performance Partnership Units. 9. VOTING RIGHTS Except as otherwise required by applicable law or in the Agreement, the holders of the Class Five Partnership Preferred Units will have the same voting rights as holders of the Partnership Common Units. As long as any Class Five Partnership Preferred Units are outstanding, for purposes of determining the Consent of Limited Partners under the Agreement, the "Majority In Interest of the Limited Partners" shall have the meaning set forth in Section 2 hereof. As long as any Class Five Partnership Preferred Units are outstanding, in addition to any other vote or consent of partners required by law or by the Agreement, the affirmative vote or consent of holders of at least 50% of the outstanding Class Five Partnership Preferred Units will be necessary for effecting any amendment of any of the provisions of the Partnership Unit Designation of the Class Five Partnership Preferred Units that materially and adversely affects the rights or preferences of the holders of the Class Five Partnership Preferred Units. The creation or issuance of any class or series of Partnership Units, including, without limitation, any Partnership Units that may have rights junior to, on a parity with, or senior or superior to the Class Five Partnership Preferred Units, will not be deemed to materially and adversely affect the rights or preferences of the holders of the Class Five Partnership Preferred Units. With respect to the exercise of the above-described voting rights, each Class Five Partnership Preferred Unit will have one (1) vote per Class Five Partnership Preferred Unit. 10. RESTRICTIONS ON TRANSFER. Class Five Partnership Preferred Units are subject to the same restrictions on transfer applicable to Partnership Common Units, as set forth in the Agreement. V-5 7 ANNEX I TO EXHIBIT V FORM OF UNIT CERTIFICATE OF CLASS FIVE PARTNERSHIP PREFERRED UNITS THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE LIMITED PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., DATED AS OF JULY 29, 1994, AS IT MAY BE AMENDED AND/OR SUPPLEMENTED FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED FROM AIMCO-GP, INC, THE GENERAL PARTNER, AT ITS PRINCIPAL EXECUTIVE OFFICE. Certificate Number --------- AIMCO PROPERTIES, L.P. FORMED UNDER THE LAWS OF THE STATE OF DELAWARE This certifies that ------------------------------------------------------------ is the owner of ---------------------------------------------------------------- CLASS FIVE PARTNERSHIP PREFERRED UNITS OF AIMCO PROPERTIES, L.P., transferable on the books of the Partnership in person or by duly authorized attorney on the surrender of this Certificate properly endorsed. This Certificate and the Class Five Partnership Preferred Units represented hereby are issued and shall be held subject to all of the provisions of the Agreement of Limited Partnership of AIMCO Properties, L.P., as the same may be amended and/or supplemented from time to time. IN WITNESS WHEREOF, the undersigned has signed this Certificate. Dated: By: -------- ------------------------------------ Name: Title: V-I-1 8 ASSIGNMENT For Value Received, ____________________________ hereby sells, assigns and transfers unto _____________________________________________________________ ______________________________________________ Class Five Partnership Preferred Unit(s) represented by the within Certificate, and does hereby irrevocably constitute and appoint the General Partner of AIMCO Properties, L.P. as its Attorney to transfer said Class Five Partnership Preferred Unit(s) on the books of AIMCO Properties, L.P. with full power of substitution in the premises. Dated: --------------------- By: ----------------------------------------- Name: Signature Guaranteed by: -------------------- NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions), WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC RULE 17Ad-15. V-I-2 EX-10.12 7 11TH AMENDMENT TO 3RD AMENDED/RESTATED AGREEMENT 1 EXHIBIT 10.12 ELEVENTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P. This ELEVENTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of January 13, 2000 (this "Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the "General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware limited partnership (the "Partnership"), pursuant to the authority conferred on the General Partner by Section 7.3.C(7) of the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994 (the "Agreement"). Capitalized terms used, but not otherwise defined herein, shall have the respective meanings ascribed thereto in the Agreement. WHEREAS, on January 11, 2000, the Previous General Partner filed Articles Supplementary amending its Charter to reclassify 1,816,216 shares of authorized but unissued shares of its Class A Common Stock, par value $.01 per share, as shares of its Class M Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class M Preferred Stock"); WHEREAS, in accordance with Section 4.3.E of the Agreement, upon the issuance of any such shares of Class M Preferred Stock, the Previous General Partner will contribute the net cash proceeds from such issuance to the Special Limited Partner, which will contribute such net cash proceeds to the Partnership in exchange for a number of Partnership Preferred Units equal to the number of shares of Class M Preferred Stock so issued, which Partnership Preferred Units shall have designations, preferences and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms and provisions of the Class M Preferred Stock, except as otherwise set forth herein; and WHEREAS, pursuant to Section 4.2.A of the Agreement, the General Partner is authorized to determine the designations, preferences and relative, participating, optional or other special rights, powers and duties of such Partnership Preferred Units. NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The Agreement is hereby amended by the addition of a new exhibit, entitled "Exhibit W," in the form attached hereto, which shall be attached to and made a part of the Agreement. 2. Except as specifically amended hereby, the terms, covenants, provisions and conditions of the Agreement shall remain unmodified and continue in full force and effect and, except as amended hereby, all of the terms, covenants, provisions and conditions of the Agreement are hereby ratified and confirmed in all respects. 2 IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above. GENERAL PARTNER: AIMCO-GP, INC. By: /s/ PETER K. KOMPANIEZ -------------------------------------- Name: Peter K. Kompaniez Title: President and Vice Chairman 2 3 EXHIBIT W PARTNERSHIP UNIT DESIGNATION OF THE CLASS M PARTNERSHIP PREFERRED UNITS OF AIMCO PROPERTIES, L.P. 1. NUMBER OF UNITS AND DESIGNATION. A class of Partnership Preferred Units is hereby designated as "Class M Partnership Preferred Units," and the number of Partnership Preferred Units constituting such class shall be 1,816,216. 2. DEFINITIONS. For purposes of the Class M Partnership Preferred Units, the following terms shall have the meanings indicated in this Section 2, and capitalized terms used and not otherwise defined herein shall have the meanings assigned thereto in the Agreement: "Agreement" shall mean the Third Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of July 29, 1994, as amended. "Call Date" shall have the meaning set forth in paragraph (a) of Section 5 of this Exhibit W. "Class M Partnership Preferred Unit" means a Partnership Preferred Unit with the designations, preferences and relative, participating, optional or other special rights, powers and duties as are set forth in this Exhibit W. It is the intention of the General Partner that each Class M Partnership Preferred Unit shall be substantially the economic equivalent of one share of Class M Preferred Stock. "Class M Preferred Stock" means the Class M Convertible Cumulative Preferred Stock, par value $0.01 per share, of the Previous General Partner. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Previous General Partner or such shares of the Previous General Partner's capital stock into which outstanding shares of Common Stock shall be reclassified. W-1 4 "Distribution Payment Date" shall mean any date on which cash dividends are paid on all outstanding shares of the Class M Preferred Stock. "Junior Partnership Units" shall have the meaning set forth in paragraph (c) of Section 8 of this Exhibit W. "Parity Partnership Units" shall have the meaning set forth in paragraph (b) of Section 8 of this Exhibit W. "Partnership" shall mean AIMCO Properties, L.P., a Delaware limited partnership. "Senior Partnership Units" shall have the meaning set forth in paragraph (a) of Section 8 of this Exhibit W. 3. DISTRIBUTIONS. On every Distribution Payment Date, the holders of Class M Partnership Preferred Units shall be entitled to receive distributions payable in cash in an amount per Class M Partnership Preferred Unit equal to the per share dividend payable on the Class M Preferred Stock on such Distribution Payment Date. Each such distribution shall be payable to the holders of record of the Class M Partnership Preferred Units, as they appear on the records of the Partnership at the close of business on the record date for the dividend payable with respect to the Class M Preferred Stock on such Distribution Payment Date. Holders of Class M Partnership Preferred Units shall not be entitled to any distributions on the Class M Partnership Preferred Units, whether payable in cash, property or stock, except as provided herein. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Partnership, whether voluntary or involuntary, before any payment or distribution of the Partnership (whether capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Partnership Units, the holders of Class M Partnership Preferred Units shall be entitled to receive the greater of (i) Twenty-Five Dollars ($25) per Class M Partnership Preferred Unit (the "Liquidation Preference"), plus an amount per Class M Partnership Preferred Unit equal to all dividends (whether or not declared or earned) accumulated, accrued and unpaid on one share of Class M Preferred Stock to the date of final distribution to such holders, or (ii) the amount that would be payable to the holders of Partnership Common Units if they had converted all outstanding shares of Class M Partnership Preferred Units into shares of Partnership Common Units immediately prior to such liquidation, dissolution or winding up; but such holders shall not be entitled to any further payment. Until the holders of the Class M Partnership Preferred Units have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not declared or earned) accumulated, accrued and unpaid on the Class M Preferred Stock to the date of final distribution to such holders, no payment shall be made to any holder of Junior Partnership Units upon the liquidation, dissolution or winding W-2 5 up of the Partnership. If, upon any liquidation, dissolution or winding up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of Class M Partnership Preferred Units shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any Parity Partnership Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Class M Partnership Preferred Units and any such Parity Partnership Units ratably in the same proportion as the respective amounts that would be payable on such Class M Partnership Preferred Units and any such other Parity Partnership Units if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Partnership with one or more partnerships, or (ii) a sale or transfer of all or substantially all of the Partnership's assets shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Partnership. (b) Upon any liquidation, dissolution or winding up of the Partnership, after payment shall have been made in full to the holders of Class M Partnership Preferred Units and any Parity Partnership Units, as provided in this Section 4, any other series or class or classes of Junior Partnership Units shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class M Partnership Preferred Units and any Parity Partnership Units shall not be entitled to share therein. 5. REDEMPTION. Class M Partnership Preferred Units shall be redeemable by the Partnership as follows: (a) At any time that the Previous General Partner exercises its right to redeem all or any of the shares of Class M Preferred Stock, the General Partner shall cause the Partnership to redeem an equal number of Class M Partnership Preferred Units, at a redemption price per Class M Partnership Preferred Unit equal to the same price paid by the Previous General Partner to redeem the Class M Preferred Stock and such price shall be paid in the same manner (including but not limited to, by means of issuance of long-term indebtedness for purpose of such redemption) as paid by the Previous General Partner for the Class M Preferred Stock redeemed (the "Call Date"), in the manner set forth herein; provided, however, that in the event of a redemption of Class M Partnership Preferred Units, if the Call Date occurs after a dividend record date for the Class M Preferred Stock and on or prior to the related Distribution Payment Date, the distribution payable on such Distribution Payment Date in respect of such Class M Partnership Preferred Units called for redemption shall be payable on such Distribution Payment Date to the holders of record of such Class M Partnership Preferred Units on the applicable dividend record date, and shall not be payable as part of the redemption price for such Class M Partnership Preferred Units. (b) If the Partnership shall redeem Class M Partnership Preferred Units pursuant to paragraph (a) of this Section 5, from and after the Call Date (unless the Partnership shall fail to make available the amount of cash or other forms of consideration necessary to effect such redemption), (i) except for payment of the redemption price, the Partnership shall not make any further distributions on the Class M Partnership Preferred Units so called for redemption, (ii) said W-3 6 units shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class M Partnership Preferred Units of the Partnership shall cease except the rights to receive the cash payable upon such redemption, without interest thereon; provided, however, that if a Call Date occurs after a dividend record date for the Class M Preferred Stock and on or prior to the related Distribution Payment Date, the full distribution payable on such Distribution Payment Date in respect of such Class M Partnership Preferred Units called for redemption shall be payable on such Distribution Payment Date to the holders of record of such Class M Partnership Preferred Units on the applicable dividend record date notwithstanding the prior redemption of such Class M Partnership Preferred Units. No interest shall accrue for the benefit of the holders of Class M Partnership Preferred Units to be redeemed on any cash set aside by the Partnership. 6. STATUS OF REACQUIRED UNITS. All Class M Partnership Preferred Units which shall have been issued and reacquired in any manner by the Partnership shall be deemed cancelled. 7. CONVERSION. Class M Partnership Preferred Units shall be convertible as follows: (a) Upon any conversion of shares of Class M Preferred Stock into shares of Common Stock, the General Partner shall cause a number of Class M Partnership Preferred Units equal to the number of such converted shares of Class M Preferred Stock to be converted by the holders thereof into Partnership Common Units. The conversion ratio in effect from time to time for the conversion of Class M Partnership Preferred Units into Partnership Common Units pursuant to this Section 7 shall at all times be equal to, and shall be automatically adjusted as necessary to reflect, the conversion ratio in effect from time to time for the conversion of Class M Preferred Stock into Common Stock. (b) In the event of a conversion of any Class M Partnership Preferred Units, the Partnership shall make a cash payment to the holder thereof equal to the cash payment required to be made by the Previous General Partner to the holder of the shares of Class M Preferred Stock the conversion of which required the conversion of such Class M Partnership Preferred Units. Holders of Class M Partnership Preferred Units at the close of business on a distribution payment record date shall be entitled to receive the distribution payable on such units on the corresponding Distribution Payment Date notwithstanding the conversion thereof following such distribution payment record date and prior to such Distribution Payment Date. Except as provided above, the Partnership shall make no payment or allowance for unpaid distributions on converted units or for distributions on the Partnership Common Units issued upon such conversion. Each conversion of Class M Partnership Preferred Units into Partnership Common Units shall be deemed to have been effected at the same time and date that the corresponding conversion of Class M Preferred Stock into Common Stock is deemed to have been effected. W-4 7 (c) No fractional Partnership Common Units shall be issued upon conversion of Class M Partnership Preferred Units. Instead of any fractional Partnership Common Units that would otherwise be deliverable upon the conversion of Class M Partnership Preferred Units, the Partnership shall pay to the holder of such converted units an amount in cash equal to the cash payable to a holder of an equivalent number of converted shares of Class M Preferred Stock in lieu of fractional shares of Common Stock. (d) The Partnership will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of (i) the issue or delivery of Partnership Common Units or other securities or property on conversion or redemption of Class M Partnership Preferred Units pursuant hereto, and (ii) the issue or delivery of Common Stock or other securities or property on conversion or redemption of Class M Preferred Stock pursuant to the terms hereof. 8. RANKING. Any class or series of Partnership Units of the Partnership shall be deemed to rank: (a) prior or senior to the Class M Partnership Preferred Units, as to the payment of distributions and as to distributions of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class M Partnership Preferred Units ("Senior Partnership Units"); (b) on a parity with the Class M Partnership Preferred Units, as to the payment of distributions and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the distribution rates, distribution payment dates or redemption or liquidation prices per unit or other denomination thereof be different from those of the Class M Partnership Preferred Units if (i) such class or series of Partnership Units shall be Class B Partnership Preferred Units, Class C Partnership Preferred Units, Class D Partnership Preferred Units, Class G Partnership Preferred Units, Class H Partnership Preferred Units, Class I Partnership Preferred Units, Class J Partnership Preferred Units, Class K Partnership Preferred Units, Class L Partnership Preferred Units, Class One Partnership Preferred Units, or Class Two Partnership Preferred Units or (ii) the holders of such class or series of Partnership Units and the Class M Partnership Preferred Units shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid distributions per unit or other denomination or liquidation preferences, without preference or priority one over the other (the Partnership Units referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Partnership Units"); and (c) junior to the Class M Partnership Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such class or series of Partnership Units shall be Partnership Common Units or Class I High Performance Partnership Units or (ii) the holders of Class M Partnership Preferred Units shall be W-5 8 entitled to receipt of distributions or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of such class or series of Partnership Units (the Partnership Units referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Partnership Units"). 9. SPECIAL ALLOCATIONS. (a) Gross income and, if necessary, gain shall be allocated to the holders of Class M Partnership Preferred Units for any Fiscal Year (and, if necessary, subsequent Fiscal Years) to the extent that the holders of Class M Partnership Preferred Units receive a distribution on any Class M Partnership Preferred Units (other than an amount included in any redemption pursuant to Section 5 hereof) with respect to such Fiscal Year. (b) If any Class M Partnership Preferred Units are redeemed pursuant to Section 5 hereof, for the Fiscal Year that includes such redemption (and, if necessary, for subsequent Fiscal Years) (a) gross income and gain (in such relative proportions as the General Partner in its discretion shall determine) shall be allocated to the holders of Class M Partnership Preferred Units to the extent that the redemption amounts paid or payable with respect to the Class M Partnership Preferred Units so redeemed exceeds the aggregate Capital Contributions (net of liabilities assumed or taken subject to by the Partnership) per Class M Partnership Preferred Unit allocable to the Class M Partnership Preferred Units so redeemed and (b) deductions and losses (in such relative proportions as the General Partner in its discretion shall determine) shall be allocated to the holders of Class M Partnership Preferred Units to the extent that the aggregate Capital Contributions (net of liabilities assumed or taken subject to by the Partnership) per Class M Partnership Preferred Unit allocable to the Class M Partnership Preferred Units so redeemed exceeds the redemption amount paid or payable with respect to the Class M Partnership Preferred Units so redeemed. 10. RESTRICTIONS ON OWNERSHIP. The Class M Partnership Preferred Units shall be owned and held solely by the General Partner or the Special Limited Partner. 11. GENERAL. (a) The ownership of Class M Partnership Preferred Units may (but need not, in the sole and absolute discretion of the General Partner) be evidenced by one or more certificates. The General Partner shall amend Exhibit A to the Agreement from time to time to the extent necessary to reflect accurately the issuance of, and subsequent conversion, redemption, or any other event having an effect on the ownership of, Class M Partnership Preferred Units. (b) The rights of the General Partner and the Special Limited Partner, in their capacity as holders of the Class M Partnership Preferred Units, are in addition to and not in limitation of any other rights or authority of the General Partner or the Special Limited Partner, W-6 9 respectively, in any other capacity under the Agreement or applicable law. In addition, nothing contained herein shall be deemed to limit or otherwise restrict the authority of the General Partner or the Special Limited Partner under the Agreement, other than in their capacity as holders of the Class M Partnership Preferred Units. W-7 EX-21.1 8 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 List of Subsidiaries 1. 7400 Roosevelt Corp. (MA) 2. AG A&R Services, Inc. (DE) 3. AG Management Company (DE) 4. AG Properties, Inc. (DE) 5. AIMCO/Beacon Hill, Inc. (DE) 6. AIMCO/Blossomtree, Inc. (DE) 7. AIMCO/Brant Rock, Inc. (DE) 8. AIMCO Calhoun, Inc. (DE) 9. AIMCO/Colonnade, Inc. (DE) 10. AIMCO/Foothills, Inc. (DE) 11. AIMCO/Fox Bay, Inc. (DE) 12. AIMCO/Foxtree, Inc. (DE) 13. AIMCO/Freedom Place, Inc. (DE) 14. AIMCO/Grovetree, Inc. (DE) 15. AIMCO/Hazeltree, Inc. (DE) 16. AIMCO/Hiddentree, Inc. (DE) 17. AIMCO Holdings QRS, Inc. (DE - incorporated September 27, 1995) 18. AIMCO/IPT, Inc. (DE) 19. AIMCO/Islandtree, Inc. (DE) 20. AIMCO LJ Tucson, Inc. (DE) 21. AIMCO/Olmos, Inc. (DE) 22. AIMCO/Orchidtree, Inc. (DE) 2 23. AIMCO/OTC QRS, Inc. (DE) 24. AIMCO/Pine Creek, Inc. (DE) 25. AIMCO/Polo Park, Inc. (DE) 26. AIMCO Properties Finance Corp. (DE - incorporated August 18, 1995) 27. AIMCO/Quailtree, Inc. (DE) 28. AIMCO/Rivercrest, Inc. (DE) 29. AIMCO/Sand Castles, Inc. (DE) 30. AIMCO/Sand Pebble, Inc. (DE) 31. AIMCO/Shadetree, Inc. (DE) 32. AIMCO/Shadow Lake, Inc. (DE) 33. AIMCO/Silktree, Inc. (DE) 34. AIMCO Somerset Inc. (DE) 35. AIMCO/Surrey Oaks, Inc. (DE) 36. AIMCO/Tall Timbers, Inc. (DE) 37. AIMCO/The Hills, Inc. (DE) 38. AIMCO/Timbertree, Inc. (DE) 39. AIMCO/Twinbridge, Inc. (DE) 40. AIMCO/Wickertree, Inc. (DE) 41. AIMCO/Wildflower, Inc. (DE) 42. AIMCO/Windsor Landing, Inc. (DE) 43. AIMCO/Woodhollow, Inc. (DE) 44. AIMCO/Wydewood, Inc. (DE) 45. AIMCO/Yorktree, Inc. (DE) 2 3 46. AIMCO-GP, Inc. (DE) 47. AIMCO-LP, Inc. (DE) 48. A.J. One, Inc. (DE) 49. A.J. Two, Inc. (DE) 50. Ambassador I, Inc. (DE) 51. Ambassador II, Inc. (DE) 52. Ambassador IV, Inc. (DE) 53. Ambassador V, Inc. (DE) 54. Ambassador VI, Inc. (DE) 55. Ambassador VII, Inc. (DE) 56. Ambassador VIII, Inc. (DE) 57. Ambassador IX, Inc. (DE) 58. Ambassador X, Inc. (DE) 59. Ambassador XI, Inc. (DE) 60. Ambassador Florida Partners, Inc. (DE) 61. Ambassador Texas, Inc. (DE) 62. AmReal Corporation (SC) 63. AmReal Realty, Inc. (SC) 64. Angeles Acceptance Directives, Inc. (DE) 65. Angeles Acceptance Pool, L.P. (CA) 66. Angeles Investment Properties, Inc. (CA) 67. Angeles Properties, Inc. (CA) 68. Angeles Realty Corporation (CA) 3 4 69. Angeles Realty Corporation II (CA) 70. Angeles Securitization Corporation (DE) 71. Brampton Corp. (CT) 72. Calmark/Fort Collins, Inc. (CA) 73. Capital Commercial, Inc. (MD) 74. Carriage AP X, Inc. (MI) 75. Casa del Mar, Inc. (FL) 76. CCP/III Village Greens GP, Inc. (SC) 77. CCP/IV Briar Bay GP, Inc. (SC) 78. Century Stoney Greens, Inc. (CA) 79. Colony of Springdale Properties, Inc. (TX) 80. ConCap CCP/IV River's Edge Properties, Inc. (TX) 81. ConCap CCP/IV Stratford Place Properties, Inc. (TX) 82. ConCap Equities, Inc. (DE) 83. ConCap Holdings, Inc. (TX) 84. Congress Realty Corp. (MA) 85. CPF 16 Landings GP, Inc. (SC) 86. CPF XIV/St. Charleston, Inc. (NV) 87. CPF XIV/Sun River, Inc. (AZ) 88. CPF XIV/Torrey Pines, Inc. (NV) 89. CPF XV/Lakeside Place, Inc. (TX) 90. Cragin Service Corporation (IL) 91. CRC Congress Realty Corp. (MA) 92. CRC Scotch Lane Corp. (MA) 4 5 93. CRPTEX, Inc. (TX) 94. Davidson Diversified Properties, Inc. (TN) 95. Davidson Growth Plus GP Corporation (DE) 96. Davidson Properties, Inc. (TX) 97. East Windsor 255, Inc. (DE) 98. Fox Capital Management Corporation (CA) 99. Fox Strategic Housing Income Partners, Inc. (CA) 100. GP Services III, Inc. (DE) 101. GP Services IV, Inc. (SC) 102. GP Services IX, Inc. (SC) 103. GP Services V, Inc. (SC) 104. GP Services VI, Inc. (SC) 105. GP Services XI, Inc. (SC) 106. GP Services XIII, Inc. (SC) 107. GP Services XV, Inc. (SC) 108. GP Services XVIII, Inc. (SC) 109. Granada AIPL 6, Inc. (TX) 110. Hamilton House, Inc. (FL) 111. Heritage Park Investors, Inc. (CA) 112. Heritage Park/MRA, Inc. (CA) 113. Holbrook Enterprises, Inc. (IL) 114. HPI, Ltd. (Bermuda) 115. Hunters Run Properties Corporation (GA) 116. IAP GP Corporation (DE) 5 6 117. IFT Financing I (DE) 118. IH Inc. (DE) 119. InCap Management, Inc. (TX) 120. Insignia Capital Corporation (DE) 121. IPGP, Inc. (DE) 122. Lakewood AOPL, Inc. (TX) 123. Lucerne Florida Development Corporation (FL) 124. MAE California, Inc. (DE) 125. MAE Delta, Inc. (DE) 126. MAE Investments, Inc. (DE) 127. MAE Ventures, Inc. (DE) 128. MAE-JMA, Inc. (DE) 129. MAERIL, Inc. (DE) 130. National Corporation for Housing Partnerships (DC) 131. National Corporation for Housing Partnerships/Development Corporation (DC) 132. National Property Investors, Inc. (DE) 133. NCHP Development Corp. 134. Neighborhood Reinvestment Resources Corporation (IL) 135. NHP Acquisition Corporation (DE) 136. NHP Capital Corporation (VA) 137. NHP-HDV, Inc. (DE) 138. NHP-HDV Two, Inc. (DE) 139. NHP-HDV Four, Inc. (DE) 140. NHP-HDV Five, Inc. (DE) 6 7 141. NHP-HDV Six, Inc. (DE) 142. NHP-HDV Seven, Inc. (DE) 143. NHP-HDV Eight, Inc. (DE) 144. NHP-HDV Nine, Inc. (DE) 145. NHP-HDV 21, Inc. (VA) 146. NHP-HG, Inc. (VA) 147. NHP-HG III, Inc. (VA) 148. NHP-HG Four, Inc. (VA) 149. NHP-HG Five, Inc. (VA) 150. NHP-HG Ten, Inc. (DE) 151. NHP-HG Eleven, Inc. (DE) 152. NHP-HG Twelve, Inc. (DE) 153. NHP-HG Fourteen, Inc. (DE) 154. NHP-HS, Inc. (DE) 155. NHP-HS Two, Inc. (DE) 156. NHP-HS Five, Inc. (DE) 157. NHP-HS Six, Inc. (DE) 158. NHP Joint Ventures, Inc. (DE) 159. NHP Multi-Family Capital Corporation (DC) 160. NHP Real Estate Corporation (DE) 161. NHP Real Estate Securities, Inc. (DC) 162. NHP Ridgewood, Inc. (DE) 163. NHP Servicing, Inc. (VA) 164. NPI Equity Investments II, Inc. (FL) 7 8 165. NPI Equity Investments, Inc. (FL) 166. NPI III Pinetree, Inc. (NC) 167. Pebblepoint 55, Inc. (DE) 168. Plainview GP, Inc. (DE) 169. Pleasant Hill 287, Inc. (DE) 170. PRA, Inc. (GA) 171. Rescorp Development, Inc. (IL) 172. Ridge Carlton Corp. (MA) 173. SAHF Funding Corp. (DE) 174. Scotch Lane Corp. (MA) 175. SF General, Inc. (DE) 176. Shelter Realty Corporation (SC) 177. Shelter Realty II Corporation (SC) 178. Shelter Realty III Corporation (SC) 179. Shelter Realty IV Corporation (SC) 180. Shelter Realty V Corporation (SC) 181. Shelter Realty VI Corporation (SC) 182. Shelter Realty VII Corporation (SC) 183. Sturbrook Investors, Inc. (CA) 184. Summerwalk GP, Inc. (SC) 185. Tennessee Trust Company (TN) 186. Tenntruco, Inc. (NC) 187. Top of the World 735, Inc. (DE) 188. U.S. Realty I Corporation (SC) 8 9 189. United Investors Real Estate, Inc. (DE) 190. Vista APX, Inc. (TX) 191. Wilbur and Company, Inc. (DE) 192. AIMCO/NHP Holdings, Inc. (DE) 193. AIMCO/NHP Properties, Inc. (DE) 194. NHP A&R Services, Inc. (VA) 195. NHP Management Company (DC) 196. Property Asset Management Services, Inc. (DE - incorporated February 2, 1996) 197. 5 Mile Limited Partnership (MI) 198. 711 West Casino Associates (WA) 199. 735 Willoughby Avenue Company 200. AG A&R Services, L.L.C. (DE) 201. AG Management, L.L.C. (DE) 202. AG Properties, L.L.C. (DE) 203. AIMCO Equity Services, Inc. (VA) 204. AIMCO Colorado Residential Group, Inc. (CO) 205. AIMCO Residential Group of California, Inc. (DE) 206. AIMCO of Florida, Inc. (FL) 207. AIMCO Residential Group, L.P. (DE) 208. AIMCO Residential Group of Texas, Inc. (DE) 209. Alaska House Associates (WA) 210. Allegheny Associates 211. Allison Village Associates 212. Alms Hill II Limited 9 10 213. Alpine Company Ltd. 214. Alpine II Company Ltd. 215. Anderson Oaks Limited Partnership (WA) 216. Apartment CCG 17, L.P. (CA) 217. Apartment CCG 17, L.L.C. (SC) 218. Apartment CCG 17, Inc. (CA) 219. Apartment Creek 17 A, L.L.C. (CO) 220. Apartment CRK 17, L.P. 221. Apartment LDG 17, Inc. (CA) 222. Apartment LDG 17, L.P. (CA) 223. Apartment Lodge 17, L.L.C. (SC) 224. Apartment Lodge 17 A, L.L.C. (CO) 225. Apartment Lodge 17, L.P. (CA) 226. Aptek Maintenance Services Company LLC (DE) 227. Aptek Management Company LLC (DE) 228. Arch-Way Ltd 229. Argus Land Company, Inc. (AL) 230. Arizona Development Partners (MA) 231. Aspen Ridge Properties, Inc. (TX) 232. Athens Gardens Ltd 233. Athens Station, Ltd 234. Atlanta Shallowford Associates, LP (GA) 235. Atrium Village Associates 236. Avon Development Company (PA) 10 11 237. Banning Villa (CA) 238. Bannock Arms Apartments 239. Barnett Plaza Ltd 240. Bellerive Associates Limited 241. Bethlehem Development Company 242. Birchfield Associates 243. Blackhawk Hills Associates 244. Blanchard Apts 245. Bluefield Associates 246. Bluff Estate II 247. Bluff Estates Limited 248. Brentwood Manor, Ltd. 249. Briarwood Member, Inc. (DE) 250. Brighton Meadows Associates (IN) 251. Broad Street Management, Inc. (OH) 252. Broadleaf Manor Associates (NV) 253. Broadway Associates 254. Broadway Glenn Associates 255. Broadway Plaza Associates 256. Buckannon Manor Associates 257. Bulldogger Housing Associates, (OK) 258. Burnsville Apartments Limited Partnership (MN) 259. Calmark Heritage Park, L.P. (CA) 260. Calmark Heritage Park III, L.P. (CA) 11 12 261. Canyon Terrace Inc. (DE) 262. Capital Heights Associates 263. Carolina Associates Limited 264. Carriage House Apartments Limited Partnership (VA) 265. Cascade Associates, Ltd 266. Cascadian Apartments (WA) 267. Catwil Liquidating Trust 268. Cayuga Village Associates (NY) 269. CCP/III Mountain Plaza Properties, Inc. (TX) 270. Central Park Towers 271. Central Park Towers II 272. Century 23 Sunnymead, Inc. (CA) 273. Century HillCreste Apartment Investors, L.P. (CA) 274. Century Summerhill, Inc. (CA) 275. Century Sunrunner 19, Inc. (CA) 276. CHA Properties, Inc. (DE) 277. Charney Associates Ltd Partnership(WA) 278. Childress Manor Associates 279. Cider Mills Associates 280. Clayton Associates Limited (WA) 281. Coastal Commons Limited Partnership (SC) 282. Colchester Stage II Company (MI) 283. Cold Harbor Limited Partnership 284. College Trace Apartments Ltd (FL) 12 13 285. Colony House Apartments Ltd (CA) 286. Combined Properties Ltd 287. Commencement Terrace Associates (WA) 288. Compleat Resource Group, Inc. (DE) 289. ConCap CCP/III Properties, Inc. (TX) 290. ConCap CCP/IV Apartment Properties, Inc. (TX) 291. ConCap CCP/IV Citadel Properties, Inc. (TX) 292. ConCap CCP/IV Properties, Inc. (TX) 293. ConCap CCP/IV Residential, Inc. (TX) 294. ConCap CCP/V Properties, Inc. (TX) 295. ConCap MBRF Properties, Inc. (TX) 296. Conifer Bedford 116, A Limited Partnership 297. Conifer Medford (P.R.) 298. Conifer Wenatchee Apartments (WA) 299. Continental Apartments (MI) 300. Continental Plaza Limited Partnership (IL) 301. Continental Plaza Associates Limited Partnership (IL) 302. Coventry Properties, Inc. (TX) 303. Creekside Inc. (DE) 304. Creekside Investment Company (ID) 305. Crestview Apartments Company (WA) 306. Cumberland Apartments 307. Cypress Housing Associates Ltd (WA) 308. DalCap Management, Inc. (TX) 13 14 309. Dallas Glen Oaks Associates, L.P. 310. Damen Court Associates 311. Daytona Village, Ltd (OH) 312. DBL Airport Valley, L.P. 313. DBL Properties Corporation (NY) 314. Decatur Arms, Limited Partnership (NV) 315. Deer Grove Associates 316. DEK Associates 317. Delta Associates, Ltd (WA) 318. Delta Park Investment Company (UT) 319. Deshler Apartment Associates (NY) 320. Dewitt Clinton Associates 321. Direct Access Association, Inc. (TN) 322. Dorchester Place Apartments 323. Drexel Burnham Lambert Real Estate Associates (NY) 324. Drexel Chandler Land Limited Partnership 325. Drexel Orlando Land Limited Partnership (FL) 326. Dunlop Tobacco Associates Limited Partnership (MD) 327. Eastgate Apartments (IA) 328. Eco Village, Ltd (OH) 329. Edgewood Apartments Associates 330. Edgewood Associates (WA) 331. Edgewood Housing Associates 332. Edgewood, Ltd. (AZ) 14 15 333. Eighth Springhill Lake Limited Partnership (MD) 334. El Cazador Ltd. 335. El Coronado Apts, Ltd (TX) 336. Elkhart Town & Country Apartments Limited Partnership 337. Elms Common Associates (CT) 338. Everett Square Plaza 339. Evergreen Club Corporation (MA) 340. Evergreen Property Ltd 341. Fairwind Associates, Ltd 342. Fernwood Ltd. 343. First Atlantic Management Corporation (DE) 344. First Piedmont Mortgage, Inc. (SC) 345. First Winthrop Corporation (DE) 346. Fish Creek Plaza, Ltd (OH) 347. Five (5) Mile Ltd 348. Fleetwood Village Apartments 349. Forest Park South Ltd (FL) 350. Fort Vancouver Terrace (WA) 351. Fox Assignor, Inc. (CA) 352. Fox Run Associates Limited 353. Franklin Mountain Run Associates Liquidating Trust (PA) 354. Franklin Partnership Liquidating Trust (PA) 355. Franklin Woods Ltd (OH) 15 16 356. Fremont Investment Company 357. G.V. II Limited Partnership 358. Galleria Park Associates Limited Partnership (MA) 359. Garden Court Associates (CA) 360. Glenbrook Corporation (MA) 361. Glenn Acres Associates 362. Goler Metropolitan Apartments (NC) 363. Goose Hollow Village Limited (OR) 364. Gotham Apartments, Ltd. (MO) 365. GP Real Estate Services II Inc. (DE) 366. GP Services II, Inc. (SC) 367. GP Real Estate Services II Inc. (DE) 368. GP Services II-B, Inc. (DE) 369. Grand Glaize Associates 370. Granite Properties Limited Partnership 371. Green Acres Apartments Limited 372. Green Village Associates 373. Greenbriar Manor, Ltd. (TX) 374. Greene Valley Associates 375. Greenfair Tower II (CA) I 376. Greenfair-ABC California Corporation (CA) 377. Greenfair-DCW Ltd (CA) 378. Greenfair-Tower II Cal Ltd 16 17 379. Greensburg Associates, Ltd 380. Greenwood Acres 381. Greenwood Villa Apts Ltd 382. Guilford Company, Inc. (AL) 383. Hamlet Manor Limited Partnership 384. Hamlet Manor, Ltd. 385. Hampton Hills Associates 386. Harlan Associates Limited 387. Harold Apartment (Aprs) Associates 388. Hawthorne Plaza Associates 389. Haynes House Associates 390. Heritage Park Inc. (DE) 391. Heritage Park II Inc. (DE) 392. HHP, L.P. (DE) 393. Hi View Gardens Development Company 394. Hibben Ferry Recreation Inc. (SC) 395. HillCreste Properties Inc. (DE) 396. Hilltop Apartments Phase I (MO) 397. Hilltop Apartments Phase II (MO) 398. Hinton House Associates 399. Historic Properties, Inc. (DE) 400. Holiday Acres Apts 401. Holiday Acres Associates 402. Holliday Associates Limited Partnership (DC) 17 18 403. Hollidaysburg Limited Partnership (PA) 404. Holly Point Associates 405. Housing Programs Corp. II (DE) 406. Housing Programs Ltd. (CA) 407. Hugo Plaza Apartments Ltd. 408. Hyde Park Apts. (Apartments Limited) 409. IFG-SCN Corporation (DE) 410. IHMG of Alabama, Inc. (AL) 411. IMH, Inc. (DE) 412. Indian River Associates 413. Insignia Allegiance Management, Inc. (DE) 414. Insignia CCP III Acquisition, LLC (DE) 415. Insignia Hospitality Management Group, Inc. (DE) 416. Insignia Related, Inc. (DE) 417. Insignia Related, L.P. (DE) 418. Insignia Residential Group of Alabama, Inc. (DE) 419. Insignia Residential Management, Inc. (DE) 420. International House Ltd (NC) 421. IPT I LLC (DE) 422. Ironman Housing Association (OK) 423. ISPMC, Inc. (DE) 424. ISTC Corporation (DE) 425. Ivanhoe Corporation (MA) 426. Jardines De Mayaguez Associates 18 19 427. Jenny Lind Hall 428. Kennedy Boulevard I, Inc. (PA) 429. Kennedy Boulevard II, Inc. (PA) 430. Kennedy Boulevard III, Inc. (PA) 431. Kenosha Gardens Associates (WI) 432. Kenton Development Company 433. Kenton Village Associates 434. Kenton Village Ltd (OH) 435. Kenyon House Co (WA) 436. Kings Row Associates (CT) 437. Kingston Greene Associates Ltd (OH) 438. Kohler Gardens Apartments (CA) 439. Kona Plus Associates (Limited) (WA) 440. L.M. Associates 441. Lafayette Terrace Associates 442. Lake June Village II Ltd (TX) 443. Lake June Village Ltd (TX) 444. Lake Towers Associates 445. Lakehurst Apts I 446. Lakehurst II Ltd. 447. Landmark Apts (Apartment) Associates (IL) 448. Leeco Co 449. Lemay Village Ltd (MO) 450. Lifton/MAQ S.E. Investments II, Inc. (GA) 19 20 451. Lincoln Village Oregon, Ltd 452. Linnaeus Hawthorne Associates 453. Linnaeus Lexington Associates 454. Lone Star Properties Limited (TX) 455. Long Beach/Wilmington Associates (WA) 456. Louisville Apartment Limited Partnership (TX) 457. Lytle Place Community Urban Redevelopment Corp. (OH) 458. Madison Park III Associates (MA) 459. Madison Park Properties Ltd (WA) 460. Madison Terrace Associates 461. MAE-SPI, L.P. (DE) 462. Maine Maintenance Corporation (DE) 463. Mallards of Wedgewood Limited (WA) 464. Mandarin Trace Apts Ltd (FL) 465. Manor Green Ltd (WA) 466. MAQ/Lifton Acquisition Corp. (FL) 467. Marcella Manor Associates 468. Marinette Woods (Apartment) Apt Associates 469. Market Ventures, L.L.C. (DE) 470. Mayer Canyon Terrace (CA) 471. Mayer Creekside (CA) 472. Mayer Warner Center Ltd. (CA) 473. Meadow Lane LP (MI) 20 21 474. MHO Partners Ltd (FL) 475. Midpark Development Company (OH) 476. Midtown Plaza Associates (WA) 477. Minneapolis Associates II Limited Partnership (MA) 478. Minneapolis Associates Limited Partnership 479. Morningside Housing Phase B (NY) 480. Mount Pleasant Associates Limited Partnership 481. New Wesley Highland Towers 482. Newark Ohio Townehouses Ltd 483. NHP Asset Management Services, Inc. (VA) 484. NHP Cash Management Services, Inc. (VA) 485. NHP/Congress Management Limited Partnership (VA) 486. NHP Financial Services, Ltd. (DE) 487. NHP Florida Management Company (FL) 488. NHP Maintenance Services Company (VA) 489. NHP/PRC Management Company LLC (DE) 490. NHP Puerto Rico Management Company (DE) 491. NHP Southeast Partners, L.P. (DE) 492. NHP Southwark HA, Inc. (VA) 493. NHP Texas Management Company (TX) 494. NHP-HDV 20, Inc. (VA) 495. NHP-HDV Eighteen, Inc. (DE) 496. NHP-HDV Eleven, Inc. (DE) 497. NHP-HDV Fifteen, Inc. (VA) 21 22 498. NHP-HDV Fourteen, Inc. (DE) 499. NHP-HDV Nineteen, Inc. (DE) 500. NHP-HDV Seventeen, Inc. (DE) 501. NHP-HDV Sixteen, Inc. (DE) 502. NHP-HDV Ten, Inc. (DE) 503. NHP-HDV Three, Inc. (DE) 504. NHP-HDV Twelve, Inc. (DE) 505. NHP-HG 15, Inc. (VA) 506. NHP-HG 16, Inc. (VA) 507. NHP-HG 17, Inc. (VA) 508. NHP-HG Six, Inc. (VA) 509. NHP-HS Four, Inc. (DE) 510. NHP-HS Three, Inc. (DE) 511. Nichols Townehomes Ltd (OH) 512. Normandy Group, Ltd. (IL) 513. North Omaha Homes (NE) 514. North Park Associates (TX) 515. North Washington Park Estates 516. Northern States Properties Ltd (WA) 517. Northwest Village Ltd. 518. Northwind Forest Ltd (MI) 519. Nova Associates Limited (WA) 520. NPI Property Management Corporation (FL) 521. NPI Realty Advisors, Inc. (FL) 22 23 522. NPI Realty Management Corp. (FL) 523. O'Dea Investment Company (CA) 524. Oak Knoll (Apartments) Apts Ltd 525. Oak Woods Associates 526. One Linwood Associates Ltd. (DC) 527. Orchard Park Apartments, L.P. (SC) 528. Oxford Holding Corporation 529. Oxford Realty Finance Group, Inc. 530. P&R Investment Services 531. Pacific Coast Plaza (CA) 532. Palace Apartments (NV) 533. Palisades Apartments LTD (FL) 534. PAM Consolidated Assurance Company, Ltd. (Bermuda) 535. Park Manor, Oregon, Ltd. 536. Park Towne Place Associates Limited Partnership (DE) 537. Parkview Associates (GA) 538. Parkview Development Co. (MN) 539. Partners of the National Housing Partnership - II Liquidating Trust 540. Penview Associates (NY) 541. Phillips Village Associates (CA) 542. Pine Haven Apartments, Ltd (MI) 543. Pine Tree Apartments, Ltd. (FL) 544. Pinetree Associates (__) 545. Pinewood Ltd. 23 24 546. Piney Branch Associates (MD) 547. Plains Village Ltd. (TX) 548. Playa Blanca Inc. (DE) 549. Playa Blanca, Inc. CA) 550. Pleasanton Greens Investment Co. 551. Plumly Townhomes Ltd 552. Point Village Associates 553. Portage Associates Limited Partnership (MI) 554. Prairie Village Associates 555. Preferred Home Health, Inc. (FL) 556. Preferred Home Health Limited Partnership (FL) 557. Preston Drive Ltd Partnership 558. Property Asset Brokerage of Florida (FL) 559. Property Services Group, Inc. (DC) 560. PTP Properties, Inc. (DE) 561. Pullman Wheelworks Assoc I 562. Queensgate II Associates (OH) 563. Quincy Manor Associates (WA) 564. Raintree GP Inc. (DE) 565. Raintree Meadows (CA) 566. Ravensworth Associates (MA) 567. Real Estate Equity Partners, Inc. (DE) 568. Real Estate Equity Partners, L.P. 569. RealMark, Inc. (SC) 24 25 570. Rescorp Realty, Inc. (IL) 571. Residents Direct Access Association, Inc. (MO) 572. RH Associates 573. Richton Park Investment (WA) 574. Richton Square Elderly, Ltd. 575. Richton Square, Phase IV, Ltd. 576. River Crossing Apartments, Ltd. 577. River Oaks Associates 578. Rivercrest Apartments, L.P. (SC) 579. Riverfront Associates Ltd 580. Rochester Avenue Associates 581. Rockledge Associates 582. Rockville Associates, Ltd. 583. Rowland Heights Apartments 584. Rowland Heights II Ltd (CA) 585. Rowland Heights Liquidating Trust 586. Royal De Leon Apartments, Ltd. (FL) 587. Royal Shore Associates 588. Running Brooke II Associates 589. The Risk Specialist Group, Inc. (DC) 590. Sagewood Manor Associates ((NV) 591. Saginaw Village Oregon, Ltd. (OR) 592. Salem Manor Oregon Ltd (OR) 25 26 593. Scott Manor Apartments 594. Seattle Rochester Avenue Associates (NY) 595. Second Springhill Lake Limited Partnership(MD) 596. Secured Income, L.P. (DE) 597. Security House, Ltd. (WA) 598. Security Management Inc. (WA) 599. Security Properties (WA general partnership) 600. Security Properties 73 (WA general partnership) 601. Security Properties 74 (WA general partnership) 602. Security Properties 74 II (WA general partnership) 603. Security Properties 74 III (WA general partnership) 604. Security Properties 74A (WA general partnership) 605. Security Properties 75 (WA general partnership) 606. Security Properties 76 (WA general partnership) 607. Security Properties 77 (WA general partnership) 608. Security Properties 77A (WA general partnership) 609. Security Properties 78 (WA general partnership) 610. Security Properties 78A (WA general partnership) 611. Security Properties 79 (WA general partnership) 612. Security Properties 79 II (WA general partnership) 613. Security Properties 80 (WA general partnership) 614. Security Properties 81 (WA general partnership) 615. Security Properties 81A (WA general partnership) 26 27 616. Security Properties FHA (WA) 617. Shadowood Apartments 618. Silverwood Village Apartments 619. Six Winthrop Properties, Inc. (DE) 620. Smith House Associates (MD) 621. South Arsenal Neighborhood Associates (CT) 622. South Shore Village Leased 623. Southside Village Apts. Liquidating Trust 624. Southwest Parkway Holdings, Inc. (WA) 625. Southwest Parkway, Ltd. (TX) 626. SP Bolingbrook Associates (WA) 627. SP Buckeye Properties (WA) 628. SP Columbia Limited (CT) 629. SP Diversified 1980 (WA) 630. SP Diversified Properties -I (WA) 631. SP/Hotel Associates, Ltd. (WA) 632. SP Illinois Partnership Ltd. (WA) 633. SP Jayhawk Properties (WA) 634. SP Mid Term Income Fund, Ltd. (WA) 635. SP Pine Hills Properties (WA) 636. SP Properties 1982 (WA general partnership) 637. SP Properties 1983 (WA general partnership) 638. SP Properties 1983 Two (WA general partnership) 27 28 639. SP Properties 1984 (WA general partnership) 640. SP Properties I 641. SPI Hartford Associates (WA) 642. SPI Willoughby Avenue (WA) 643. Springdale West (CA) 644. Springdale West II California Ltd (CA) 645. Spruce Hill Apartments, Ltd. 646. St. Joseph Limited Partnership (MD) 647. Standpoint Vista Limited Partnership (MD) 648. Steeplechase (Ailken) Ltd. (SC) 649. Stewartown Associates Ltd. (MD) 650. Stonegate Park Apartments, Ltd 651. Stuyvesant Limited Dividend (MI) 652. Summit Square Associates (PA) 653. Sun Terrace Associates (PA) 654. Suncrest Village (IA) 655. Sunrise Gardens (CA) 656. Sunset Capital Apartments Liquidating Trust 657. Sunset Silver Bow Apts 658. Sunset Village Apartments Ltd 659. Swan Creek Associates Liquidating Trust 660. Table Mesa Joint Venture 661. TAHF Funding Corp. (DE) 28 29 662. Tanara Villa Associates I Liquidating Trust 663. Tandem Properties 664. TEB Municipal Trust II (DE) 665. Ten Winthrop Properties, Inc. (MD) 666. TERRA II Ltd. (PA) 667. Terrace Investors Ltd. 668. The Advance Fund, Ltd. (WA) 669. The New Fairways, L.P. (DE) 670. The Tinley Company 671. The Villa Limited Partnership 672. The Villas, A Limited Partnership (TX) 673. The Woods Associates 674. Three Fountains Limited (MI) 675. Three Winthrop Properties, L.P. 676. Tower of David 677. Town & Country Club Apartments LP 678. Town One, Phase I 679. Town One, Phase II (SD) 680. Trail Ridge Apartments, Ltd. 681. Treeline Associates 682. Tri-State Ltd 683. Uptown Village Ltd (OH) 684. Urbana Village (OH) 685. USS Depositary, Inc. (SC) 29 30 686. Valley Associates 687. Victoria Arms Apts (MO) 688. Victorian Associates Limited 689. Villa Del Norte Associates (TX) 690. Villa Del Norte II Associates (TX) 691. Village East Towers Limited (MO) 692. Village South Associates (TX) 693. Vincennes Associates (IL) 694. Virginia Apartments Limited 695. Vivendas Associates 696. W.T. Limited Partnership 697. WAI Associates Limited Partnership (TX) 698. WAI Properties, Inc. (TX) 699. Walden Member, Inc. (DE) 700. Walnut Towers Development Liquidating Trust 701. Walton-Perry Ltd. (MI) 702. Warden Associates, A Limited Partnership 703. Warner Center Inc. (DE) 704. Warner Center/MGP Inc. (DE) 705. Warwick Terrace Company Liquidating Trust 706. Washington Plaza, Oreg., Ltd. (OR) 707. Watergate II Apartments Ltd. 708. Watergate II Associates 709. Waterman Crossing Associates, L.P. 30 31 710. Wedgewood Club Estates Limited (WA) 711. Wedgewood Golf Associates 712. Wesley Madison Towers Ltd. 713. West Alameda Apartments (OR) 714. West Virginian Manor Associates 715. Western Hills, Assoc. LLC 716. Westgate (Spartanburg) Ltd (SC) 717. Westgate Apartments 718. Westlake Terrace Associates 719. Westminster Commons Associates (VA) 720. Westminster Properties Ltd. 721. Westview-Youngstown Ltd (OH) 722. Westwick Apartments, Ltd. 723. Westwick II Ltd. 724. Westwood Terrace Associates 725. WFC Realty Co., Inc. (MA) 726. WFC Realty Saugus, Inc. (MA) 727. Wilder Richman Historic Properties II, L.P. (DE) 728. Wilder Richman Historic Properties, L.P. (DE) 729. Willow Park Associates, L.P.) 730. Willows Associates Limited 731. Windgate Member, Inc. (DE) 732. Win-Wood Village, Ltd. 31 32 733. Winding Brook Associates 734. Winhaven Associates 735. Winslowe Apts Ltd. 736. Winthrop Apartment Investors 2 Limited Partnership (MD) 737. Winthrop Financial Associates (MD) 738. Winthrop Financial Co., Inc. (MA) 739. Winthrop Metro Equities Corporation (DE) 740. Winthrop Northeast Properties, Inc. (MA) 741. Winthrop Petersburg Co., Inc. (MD) 742. Winthrop Properties, L.P. 743. WoodCrest Apartments, Ltd. 744. Woodfield Member, Inc. (DE) 745. Woodlake Associates, a Limited Partnership 746. Woodsong I 747. Woodsong II 748. Woodsong Limited Partnership 749. Woodsvilla Associates (WA) 750. WRC -87A Corp. 32 33 751. Creekside Industrial Associates, Inc. (NY) 752. Monroeville Development Corporation (MA) 753. ISLP Limited Partnership (DE) 754. Partners Liquidating Trust (DE) 755. Stratford Village Realty Trust (MA) 756. 51 North High Street L.P. 757. 62nd Street Joint Venture 758. 62nd Street Ltd Partnership (IN) 759. 107-145 West 135th Street Associates Ltd Partnership (NY) 760. 630 East Lincoln Avenue Associates Ltd Partnership (NY) 761. 1133 Fifteenth Street Fourth Associates (MD) 762. 1133 Fifteenth Street Associates (DC) 763. 2900 Van Ness Associates (DC) 764. 7400 Roosevelt Investors (PA) 765. 8503 Westheimer Partners, Ltd. 766. Abbott Associates Ltd Partnership (NY) 767. Academy Gardens Associates LP (NY) 768. Adirondack Apartments Saranac Associates LP (NY) 769. Advanced Affordable Mill, Ltd. (FL) 770. AG Services, L.P. (DE) 771. AIMCO Anchorage, L.P. (DE) 772. AIMCO Arbors, L.L.C. (DE) 773. AIMCO Arbor Station, L.P. (DE) 774. AIMCO Arbor Station Two, L.P. (DE) 33 34 775. AIMCO Atriums of Plantation L.P. (DE) 776. AIMCO Bay Club II, L.P. (DE) 777. AIMCO Bay Club, L.P. (DE) 778. AIMCO/Beacon Hill, L.L.C. (DE) 779. AIMCO/Beacon Hill, L.P. (DE) 780. AIMCO Beau Jardin, L.L.C. (DE) 781. AIMCO Beech Lake, L.L.C. (DE) 782. AIMCO Bella Vista, L.L.C. (DE) 783. AIMCO/Blossomtree L.L.C. (DE) 784. AIMCO/Blossomtree L.P. (DE) 785. AIMCO/Bluffs, L.L.C. (DE) 786. AIMCO/Boardwalk, L.P. (DE - formed on November 20, 1995) 787. AIMCO/Boardwalk Finance, L.P. (DE - formed on December 6, 1995) 788. AIMCO Bradford, L.L.C. (DE) 789. AIMCO/Brandywine, L.P. (DE) 790. AIMCO/Brant Rock, L.L.C. (DE) 791. AIMCO/Brant Rock, L.P. (DE) 792. AIMCO Breakers, L.P. (DE) 793. AIMCO Briarwood, L.L.C. (DE) 794. AIMCO Bridgewater, L.P. (DE) 795. AIMCO Brookside, L.L.C. (DE) 796. AIMCO Brookside/Tustin, L.L.C. (DE) 797. AIMCO Brookville, L.L.C. (DE) 34 35 798. AIMCO Brookwood, L.L.C. (DE) 799. AIMCO Burgundy Park, L.P. (DE) 800. AIMCO Calhoun, L.L.C. (DE) 801. AIMCO Cameron Villas, L.L.C. (DE) 802. AIMCO Canterbury Green, L.L.C. (DE) 803. AIMCO Captiva Club, L.L.C. (DE) 804. AIMCO Casa Anita, L.P. (DE) 805. AIMCO Cedar Creek, L.P. (DE) 806. AIMCO Chatham Harbor, L.L.C. (DE) 807. AIMCO Chesapeake, L.P. (DE) 808. AIMCO Citrus Grove, L.P. (DE) 809. AIMCO Citrus Sunset, L.L.C. (DE) 810. AIMCO Cobble Creek, L.P. (DE) 811. AIMCO Colonial Crest, L.L.C. (DE) 812. AIMCO/Colonnade, L.L.C. (DE) 813. AIMCO/Colonnade, L.P. (DE) 814. AIMCO Colony, L.P. (DE) 815. AIMCO Copperfield, L.P. (DE) 816. AIMCO Crossings at Belle, L.P. (DE) 817. AIMCO Crows Nest, L.P. (DE) 818. AIMCO Dolphin's Landing, L.P. (DE) 819. AIMCO/Easton Falls, L.P. (DE) 820. AIMCO Elm Creek, L.P. (DE) 821. AIMCO Fieldcrest, L.P. (DE) 35 36 822. AIMCO Fisherman's Landing, L.P. (DE) 823. AIMCO Fondren Court, L.P. (DE) 824. AIMCO/Foothills, L.P. (DE) 825. AIMCO/Foothills, L.L.C. (DE) 826. AIMCO/Fox Bay, L.P. (DE) 827. AIMCO/Fox Bay, L.L.C. (DE) 828. AIMCO Foxchase, L.P. (DE) 829. AIMCO/Foxtree, L.L.C. (DE) 830. AIMCO/Foxtree, L.P. (DE) 831. AIMCO/Freedom Place, L.L.C. (DE) 832. AIMCO/Freedom Place, L.P. (DE) 833. AIMCO Galleria Office, L.P. (DE) 834. AIMCO Glen Hollow, L.L.C. (DE) 835. AIMCO Group, L.P. (DE) 836. AIMCO/Grovetree, L.L.C. (DE) 837. AIMCO/Grovetree, L.P. (DE) 838. AIMCO Hampton Hill, L.P. (DE) 839. AIMCO Hanover Square/DIP, L.L.C. (DE) 840. AIMCO Hastings Green, L.P. (DE) 841. AIMCO Hastings Place, L.P. (DE) 842. AIMCO Haverhill, L.L.C. (DE) 843. AIMCO/Hazeltree, L.P. (DE) 844. AIMCO/Hazeltree, L.L.C. (DE) 845. AIMCO/Hiddentree, L.L.C. (DE) 36 37 846. AIMCO/Hiddentree, L.P. (DE) 847. AIMCO/HIL, L.L.C. (DE) 848. AIMCO Holdings, L.P. (DE - formed September 29, 1995) 849. AIMCO Hunters Creek, L.L.C. (DE) 850. AIMCO Hunters Crossing, L.P. (DE) 851. AIMCO Hunters Glen, L.P. (DE) 852. AIMCO/Islandtree, L.P. (DE) 853. AIMCO/Islandtree, L.L.C. (DE) 854. AIMCO Key Towers, L.P. (DE) 855. AIMCO Lake Castleton Arms, L.L.C. (DE) 856. AIMCO Lakehaven, L.P. (DE) 857. AIMCO Lakehaven Two, L.P. (DE) 858. AIMCO Landmark, L.P. (DE) 859. AIMCO LaValle, L.L.C. (DE) 860. AIMCO LJ Tucson, L.P. (DE) 861. AIMCO Los Arboles, L.P. (DE) 862. AIMCO LT, L.P. (DE) 863. AIMCO Maple Bay, L.L.C. (DE) 864. AIMCO Marbella Club, L.L.C. (DE) 865. AIMCO Mayfair Village, L.L.C. (DE) 866. AIMCO Merrill House, L.L.C. (DE) 867. AIMCO Michigan Meadows, L.L.C. (DE) 868. AIMCO Michigan Meadows Holdings, L.L.C. (DE) 869. AIMCO/Montecito, L.P. (DE) 37 38 870. AIMCO Mountain View, L.L.C. (DE) 871. AIMCO Northview Harbor, L.L.C. (DE) 872. AIMCO/NHP Partners, L.P. (DE) 873. AIMCO Oakbrook, L.L.C. (DE) 874. AIMCO Oak Falls, L.P. (DE) 875. AIMCO Ocean Oaks, L.L.C. (DE) 876. AIMCO Old Farm, L.L.C. (DE) 877. AIMCO Old Orchard, L.L.C. (DE) 878. AIMCO/Olmos, L.L.C. (DE) 879. AIMCO/Olmos, L.P. (DE) 880. AIMCO/Orchidtree, L.L.C. (DE) 881. AIMCO/Orchidtree, L.P. (DE) 882. AIMCO/OTC, L.L.C. (DE) 883. AIMCO/OTC, L.P. (DE - formed February 15, 1996) 884. AIMCO/PAM Properties, L.P. (DE) 885. AIMCO Park at Cedar Lawn, L.P. (DE) 886. AIMCO Park Colony, L.L.C. (DE) 887. AIMCO Park Townhomes, L.P. (DE) 888. AIMCO Parker House, L.P. (DE) 889. AIMCO Pavilion, G.P., L.L.C. (DE) 890. AIMCO Pavilion, L.P., L.L.C. (DE) 891. AIMCO/Penn Square, L.L.C. (DE) 892. AIMCO Peppermill Place, L.P. (DE) 893. AIMCO/Pine Creek, L.P. (DE) 38 39 894. AIMCO/Pine Creek, L.L.C. (DE) 895. AIMCO Pine Shadows, L.L.C. (DE) 896. AIMCO Pinebrook, L.P. (DE) 897. AIMCO Pines, L.P. (DE) 898. AIMCO Placid Lake, L.P. (DE) 899. AIMCO/Polo Park, L.L.C. (DE) 900. AIMCO/Polo Park, L.P. (DE) 901. AIMCO Properties, L.P. (DE) (As of 6-13-97) 902. AIMCO Properties Finance Partnership, L.P. (DE - formed August 30, 1995) 903. AIMCO Properties Holdings, L.L.C. (DE) 904. AIMCO/Quailtree, L.L.C. (DE) 905. AIMCO/Quailtree, L.P. (DE) 906. AIMCO/RALS, L.P. (DE - formed December 19, 1995) 907. AIMCO Ramblewood, L.L.C. (DE) 908. AIMCO Recovery Fund, L.P. (DE) 909. AIMCO Rio Cancion, L.P. (DE) 910. AIMCO/Rivercrest, L.P. (DE) 911. AIMCO/Rivercrest, L.L.C. (DE) 912. AIMCO Rosecroft Mews, L.P. (DE) 913. AIMCO Royal Gardens, L.L.C. (DE) 914. AIMCO/SA, L.L.C. (DE) 915. AIMCO San Marina, L.P. (DE) 916. AIMCO/Sand Castles, L.P. (DE) 917. AIMCO/Sand Pebble, L.L.C. (DE) 39 40 918. AIMCO/Sand Pebble, L.P. (DE) 919. AIMCO/Sand Castles, L.L.C. (DE) 920. AIMCO Sandalwood, L.P. (DE) 921. AIMCO Sandpiper, L.P. (DE) 922. AIMCO Seaside Point, L.P. (DE) 923. AIMCO/Shadetree, L.P. (DE) 924. AIMCO/Shadetree, L.L.C. (DE) 925. AIMCO/Shadow Lake, L.P. (DE) 926. AIMCO/Shadow Lake, L.L.C. (DE) 927. AIMCO Signature Point, L.P. (DE) 928. AIMCO/Silktree, L.P. (DE) 929. AIMCO/Silktree, L.L.C. (DE) 930. AIMCO Silver Ridge, L.L.C. (DE) 931. AIMCO Somerset Lakes, L.L.C. (DE) 932. AIMCO Steeplechase, L.L.C. (DE) 933. AIMCO Steeplechase, L.P. (DE) 934. AIMCO Stirling Court, L.P. (DE) 935. AIMCO/Stonegate, L.P. (DE) 936. AIMCO Stone Pointe, L.L.C. (DE) 937. AIMCO Sunbury, L.P. (DE) 938. AIMCO Sundown, L.P. (DE) 939. AIMCO Sunset Village, L.L.C. (DE) 940. AIMCO Sunset Escondido, L.L.C. (DE) 40 41 941. AIMCO/Surrey Oaks, L.L.C. (DE) 942. AIMCO/Surrey Oaks, L.P. (DE) 943. AIMCO/Tall Timbers, L.P. (DE) 944. AIMCO/Tall Timbers, L.L.C. (DE) 945. AIMCO/Teal Pointe, L.P. (DE - formed December 19, 1995) 946. AIMCO Terrace Royale, L.L.C. (DE) 947. AIMCO/The Hills, L.P. (DE) 948. AIMCO/The Hills, L.L.C. (DE) 949. AIMCO Timbermill, L.P. (DE) 950. AIMCO/Timbertree, L.P. (DE) 951. AIMCO/Timbertree, L.L.C. (DE) 952. AIMCO Tor, L.L.C. (DE) 953. AIMCO Township at Highlands, L.P. (DE) 954. AIMCO Tustin, L.P. (DE) 955. AIMCO/Twinbridge, L.P. (DE) 956. AIMCO/Twinbridge, L.L.C. (DE) 957. AIMCO UT, L.P. (DE) 958. AIMCO Villa Del Sol, L.L.C. (DE) 959. AIMCO/Villa Ladera, L.P. (DE - formed November 20, 1995) 960. AIMCO Villa La Paz, L.P. (DE) 961. AIMCO Village Crossing, L.L.C. (DE) 962. AIMCO Walden, L.L.C. (DE) 963. AIMCO Walnut Springs, L.P. (DE) 964. AIMCO Weatherly, L.P. (DE) 41 42 965. AIMCO West Trails, L.P. (DE) 966. AIMCO Westchase Midrise, L.P. (DE) 967. AIMCO Whispering Pines, L.L.C. (DE) 968. AIMCO/Wickertree, L.P. (DE) 969. AIMCO/Wickertree, L.L.C. (DE) 970. AIMCO/Wildflower, L.P. (DE) 971. AIMCO/Wildflower, L.L.C. (DE) 972. AIMCO Williamsburg, L.L.C. (DE) 973. AIMCO/Williams Cove, L.P. (DE) 974. AIMCO Wimbledon Square, L.L.C. (DE) 975. AIMCO Windgate, L.L.C. (DE) 976. AIMCO/Windsor Landing, L.L.C. (DE) 977. AIMCO/Windsor Landing, L.P. (DE) 978. AIMCO Woodfield, L.L.C. (DE) 979. AIMCO/Woodhollow, L.P. (DE) 980. AIMCO/Woodhollow, L.L.C. (DE) 981. AIMCO Woodlands, L.L.C. (DE) 982. AIMCO/Woodlands-Tyler, L.P. (DE) 983. AIMCO Woods of Burnsville, L.L.C. (DE) 984. AIMCO Woodway Offices, L.P. (DE) 985. AIMCO/Wydewood, L.P. (DE) 986. AIMCO/Wydewood, L.L.C. (DE) 987. AIMCO/Yorktree, L.L.C. (DE) 42 43 988. AIMCO/Yorktree, L.P. (DE) 989. AIP 6 GP, L.P. (SC) 990. AIP II Georgetown GP, L.L.C. (SC) 991. AIP II Georgetown, L.L.C. (MA) 992. AIP III GP Limited Partnership (SC) 993. AIP IV GP Limited Partnership (SC) 994. AIP IV Factory GP, LLC (SC) 995. AIP IV GP Limited Partnership (SC) 996. AIV Properties, L.P. (DE) 997. AJ One, L.P. (DE) 998. AJ Two, L.P. (DE) 999. Algonquin Tower Ltd Partnership (CT) 1000. All Hallows Associates (DC) 1001. Allentown Towne House Ltd Partnership (PA) 1002. Ambassador Apartments, L.P. (DE) 1003. Ambassador CRM Florida Partners Limited Partnership (DE) 1004. Ambassador Florida Partners Limited Partnership (DE) 1005. Ambassador I, L.P. (IL) 1006. Ambassador II, L.P. (DE) 1007. Ambassador III, L.P. (DE) 1008. Ambassador IV, L.P. (DE) 1009. Ambassador IX, L.P. (DE) 1010. Ambassador Texas Partners, L.P. (DE) 1011. Ambassador V, L.P. (DE) 43 44 1012. Ambassador VI, L.P. (DE) 1013. Ambassador VII, L.P. (DE) 1014. Ambassador VIII, L.P. (DE) 1015. Ambassador X, L.P. (DE) 1016. Ambassador XI, L.P. (DE) 1017. Anchorage Partners (TX) 1018. Anderson Mill Associates (IL) 1019. Anderson Mill Associates (IL) 1020. Angeles Eastgate Joint Venture (CA) 1021. Angeles Income Properties II GP LP 1022. Angeles Income Properties, Ltd. II (CA) 1023. Angeles Income Properties, Ltd. III (CA) 1024. Angeles Income Properties Ltd. IV (CA) 1025. Angeles Income Properties Ltd. V (CA) 1026. Angeles Income Properties IV GP LP 1027. Angeles Income Properties, Ltd. 6 (CA) 1028. Angeles Income Properties Ltd 6 GP LP 1029. Angeles Opportunity Properties, Ltd. (CA) 1030. Angeles Opportunity Properties Ltd GP LP 1031. Angeles Park Communities GP LP (SC) 1032. Angeles Park Communities, Ltd. (CA) 1033. Angeles Partners VII (CA) 1034. Angeles Partners VIII (CA) 44 45 1035. Angeles Partners IX (CA) 1036. Angeles Partners X (CA) 1037. Angeles Partners X GP Limited Partnership 1038. Angeles Partners XI (CA) 1039. Angeles Partners XI GP Limited Partnership (SC) 1040. Angeles Partners XII (CA) 1041. Angeles Partners XIV (CA) 1042. Angeles Partners XV (CA) 1043. Angeles Partners XII GP LP 1044. Angeles Partners 16 (CA) 1045. Antioch Apartments Ltd. 1046. Anton Square Ltd. 1047. AP XI Fox Run GP, LLC 1048. AP XII Associates GP, L.L.C. (SC) 1049. AP XII Associates Limited Partnership 1050. AP XII GP, LP 1051. Apartment Associates, Ltd. 1052. Apartment LDG 17, LLC 1053. API/AREC Partners, Ltd. (CA) 1054. ARC II/AREMCO Partners 1055. Arvada House Ltd Partnership 1056. Ashland Town Square-REO, L.P. (TX) 1057. Ashley Woods LLC 1058. Aspen Point, L.P. (DE) 45 46 1059. Aspen Ridge Associates, Ltd. 1060. Aspen Stratford Apartments Company B 1061. Aspen Stratford Apartments Company C Limited Partnership 1062. Athens Arms Associates 1063. Audobon Park Associates 1064. Aurora/GHI Associates 1065. Autumn Chase-REO, L.P. (TX) 1066. Baisley Park Associates LP 1067. Balcor/Sportvest-II (IL) 1068. Baldwin Towers Associates 1069. Baldwin Oaks Elderly Ltd. 1070. Barrington Park-REO, L.P. (TX) 1071. Basswood Manor Ltd Partnership 1072. Bayview Hunters Point Apartments 1073. Baywood Partners. Ltd 1074. Baywood Apts. Ltd 1075. Beautiful Village Associates LP Redevelopment Company 1076. Beaux Gardens Associates, LTD. 1077. Ellmire LP 1078. Benjamin Banneker Plaza Associates 1079. Bennington Square Associates, L.P. 1080. Bensalem Gardens Associates Ltd. 1081. Bensalem Gardens Associates Ltd Partnership 46 47 1082. Benton Square Partnership 1083. Berkley Ltd Partnership 1084. Beverly Apartments Assoc., LP 1085. Bexley House GP, L.L.C. (SC) 1086. Bexley House, LP (DE) 1087. Big Walnut, L.P. (DE) 1088. Biscayne Apartments Associates, Ltd. 1089. Blakewood Properties Assoc. 1090. Blakewood Apartments Associates 1091. Bloomsburg Elderly Associates 1092. Boca West Shopping Center Associates, Ltd. (FL) 1093. Boynton Sandpiper Limited Partnership (FL) 1094. Braesview Partnership (TX) 1095. Brampton Associates Limited Partnership (CT) 1096. Branchwood Towers Ltd Partnership 1097. Brandemere-REO Assoc., L.P. (TX) 1098. Brandon Lake, Ltd. (FL) 1099. Briar Bay Apartments Associates, Ltd. 1100. Briarwood Apartments 1101. Bridgewater Partners, Ltd. (TX) 1102. Brighton Crest LP 1103. Brighton GP, L.L.C. 1104. Brightwood Ltd Partnership 1105. Brightwood Manor Associates 47 48 1106. Brinton Towers Associates 1107. Brinton Manor No. 1 Associates 1108. Brittany Point AP VIII LP (SC) 1109. Brittany Point GP Limited Partnership (SC) 1110. Broad River Properties, L.L.C. (DE) 1111. Broadmoor Apt. Assoc. 1112. Brook Run Associates, L. P. (IL) 1113. Brookdale Lakes Partnership (IL) 1114. Brookside Apartments Associates 1115. Brookview Apartments Co Ltd 1116. Brunswick Village Limited Partnership 1117. Buccaneer Trace, Limited Partnership (SC) 1118. Buckingham Hall Associates Ltd Partnership 1119. Buena Vista Apartments Ltd. 1120. Buena Vista Rehabilitation Associates, LTD. 1121. Buffalo Village Associates 1122. Burgundy Court Associates, L.P. (DE) 1123. Burnt Oaks Ltd 1124. Cabell Associates of Lakeview (VA) 1125. California Square Ltd Partnership 1126. California Square II Ltd Partnership 1127. Calmark/Fort Collins, Ltd. 1128. Calmark Investors, a California Limited Partnership 48 49 1129. Calmark MRA Limited Partnership 1130. Calmark Heritage Park II, Limited Partnership 1131. Calvert City LP 1132. Calverton Construction Co. Limited Partnership (MD) 1133. Calverton Associates Limited Partnership 1134. Cambridge Heights Apartments Ltd 1135. Campbell Heights Associates Ltd Partnership 1136. Canterbury Gardens Associates Ltd Partnership 1137. Canterbury Services, LLC (DE) 1138. Cape Cod Partnership (TX) 1139. Capital Park Limited Partnership 1140. Cardinal Woods Apts. Ltd (CA) 1141. Caroline Associates I Ltd Partnership 1142. Caroline Arms Limited Partnership 1143. Carriage AP X Ltd 1144. Carter Associates Ltd Partnership 1145. Casa del Mar Associates Limited Partnership (FL) 1146. Castle Rock Joint Venture (TX) 1147. Catawba Club Associates, L.P. (DE) 1148. CB L-2 B Associates (FL general partnership) 1149. CB Associates (FL general partnership) 1150. CB L-2 C Associates (FL general partnership) 1151. CC Office Associates 1152. CCP V/Aspen Ridge GP, LLC (SC) 49 50 1153. CCP VI Springdale GP, LLC (SC) 1154. CCP V GP Limited Partnership (SC) 1155. CCP/IV Nob Hill GP, LLC 1156. CCP V Fifty-One GP LLC (SC) 1157. CCP/IV Residential GP, LLC (SC) 1158. CCP/IV Apartments GP, LLC 1159. CCP V Sutton Place GP LLC (SC) 1160. CCP/IV Citadel GP, LLC 1161. CCP/IV Associates Ltd. 1162. Cedar Creek Partners, Ltd. 1163. Cedar Creek Partners, Ltd. (AL) 1164. Cedar Tree, L.L.C. 1165. Cedar Tree Investors, Limited Partnership (KS) 1166. Center Square Associates 1167. Centinella GP LP (SC) 1168. Central Woodlawn LP 1169. Central Woodlawn Rehabilitation Joint Venture 1170. Central Village Associates Ltd Partnership 1171. Central Court LP 1172. Century St. Charleston, L.P. (NV) 1173. Century Stoney Greens, L.P. (CA) 1174. Century Sun River, L.P. (AZ) 1175. Century Properties Fund XI (CA) 50 51 1176. Century Properties Growth Fund XXII (CA) 1177. Century Torrey Pines, L.P. (NV) 1178. Century Pension Income Fund XXIII, A California Limited Partnership 1179. Century Pension Income Fund XXIV, A California Limited Partnership 1180. Century Lakeside Place, L.P. 1181. Century Properties Fund XX (CA) 1182. Century Properties Fund XIX (CA) 1183. Century 23 Sunnymead, L.P. (CA) 1184. Century Properties Fund XVI (CA) 1185. Century Properties Fund XIV (CA) 1186. Century Properties Fund XVII (CA) 1187. Century Properties Fund XVIII (CA) 1188. Century Properties Fund XV (CA) 1189. Chapel Housing Ltd Partnership 1190. Chapel Hill, Limited (DE) 1191. Chateau Gardens L.P. (CA) 1192. Cheek Road Ltd Partnership 1193. Chelsea Place, Limited (TN) 1194. Chesterfield Housing Associates 1195. Chestnut Hill Associates Limited Partnership (DE) 1196. Cheyenne Woods LLC 1197. Cheyenne Woods United Investors LP 1198. Cheyenne Woods GP LP 1199. Cheyenne Village Apartments Ltd Partnership 51 52 1200. Chimney Ridge, LP 1201. Christopher Court Housing Company Ltd Partnership 1202. Church Street Associates (IL) 1203. Churchview Gardens Ltd Partnership 1204. Citrus Park Associates Ltd 1205. Civic Tower Associates, LTD. 1206. Clay Courts Associates Ltd Partnership 1207. Clear Lake Land Partners, Ltd. (TX) 1208. Clinton Manor, L.P. 1209. Clover Ridge East Ltd Partnership 1210. Cloverleaf Farms Limited Partnership (SC) 1211. Club Apartments Associates 1212. Cobble Creek, LLC 1213. College Park Associates 1214. College Heights Ltd Partnership 1215. College Park Associates Ltd Partnership 1216. Colonial Terrace I Associates 1217. Colonial Terrace II Associates 1218. Colony of Springdale Associates, Ltd. 1219. Colony Apartments Company Ltd 1220. Colony-REO, L.P. (TX) 1221. Columbus Court LP 1222. Columbus Square Associates I Ltd Partnership 52 53 1223. Columbus Associates, Ltd. (TN) 1224. Columbus Square Associates II Ltd Partnership 1225. Community Developers Of High Point Limited Partnership (NC) 1226. Community Circle II Ltd 1227. Community Developers Of Princeville Ltd Partnership 1228. ConCap Metro Centre Associates, Ltd. 1229. ConCap Village Green Associates, Ltd. 1230. ConCap River's Edge Associates, Ltd. 1231. ConCap Citadel Associates, Ltd. 1232. ConCap Stratford Place Associates, Ltd. 1233. Concord Houses Associates 1234. Congress Park Associates Ltd Partnership 1235. Congress Park Associates II Ltd Partnership 1236. Congress Realty Companies Limited Partnership (MA) 1237. Congress Management Company Limited Partnership (MA) 1238. Connecticut Colony Associates (GA) 1239. Consolidated Capital Institutional Properties/3 (CA) 1240. Consolidated Capital Equity Partners / Two, L.P. (CA) 1241. Consolidated Capital Properties III (CA) 1242. Consolidated Capital Equity Partners, L.P. (CA) 1243. Consolidated Capital Properties IV (CA) 1244. Consolidated Capital Properties V (CA) 1245. Consolidated Capital Growth Fund (CA) 1246. Consolidated Capital Institutional Properties (CA) 53 54 1247. Consolidated Capital Institutional Properties/2 (CA) 1248. Consolidated Capital Properties VI (CA) 1249. Cooper River Properties, L.L.C. (CA) 1250. Cooper's Pointe CPGF 22, LP 1251. Copper Chase Partners (IL) 1252. Copper Mill CPGF 22, LP 1253. Copper Chase Associates (IL) 1254. Copperfield Partners, Ltd. (TX) 1255. Copperwood II Ltd Partnership 1256. Copperwood Ltd Partnership 1257. Coral Palm Plaza Joint Venture 1258. Corinth Square Assocs. 1259. Cottonwood Apartments 1260. Country Lake Associates Two Limited Partnership (IL) 1261. Country Villa Associates 1262. Countrybrook Associates 1263. Court Street Plaza Ltd 1264. Coventry Square Partners (TX) 1265. Covington Pike Associates 1266. CPF Misty Woods GP, L.L.C. 1267. CPF 16 Woods of Inverness, LLC 1268. CPF 16 Woods of Inverness GP, L.L.C. (SC) 1269. CPGF 22 Hampton Greens, L.L.C. 54 55 1270. CPGF 22 Hampton Greens GP, L.L.C. 1271. CPGF 22 Cooper's Pointe GP, L.L.C. (SC) 1272. CPGF 22 Copper Mill GP, L.L.C. 1273. CPGF 22 Four Winds GP, L.L.C. 1274. CPGF 22 Wood Creek GP, L.L.C. 1275. CPGF 22 Plantation Creek GP, L.L.C. 1276. CPGF 22 Stoney Creek GP, L.L.C. 1277. CRA Investors, Ltd. (TX) 1278. Creekside Industrial Associates (CA general partnership) 1279. Creekside Partners (NY general partnership) 1280. Crosland Housing Associates 1281. Cross Creek Limited Partnership (GA) 1282. Crows Nest Partners, Ltd. (TX) 1283. Cumberland Court Associates 1284. Cutler Canal Associates, Ltd. 1285. Cutler Canal II Associates, Ltd. 1286. Cutler Canal III Associates, Ltd. 1287. Cypress Landing Associates (IL) 1288. Cypress Landing Limited Partnership (IL) 1289. Daniel Lake Apts. Ltd 1290. Darby Townhouses Associates 1291. Darbytown Development Associates LP (VA) 1292. Davidson Income GP Limited Partnership (DE) 1293. Davidson IRE Assocs. LP 55 56 1294. Davidson GP, L.L.C. (SC) 1295. Davidson Diversified Real Estate I, L.P. (DE) 1296. Davidson Diversified Real Estate II, L.P. (DE) 1297. Davidson Diversified Real Estate Investors III GP, L.P. (DE) 1298. Davidson Diversified Real Estate Investors III, L.P. (DE) 1299. Davidson IRE GP LP 1300. Davidson Growth Plus, L.P. (DE) 1301. Davidson Income Real Estate, L.P. (DE) 1302. Dawson Springs Ltd. 1303. Decatur Meadows Housing Partners Ltd 1304. Deerfield Apartments, L.L.C. 1305. Deerfield Beach Associates, LTD. 1306. Delcar-S Ltd 1307. Delcar T Ltd Partnership 1308. Desoto Estates, LP 1309. DFW Apartment Investors Limited Partnership (DE) 1310. DFW Residential Investors Limited Partnership (DE) 1311. DGP, GP, L.P. 1312. Diakonia Associates 1313. Dip Limited Partnership 1314. Dip Limited Partnership II 1315. Dip Limited Partnership III 1316. Discovery Limited Partnership (MA) 56 57 1317. Diversified Equities, L.P. 1318. Dixie Apartments Associates, LTD. 1319. Downing Apartments 1320. Drexel Burnham Lambert Real Estate Associates II (NY) 1321. Drexel Burnham Lambert Real Estate Associates III (NY) 1322. Druid Hills Apartments, LP 1323. Duke Manor Associates 1324. Duquesne Associates No. 1 1325. Eagle's Nest Partnership (TX) 1326. East Hampton Ltd Partnership 1327. East Windsor 255 Limited Partnership [(DE)] 1328. Eastcourt Village Partners 1329. Eastgreen, Ltd. (TN) 1330. Easton Terrace II Associates Ltd Partnership (DE) 1331. Easton Terrace I Associates Ltd Partnership 1332. Eastridge Apartments 1333. Edgewood II Associates (GA) 1334. Edmond Estates Limited Partnership (AL) 1335. Elden Limited Partnership 1336. Elderly Housing Associates Limited Partnership (MD) 1337. Elm Creek Limited Partnership (IL) 1338. Emory Grove Limited Partnership 1339. English Manor Joint Venture (TX) 1340. English Manor Partners (TX) 57 58 1341. Esbro Limited Partnership 1342. Eustis Apartments Ltd 1343. Everest Investors 5, L.L.C. (CA) 1344. Evergreen Club Limited Partnership (MA) 1345. Factory Merchants AIP IV LP 1346. Fairburn & Gordon Associates Phase II 1347. Fairburn & Gordon Associates Phase I 1348. Fairfax Associates (VA) 1349. Fairmeadows Limited Partnership 1350. Fairmont #2 Ltd Partnership 1351. Fairmont #1 Ltd Partnership 1352. Fairview Homes Associates 1353. Fairview Gardens LP 1354. Fairwood Associates 1355. Federal Square Village Ltd Partnership 1356. Fernando Associates, LTD. 1357. Ferncliff Limited Partnership 1358. Field Associates 1359. Fifth Springhill Lake Limited Partnership 1360. Fifty-One North High Street LP 1361. First Springhill Lake Limited Partnership 1362. First Alexandria Associates (VA) 1363. Fisherman's Wharf Partners (TX) 58 59 1364. Fisherman's Landing Apartments Limited Partnership (FL) 1365. Flatbush Nsa Associates Ltd Partnership 1366. FMI Limited Partnership (PA) 1367. Fondren Court Partners, Ltd. (TX) 1368. Foothill Chimney Assocs. LP 1369. Forest Apartments Associates 1370. Forest Green Limited Partnership 1371. Forrester Gardens Ltd 1372. Forst Park Elderly Associates Ltd Partnership 1373. Fort Collins Co. Ltd 1374. Fort Carson Associates Ltd Partnership 1375. Four Winds CPGF 22, LP 1376. Four Quarters Habitat Apts. Assocs. 1377. Fox Growth Partners (CA) - Active 1378. Fourth Springhill Lake Limited Partnership 1379. Fox Partners VIII (CA general partnership) 1380. Fox Partners IX (CA general partnership) 1381. Fox Partners V (CA general partnership) 1382. Fox Partners VI (CA general partnership) 1383. Fox Realty Partners '77, Ltd. (CA) - Active 1384. Fox Run AP XI LP 1385. Fox Run AP XI GP, LP 1386. Fox Partners VII (CA general partnership) 1387. Fox Partners IX (CA General Partnership) 59 60 1388. Fox Partners IV (CA general partnership) 1389. Fox Partners III (CA general partnership) 1390. Fox Partners II (CA general partnership) 1391. Fox Partners (CA general partnership) 1392. Fox Strategic Housing Income Partners (CA) 1393. Foxfire Apts. V LP 1394. Foxfire Associates, a South Carolina Limited Partnership (SC) 1395. Foxwood II-REO, L.P. 1396. Franklin Park Ltd Partnership (PA) 1397. Franklin Chandler Associates (PA) 1398. Franklin Chapel Hill Associates (PA) 1399. Franklin Eagle Rock Associates (PA) 1400. Franklin Housing Associates [(PA)] 1401. Franklin Huntsville Associates (PA) 1402. Franklin New York Avenue Associates [(PA)] 1403. Franklin Woods Associates (PA) 1404. Franklin Pheasant Ridge Associates (PA) 1405. Franklin Pine Ridge Associates (PA) 1406. Franklin Ridgewood Associates (PA) 1407. Franklin Square School Associates Ltd Partnership (PA) 1408. Franklin Victoria Associates I (TX) 1409. Freeman Equities, L.P. 1410. Friendset Housing Co Ltd Partnership 60 61 1411. Friendship Court, LP 1412. Frio Housing Ltd Partnership 1413. FRP Limited Partnership (PA) 1414. G.P. Municipal Holdings, LLC (DE) 1415. Galion Limited Partnership 1416. Galleria Office Partners, Ltd. (TX) 1417. Garfield Hills Associates (DC) 1418. Gate Manor Apartments Ltd 1419. Gates Mills I Limited Partnership 1420. Gateway Village Associates 1421. Genesee Gardens Associates Ltd Partnership 1422. Georgetown of Columbus Associates, L.P. (DE) 1423. Georgetown AIP II, Ltd. (MA) 1424. GHI II Big River Associates 1425. GHI Associates 1426. Gladys Hampton Homes Associates Ltd Partnership 1427. Glenbrook Limited Partnership (MA) 1428. Glendale Terrace LP 1429. Golden Apartments II 1430. Golden Apartments I 1431. Governor's Park Apt. VII LP 1432. Governors Associates, L.P. 1433. GP Services XIX, Inc. (SC) 1434. GP Services XVII, Inc. (SC) 61 62 1435. Granada AIP 6 Ltd 1436. Grandland Realty Associates (GA) 1437. Grandview Apartments 1438. Great Southwest GP, L.L.C (SC) 1439. Great Southwest Industrial, L.P. (SC) 1440. Greater Richmond Community Development Corp. #2 & Associates 1441. Greater Mount Calvary Terrace, Ltd. (GA) 1442. Greater Hartford Associates (CT) 1443. Greater Richmond Community Development Corp. #1 & Associates 1444. Green Mountain Manor Ltd Partnership 1445. Greenfield Apartments Ltd Partnership 1446. Greenfield North Apartments Ltd Partnership 1447. Greentree Associates (IL) 1448. Greenville Arms, LP 1449. Griffith Limited Partnership 1450. Grosvenor House Associates Limited Partnership (MA) 1451. Grove Park Villas, Ltd 1452. Growth Hotel Investors II (CA) - Active 1453. Growth Hotel Investors (CA) - Active 1454. Growth Hotel Investors Combined Fund #1 1455. GSSW-REO Confederate Ridge, L.P. (MS) 1456. GSSW-REO Providence Place, L.P. (TX) 1457. GSSW-REO Pebblecreek, L.P. (TX) 62 63 1458. GSSW-REO Dallas, L.P. (TX) 1459. GSSW-REO Limited Partnership II (SC) 1460. GSSW-REO Timberline, L.P. (TX) 1461. GSSW-Woods on the Fairway, L.P. (TX) 1462. Gulf Coast Partners, Ltd. (AL) 1463. Gulf Coast Holdings Ltd 1464. Gulfgate Partners, Ltd. (TX) 1465. Gulfport Apts. Ltd. 1466. Gulfway Limited Partnership 1467. GW Carver Ltd 1468. Haili Associates 1469. Haines Associates Ltd Partnership 1470. Hainlin Mills Apt. Assoc., Ltd. 1471. Halls Mill Ltd. 1472. Hamilton House Associates (FL) 1473. Hampton Hill Partners (TX) 1474. Hampton Greens CPGF 22, LP 1475. Hampton/GHI Associates No. 1 1476. Hampton/GHI Associates No. 2 1477. Harbor Court Associates, LTD. 1478. Harbor Landing AP XI, LP (SC) 1479. Harold House Limited Partnership (FL) 1480. Harris Park Ltd Partnership 1481. Hastings Green Partners, Ltd. (TX) 63 64 1482. Hastings Place Partners (TX) 1483. Hatillo Housing Associates 1484. Hattiesburg Ltd. 1485. HCW General Partners, Ltd. (TX) 1486. HCW Pension Real Estate Fund Limited Partnership (MA) 1487. Heather Associates (IL) 1488. Heatherwood-REO, L.P. (TX) 1489. Heights Associates Ltd Partnership 1490. Hemingway Housing Associates Ltd Partnership 1491. Heritage Village Limited Partnership (CT) 1492. Hickory Ridge Associates, Ltd. (FL) 1493. Hickory Heights Apartments, LP 1494. Highland Park Partners (IL) 1495. Highlands Village II Ltd 1496. Highridge Associates, L.P. (DE) 1497. Hillcrest Green Apartments Ltd 1498. Hillside Village Associates 1499. Hilltop Apartments Associates 1500. Hilltop Limited Partnership 1501. Hollows Associates Ltd Partnership 1502. Holly Court, LP 1503. Hollywood Gardens (DC) 1504. HomeCorp Investments, Ltd. (AL) 64 65 1505. Homestead Apartments Associates, Ltd. 1506. Homestead Apartments Associates II, Ltd. 1507. Homestead III Associates, Ltd. 1508. Hospitality Inns Jacksonville Ltd II 1509. Hospitality Inns Pensacola, Ltd. 1510. Hospitality Inns Pensacola, Ltd. II 1511. Hospitality Partners II (CA) 1512. Hospitality Pensacola Partners, Ltd. (CA) 1513. Housing Assistance Of Mt. Dora Ltd 1514. Housing Assistance Sebring Ltd 1515. Housing Assistance Of Vero Beach Ltd 1516. Housing Assistance Of Orange City Ltd 1517. Houston Pines Ltd 1518. Houston Aristocrat Apartments Ltd Partnership 1519. HRH Properties, Ltd. 1520. Hudson Terrace Associates Ltd Partnership 1521. Hunt Club Associates, Ltd. (TX) (pending dissolution) 1522. Hunter's Glen (Phase I) AP XII LP 1523. Hunter's Glen AP XII LP 1524. Hunter's Glen Phase I GP, LLC (SC) 1525. Hunter's Glen Phase V GP, LLC (SC) 1526. Hunters Run Partners Ltd. (GA) 1527. Hurbell II Limited Partnership 1528. Hurbell III Ltd Partnership 65 66 1529. Hurbell IV Limited Partnership 1530. Hurbell I Limited Partnership 1531. IDA Tower 1532. Indian Valley III Limited Partnership 1533. Indian Valley I Limited Partnership 1534. Indian Valley II Limited Partnership 1535. Ingram Square Apartments Ltd 1536. Insignia Jacques Miller, L.P. 1537. Insignia Properties, L.P. (DE) 1538. International Plaza Associates, LTD 1539. Intown West Associates Ltd Partnership 1540. Investors First-Staged Equity, L.P. (DE) 1541. Investors First-Staged Equity, L.P. II (DE) 1542. IPLP Midrise, L.L.C. (DE) 1543. IPLP Acquisition I, L.L.C. (DE) 1544. Ivanhoe Associates Limited Partnership (PA) 1545. J.W. English, Fondren Court Partners (TX) 1546. J.W. English, Camelot Apartments (TX) 1547. J.W. English Swiss Village Partners, Ltd. (TX) 1548. Jacques-Miller Associates (TN limited partnership) 1549. Jamestown Village Associates 1550. Jersey Park Associates Ltd Partnership 1551. JFK Associates 66 67 1552. JMA Equities, L.P. (DE) 1553. Johnson Court LP 1554. Johnston Square Associates Ltd Partnership 1555. Johnstown/Consolidated Income Partners / 2 (CA) 1556. Johnstown/Consolidated Income Partners, A California Limited Partnership 1557. Jupiter - I, L.P. (DE) 1558. Jupiter - II, L.P. (DE) 1559. JVL 19 Associates Ltd Partnership Verified 1560. JVL Limited Partnership 1561. JVL Sixteen Limited Partnership 1562. JVL 18 Associates Ltd Partnership Verified 1563. Kalmia Apts. LP 1564. Kapuna Associates 1565. Kemar Townhouse Associates, L.P. (IN) 1566. Kendall Court Associates, Ltd. 1567. Kendall Townhome Investors, Ltd. (FL) 1568. Kennedy Boulevard II GP, LLC 1569. Kennedy Boulevard III GP, LLC (SC) 1570. Kennedy Boulevard Associates 1571. Kennedy Boulevard I GP, LLC (SC) 1572. Kennedy Boulevard Associates I, L.P. (PA) 1573. Kennedy Boulevard Associates II, L.P. (PA) (pending dissolution) 1574. Kennedy Boulevard Associates III, L.P. (PA) (pending dissolution) 1575. Kennedy Boulevard Associates IV, L.P. (PA)(1) (pending dissolution) 67 68 1576. Kennedy Homes Limited Partnership 1577. Kenneth Court LP 1578. Kenneth Arms 1579. Key Parkway West Associates (MA) 1580. Kimberly Associates Limited Partnership 1581. Kimberton Apartments Associates Limited Partnership 1582. Kinard LP 1583. King Bell Associates 1584. Knollcrest Apartments Ltd Partnership 1585. Koolau Housing Associates 1586. La Colina Partners, Ltd. 1587. La Colina Partners, Ltd. (CA) 1588. La Colina Ranch Apartments Ltd. 1589. La Salle Apartments 1590. La Vista Associates 1591. La Fontenay LP 1592. Lafayette Square, Ltd. (TN) 1593. Lafayette Manor Associates Ltd Partnership 1594. Lafayette Square Associates 1595. Lafayette Towne Elderly, Ltd. (MO) 1596. Lafayette Towne Family, Ltd. (MO) 1597. Laing Village Ltd Partnership 1598. LaJolla Partnership (TX) 68 69 1599. Lake Avenue Associates 1600. Lake Avenue Offices Ltd 1601. Lake Crossing Limited Partnership (GA) 1602. Lake Forest Apartments 1603. Lake Wales Villas Ltd 1604. Lake Eden Associates, L.P. (DE) 1605. Lake Avenue Partners, Ltd. (CA) 1606. Lake Meadows GP, LLC (SC) 1607. Lakehaven Associates One (IL) 1608. Lakehaven Associates Two (IL) 1609. Lakeland East Limited Partnership (CT) 1610. Lakeshore LP 1611. Lakeside Village, Limited Partnership (TN) 1612. Lakeside Villa Associates, Ltd. 1613. Lakeview Arms Associates Lts Partnership 1614. Lakeview Villas Ltd 1615. Lakewood Associates, L.P. (DE) 1616. Lakewood AOPL LP 1617. Landau Apartments Company, LP 1618. Landings CPF 16, L.P. (DE) 1619. La Fontenay LLC 1620. Landmark Associates, Ltd. (TN) 1621. Las Americas Housing Associates 1622. Lassen Associates (DC) 69 70 1623. Lauderdale Towers-REO, L.P. (TX) 1624. Lauderdale Lakes Associates, Ltd. 1625. Laurel Gardens, a Partnership In Commendam 1626. Laurens Villas, LP 1627. Lawndale Square-REO, L.P. (TX) 1628. Lazy Hollow Partners (a general partnership) 1629. Le Mans Apartments LP 1630. Lee Hy Manor Associates Ltd Partnership 1631. Lewisburg Associates 1632. Lincmar Associates (CA) 1633. Lincoln Park Associates (CO) 1634. Linden Court Associates Ltd Partnership 1635. Lock Haven Gardens Associates 1636. Lock Haven Elderly Associates 1637. Long Meadow Apartments, LP 1638. Loring Towers Associates 1639. Loring Towers Apartments Limited Partnership 1640. Loudoun House Ltd Partnership 1641. Louisbourg Elderly Associates 1642. Ludlam Gardens Apartments, LTD. 1643. Lyncstar Integrated Communications LLC (CO) 1644. M&P Development Co. 1645. Madison River Properties, L.L.C. (DE) 70 71 1646. Madison Apts. Assocs. 1647. Madisonville, Ltd. 1648. Magnolia State Partners, Ltd. (MS) 1649. Manzanita Arms 1650. Maple Park West Ltd Partnership 1651. Maple Hill Associates 1652. Marten Manor Realty Associates (IN) 1653. Mayfair Manor Limited Partnership 1654. MBRF Hunt Club GP, LLC (SC) 1655. McColl Housing Associates 1656. McCombs Pension Investment Fund, Ltd. (CA) 1657. McCombs Realty Partners, L.P. (CA) 1658. Meadow Wood Associates General Partnership 1659. Meadowbrook Drive Limited Partnership (IL) 1660. Meadowgreen Associates, LTD 1661. Meadowood Townhouses III Limited Partnership 1662. Meadowood Townhouses I Limited Partnership 1663. Meadows IV Ltd. 1664. Meadows II Ltd 1665. Meadows Partners IV, Ltd. (MS) 1666. Meadows Partners, Ltd. (MS) 1667. Meadows Apartments Limited Partnership 1668. Meadows East Apartments Limited Partnership 1669. Meadows Limited Partnership (IL) 71 72 1670. Menlo Limited Partnership 1671. Merced Commons (DC) 1672. Merced Commons II (DC) 1673. Meridian-REO, L.P. (TX) 1674. Merrifields Associates 1675. Mesa Dunes MHP LP 1676. Mesa Ridge Partnership (TX) 1677. Mesa Dunes GP, LLC (SC) 1678. Miami Elderly Associates Ltd Partnership 1679. Miami Court Associates, LTD 1680. Mid States Industrial Complex Ltd 1681. Mid-States Partners, Ltd. (CA) 1682. Midtown Plaza Associates, Ltd. 1683. Mill Street Associates Ltd Partnership 1684. Miller Village (Eastline Associates) 1685. Milliken Apartments Company 1686. Minneapolis Business Park JV 1687. Miramar Housing Associates Ltd Partnership 1688. Misty Woods CPF 19, LP (DE) 1689. Monaco Arms Associates II Ltd 1690. Monaco Arms Associates I 1691. Monmouth Associates Ltd Partnership 1692. Montblanc Gardens Apartments Associates 72 73 1693. Montblanc Housing Associates 1694. Montgomery Realty Company - 84 (CA General Partnership) 1695. Montgomery Partners, Ltd. 1696. Montgomery Realty Company - 85 (CA General Partnership) 1697. Montgomery Realty Company - 80 (CA) 1698. Montgomery Realty Company - 83 (CA General Partnership) 1699. Monument Street Ltd Partnership 1700. Moral Gardens Associates 1701. Morrisania Towers Housing Company Ltd Partnership 1702. Morton Towers Apartments, L.P. (DE) 1703. Moss Gardens Ltd, a Partnership in Commendam 1704. Mountain Run, L.P. (DE) 1705. MRI Business Properties Fund, Ltd. (CA) - Active 1706. MRR Ltd Partnership 1707. Multi-Benefit Realty Funds 87-1, California Limited Partnerships (A) 1708. Multi-Benefit Realty Funds 87-1, California Limited Partnerships (B) 1709. Murphy-Blair Associates III (MO) 1710. Muske Ltd Partnership 1711. Natchez Ltd 1712. Natick Associates 1713. National Housing Partnership Realty Fund I 1714. National Housing Partnership Realty Fund III 1715. National Housing Partnership Realty Fund IV 1716. National Housing Partnership Realty Fund Two 73 74 1717. National Pinetree Limited Partnership (NC) 1718. National Property Investors III (CA) 1719. National Property Investors 4 (CA) 1720. National Property Investors 5 (CA) 1721. National Property Investors 6 (CA) 1722. National Property Investors 7 (CA) 1723. National Property Investors 8 (CA) 1724. Neighborhoods of The Universities Lock Street Apartments Company 1725. New Vistas Apartments Associates Phase II 1726. New Fairways LP 1727. New Hidden Acres, LP 1728. New Horizons Associates, LTD. 1729. New Lake Meadows LP 1730. New Shelter V LP (DE) 1731. New Timber Ridge GP, L.P. (DE) 1732. New Timber Ridge, L.P. (DE) 1733. New Snowden Village I LP (DE) 1734. New Vistas Apartments Ltd Partnership 1735. New West 111th Street Housing Company Ltd Partnership 1736. New West 111th Street Two Associates Ltd Partnership 1737. Newberry Arms, LP 1738. Newton Hill Limited Partnership 1739. NHP Bayberry Associates LP 74 75 1740. NHP Bayberry, LP 1741. NHP Bayshore Associates L.P. 1742. NHP Bayshore, L.P. 1743. NHP Carriage Associates LP 1744. NHP Carriage, LP 1745. NHP Center Associates LP 1746. NHP Center, LP 1747. NHP Chapparal Associates LP 1748. NHP Coach Associates LP 1749. NHP Coach, LP 1750. NHP Cornerstone Associates, LP 1751. NHP Cornerstone, LP 1752. NHP Country Club Woods Associates LP 1753. NHP Cranbrook Club Associates L.P. 1754. NHP Cranbrook Club Limited Partnership 1755. NHP Dove Associates, LP 1756. NHP Dove, LP 1757. NHP Elk Associates, LP 1758. NHP Elk, LP 1759. NHP Employee Limited Partnership (DC) 1760. NHP Forest II Associates, LP 1761. NHP Forest II, LP 1762. NHP Forest IV Associates, LP 1763. NHP Forest IV, LP 75 76 1764. NHP Gates of Arlington Associates LP 1765. NHP Gates of Arlington, LP 1766. NHP Green Associates LP 1767. NHP Green, LP 1768. NHP Greenbriar Associates LP 1769. NHP Heather I Associates LP 1770. NHP Heather I, LP 1771. NHP Heather II Associates, LP 1772. NHP Heather II LP 1773. NHP Hessian Hills Associates LP 1774. NHP/HG Ten, L.P. (DE) 1775. NHP High River Associates LP 1776. NHP Hollymead Associates L.P. 1777. NHP Hollymead L.P. 1778. NHP Joint Ventures, Inc. (DE) 1779. NHP Kingston Associates L.P. 1780. NHP Kingston L.P. 1781. NHP Lane Associates LP 1782. NHP Lane, LP 1783. NHP Laurel III Associates, LP 1784. NHP Laurel III, LP 1785. NHP Longfellow Associates, LP 1786. NHP Longfellow, LP 76 77 1787. NHP Mattapony, LP 1788. NHP Mid-Atlantic Partners One Limited Partnership (DE) 1789. NHP Mid-Atlantic Partners Three Limited Partnership (DE) 1790. NHP Mid-Atlantic Partners Two Limited Partnership (DE) 1791. NHP Midland Associates LP 1792. NHP Midland, LP 1793. NHP Mill Creek Associates LP 1794. NHP Mill Creek, LP 1795. NHP Oak Associates LP 1796. NHP Oak, LP 1797. NHP Paradise Bay Associates, LP 1798. NHP Paradise Bay, LP 1799. NHP Park Associates LP 1800. NHP Park, LP 1801. NHP Park Village Associates L.P. 1802. NHP Park Village Limited Partnership 1803. NHP Parkview Associates LP 1804. NHP Parkview, LP 1805. NHP Parkway Associates L.P. 1806. NHP Parkway L.P. 1807. NHP Partners Two Limited Partnership (DE) 1808. NHP Pembroke Associates LP 1809. NHP Pembroke Courts Associates L.P 1810. NHP Pembroke Courts L.P 77 78 1811. NHP Pine Creek Manor Associates, LP 1812. NHP Pine Creek Manor, LP 1813. NHP Port Richey Associates LP 1814. NHP Port Richey, LP 1815. NHP Ramblewood Associates L.P. 1816. NHP Ramblewood L.P. 1817. NHP Regal Associates LP 1818. NHP Regal, LP 1819. NHP Ridgewood Partners, L.P. (DE) 1820. NHP Southwest Partners, L.P. (DE) 1821. NHP Spring Lake Manor Associates LP 1822. NHP Summer Associates LP 1823. NHP Summer, LP 1824. NHP Summit Associates LP 1825. NHP Summit, LP 1826. NHP Sunridge Associates LP 1827. NHP Sunridge, LP 1828. NHP Three Chopt West Associates LP 1829. NHP Timberview Associates LP 1830. NHP Timberview, LP 1831. NHP Town & Country/Country Place, LP 1832. NHP Townhouse Associates LP 1833. NHP Tropical Gardens Associates L.P. 78 79 1834. NHP Tropical Gardens Limited Partnership 1835. NHP Twin Associates LP 1836. NHP Twin Gates East Associates LP 1837. NHP Twin, LP 1838. NHP Villa Associates LP 1839. NHP Villa, LP 1840. NHP Villas Associates L.P. 1841. NHP Villas L.P. 1842. NHP Will-O-Wisp Arms Associates LP 1843. NHP Windsor Crossing Associates, L.P. 1844. NHP Windsor Crossing, L.P. 1845. NHP Woodcreek Associates LP 1846. NHP Woodcreek, LP 1847. NHP Woodshire Associates L.P. 1848. NHP Woodshire, L.P. 1849. Ninth Springhill Lake Limited Partnership 1850. Nob Hill Villa Apts. Assocs. LP 1851. Norco Associates (PA) 1852. North River Village III 1853. North Lake Terrace Associates Ltd Partnership 1854. North Washington Park Partnership 1855. North River Village III GP LP 1856. North Coast/Syracuse LP 1857. Northbrook Partners, Ltd. 79 80 1858. Northbrook Apts. Ltd 1859. Northgate Limited, L.P. (DE) 1860. Northgate Village Limited Partnership 1861. Northwest Terrace Associates Ltd Partnership 1862. NPI-AP Management, L.P. (DE) 1863. NPI-CL Management, L.P. (DE) 1864. Oak Park Partnership (IL) 1865. Oak West Ltd Partnership 1866. Oak Run LLC (SC) 1867. Oak Falls Partners (TX) 1868. Oak Hill Apartment Associates 1869. Oak Hollow South Associates 1870. Oak Park Partnership (IL) 1871. Oakland City/West End Associates, Ltd. (GA) 1872. Oakland Village Townhouse Associates Ltd Partnership 1873. Oakland Company, LP 1874. Oakwood Limited Partnership 1875. Ocala Place Ltd. 1876. OFA Partners (PA) 1877. Old Farm Associates (PA) 1878. Olde Rivertown Venture (IN) 1879. Olde Mill Investors Limited Partnership (DE) 1880. One West Conway Associates Ltd Partnership 80 81 1881. One Lytle Place (OH) 1882. Opa Locka Associates, LTD. 1883. Orange Village Associates (PA) 1884. Orange City Villas II Ltd 1885. Orangeburg Manor 1886. Orchard Park Joint Venture 1887. Orchard Mews Associates Ltd Partnership 1888. Orchard Park Apartments, L.P. 1889. Orlando-Lake Conway Limited Partnership (CT) 1890. OTC Apartments Limited Partnership (FL) 1891. Outlets GP, L.L.C. (SC) 1892. Outlets Mall LP (DE) 1893. Outlets Mall GP Limited Partnership (DE) 1894. Overbrook Park Ltd 1895. Overlook Apartments Associates Ltd (GA) 1896. Oxford Apartments Ltd 1897. Oxford Place Associates 1898. Oxford Oaks Investors Ltd Partnership 1899. P W VI Associates Ltd Partnership 1900. P W III Associates Ltd Partnership 1901. P W IV Associates Ltd Partnership 1902. P W V Associates Ltd Partnership 1903. P.A.C. Land II Limited Partnership (OH) 1904. Palm Lake Associates, LTD. 81 82 1905. Palm Beach Apartments, L.P. 1906. Palm House Ltd Partnership 1907. Palmer Square Apartments Associates 1908. Park Avenue West I Limited Partnership 1909. Park Avenue West II Limited Partnership 1910. Park Creek Ltd Partnership 1911. Parkview Arms Associates I Ltd Partnership 1912. Parkview Arms Associates II Ltd Partnership 1913. Parkview Apartments Ltd Partnership 1914. Parkview Associates Ltd Partnership Verified 1915. Parkways Associates Ltd Partnership 1916. Patman Switch Associates 1917. Pavilion Associates 1918. Pelham Place GP Limited Partnership 1919. Pelham Place L.P. 1920. Pendleton Riverside Apartments Oregon Ltd 1921. Penn Hall Associates Ltd Partnership 1922. Peppermill Place Partners (TX) 1923. Peppertree Village Of Avon Park Ltd 1924. Pershing Waterman Phase I Ltd Partnership 1925. Pickwick Place AP XII, LP 1926. PineHaven Villas Apartments LP 1927. Pinehurst, Ltd. 82 83 1928. Pittsfield Neighborhood Associates 1929. Place One Ltd Partnership 1930. Placid Lake Associates, Ltd. (FL) 1931. Plainview Apartments, LP 1932. Plantation Partners Ltd. (FL) 1933. Plantation Creek CPGF 22, LP 1934. Pleasant Valley Apartments Ltd Partnership 1935. Point West Associates Limited Partnership (pending dissolution) 1936. Point West Limited Partnership (KS) 1937. Point James Apts., LP 1938. Polynesian Apartments Associates, LTD. 1939. Poplar Square GP LP (SC) 1940. Poplar Square AIP III LP (SC) 1941. Porterwood-REO, L.P. (TX) 1942. Portfolio Properties Eight Associates (DC) 1943. Portland Plaza Ltd Partnership 1944. Portner Place Associates Ltd Partnership 1945. Post Ridge Associates, Ltd. 1946. Post Street Associates Ltd Partnership 1947. Preferred Properties Fund 82 (CA) 1948. Preferred Properties Fund 80 (CA) 1949. Pride Gardens 1950. Prime H.C. Limited Partnership (TX) 1951. Prime Crest, L.P. (TX) 83 84 1952. Prime Aspen Limited Partnership (TX) 1953. Prince Street Towers Ltd Partnership 1954. Property Asset Management Services, L.L.C. (DE- converted from L.P. in 1999) 1955. Property Asset Management Services-California, L.L.C. (CA) 1956. Pueblo Ltd Partnership 1957. Quail Run IV GP LP 1958. Quail Woods Developers 1959. Quail Run IV LP 1960. Quail Run Associates, L.P. (DE) 1961. Queen's Court Joint Venture (TN) 1962. Queenstown Apartments Ltd Partnership 1963. Quint Properties 1964. Raintree Pensacola, L.P. (SC) 1965. Raintree GP, L.L.C. (SC) 1966. Ramblewood LP 1967. Ramblewood Services, LLC (DE) 1968. Rancho Townhouse Associates (DC) 1969. Rancho Arms 1970. Randol Crossing Investors (IL) 1971. Randol Crossing Partners (IL) 1972. Raymonia Apts. LP 1973. RC Associates (IL) 1974. Real Estate Venture Fund III Limited Partnership 84 85 1975. Red River Estates, LP 1976. Reedy River, L.L.C. (DE) 1977. Registry Square Ltd Partnership 1978. Related/Advance Capital, Ltd. (FL) 1979. Related/GMN Biscayne, Ltd. (FL) 1980. Related/GMN Teal, Ltd. (FL) 1981. Related Management Company of Florida 1982. Related/Winchester, Ltd. (FL) 1983. Residual Equities, L.P. (DE) 1984. Restaurant Properties 1978, Ltd. (TN) 1985. Retirement Manor Associates (CA) 1986. RI-15 Limited Partnership (DC) 1987. Richlieu Associates 1988. Ridge Carlton Associates (MA) 1989. Ridgecrest Associates (IL) 1990. Riding Club, Ltd. (DE) 1991. River Loft Associates (MA) 1992. River Hill, Limited (TN) 1993. River Loft Apartments Limited Partnership (PA) 1994. River Woods Associates Ltd Partnership 1995. Rivercreek Apartments Limited Partnership 1996. Rivercrest Apartments LP (SC) 1997. Riverfront Apartments Ltd Partnership 1998. Riverside Park Associates Limited Partnership (DE) 85 86 1999. Riverview II Associates 2000. Riverwalk Associates LP 2001. Rockwell Limited Partnership 2002. Rodeo Drive Limited Partnership (CA) 2003. Rolling Meadows Of Ada Ltd 2004. Roosevelt Gardens II 2005. Roosevelt Gardens LP 2006. Royal Coast Apt. Assoc., Ltd. 2007. Royal Towers Limited Partnership 2008. RT Homestead Assoc., Ltd. (FL) 2009. RT Walden Associates, Ltd. (FL) 2010. Ruffin Road Associates Limited Partnership (VA) 2011. Ruscombe Gardens Ltd Partnership 2012. Russ Allen Plaza Associates, LTD 2013. Rutherford Park Townhouses Associates 2014. S.A. Apartments, Ltd. (AL) 2015. Sabal Palm Associates, Ltd. 2016. SAHF I Limited Partnership (DE) 2017. SAHF II Limited Partnership (DE) 2018. Saint George Villas (SC) 2019. Salem GP, L.L.C. (SC) 2020. Salem Court House LP 2021. Salem Arms of Augusta LP 86 87 2022. San Juan Apartments 2023. San Souci-REO, L.P. (TX) 2024. San Juan del Centro Limited Partnership 2025. San Jose Limited Partnership 2026. Sandy Springs Associates Ltd 2027. Scotch Associates Limited Partnership (PA) 2028. Scotch Lane Associates (PA) 2029. Seagrape Village Associates, LTD. 2030. Seaside Point Partners, Ltd. (TX) 2031. Seasons Apartments, L.L.C. (TX) 2032. Seasons Apartments, L.P. (TX) 2033. Sencit Selinsgrove Associates 2034. Sencit Towne House LP 2035. Sencit New York Avenue Associates 2036. Sencit Kelly Township Associates 2037. Sencit F/G Metropolitan Associates (NJ) 2038. Sencit Lebanon Company 2039. Sencit Jacksonville Company, Ltd 2040. Serramonte Plaza, a California Limited Partnership 2041. Shaker Square, L.P. (DE) 2042. Serramonte Plaza, a California Limited Partnership 2043. Seventh Springhill Lake Limited Partnership 2044. Shannon Manor 2045. Sharon Woods, Limited (A Tennessee Limited Partnership) 87 88 2046. Shearson/Calmark Heritage Park, Ltd. (CA) 2047. Shearson/Calmark Heritage Park II, Ltd. (CA) 2048. Shelter V GP SC LP 2049. Shelter Properties V (A South Carolina Limited Partnership) 2050. Shelter IV GP LP 2051. Shelter Properties I (A South Carolina Limited Partnership) 2052. Shelter Properties III (A South Carolina Limited Partnership) 2053. Shelter Properties VII (A South Carolina Limited Partnership) 2054. Shelter Properties VI (A South Carolina Limited Partnership) 2055. Shelter Properties IV (A South Carolina Limited Partnership) 2056. Shelter Properties II (A South Carolina Limited Partnership) 2057. Shelter I GP LP (DE) 2058. Shelter III GP LP 2059. Shelter V GP LP (DE) 2060. Shelter VII GP LP 2061. Sherman Terrace Associates 2062. Shoreview Apartments 2063. Signature Point Partners, Ltd. (TX) 2064. Signature Point Joint Venture (TX)\ 2065. Silver Blue Lake Apartments, LTD 2066. Site 10 Community Alliance Associates Ltd Partnership 2067. Sixth Springhill Lake Limited Partnership 2068. Sleepy Hollow Apartments Ltd Partnership 88 89 2069. Snap IV Ltd Partnership 2070. SNI Development Company Ltd Partnership 2071. Snowden Village Associates, L.P. (DE) 2072. Snowden Village GP Limited Partnership (DE) 2073. Snowden GP, L.L.C. 2074. Somerset Utah, L.P. (CO) 2075. South Port CCP/IV, L.L.C. 2076. South Brittany Oaks, L.P. (DE) 2077. South Windrush Properties, L.P. (TX) 2078. South Port Apartments, A California Limited Partnership 2079. South Mountain Terrace Ltd 2080. South Dade Apartments, LTD. 2081. South Hiawassee Village Ltd 2082. South La Mancha, L.P. (DE) 2083. South Landmark Properties, L.P. (TX) 2084. Southmont Apartments 2085. Southridge Apartments Limited Partnership 2086. Southridge Investors (IL) 2087. Southridge Associates (IL) 2088. Southward Limited Partnership (TX) 2089. Southwest Associates, L.P. (DE) 2090. Spring Meadow Limited Partnership 2091. Springfield Facilities, LLC (MD) 2092. Springhill Commercial Limited Partnership (MD) 89 90 2093. Springhill Lake Investors Limited Partnership (MD) 2094. Spruce Ltd Partnership 2095. St. Nicholas Associates Ltd Partnership 2096. Stafford Apartments Ltd Partnership 2097. Stanbridge LP (Lakeshore I) 2098. Standart Woods Associates Limited Partnership (DE) 2099. Star Creek Assoc., Ltd. 2100. Star Creek II Assoc., Ltd. 2101. Staunton Heights LP (Lakeshore III) 2102. Sterling Crest Joint Venture 2103. Stirling Court Partners (TX) 2104. Stock Island Ltd Partnership 2105. Stone Hollow-REO, L.P. (TX) 2106. Stone Ridge LLC 2107. Stonecreek, Limited (TN) 2108. Stoney Creek CPGF 22, LP 2109. Stoney Greens, LLC (SC) 2110. Stonybrook Apartments Associates (SC) 2111. Storey Manor Associates Ltd Partnership 2112. Stratford Place Investors Limited Partnership (DE) 2113. Strawbridge Square Associates Ltd Partnership 2114. Sturbrook Investors, Ltd. 2115. Summersong Townhouse Ltd Partnership 90 91 2116. Summerwalk NPI III, L.P. 2117. Sunbury Partners, Ltd. (TX) 2118. Sunrise Associates Ltd Partnership 2119. Sunset Plaza Apartments 2120. Susquehanna View LP 2121. Sutton Place CCP V, LP 2122. Swift Creek Apts. of Hartsville, LP 2123. Sycamore Creek Associates, L.P. (DE) 2124. T.M. Alexander Associates, LTD. 2125. TAHF II Limited Partnership (DE) 2126. Tamarac Pines II Ltd Partnership 2127. Tamarac Pines Ltd Partnership 2128. Tara Bridge Limited Partnership (GA) 2129. Taunton II Associates 2130. Taunton Green Associates 2131. Teal Pointe Assoc., Ltd. 2132. Texas Apartment Investors General Partnership (DE) 2133. Texas Affordable Housing Investment Fund I Limited Partnership (NC) 2134. Texas Residential Investors Limited Partnership (DE) 2135. The Bluffs Development Limited Partnership 2136. The Corners Apartments IV Limited Partnership (SC) 2137. The Crossings II Limited Partnership (GA) 2138. The Fondren Court Joint Venture (TX) 2139. The Glens LP 91 92 2140. The Houston Recovery Fund (TX) 2141. The Meadows Apartments 2142. The National Housing Partnership (DC) 2143. The Park at Cedar Lawn, Ltd. (TX) 2144. The Rogers Park Partnership 2145. The Trails GP Limited Partnership 2146. The Trails, LP 2147. Third Springhill Lake Limited Partnership 2148. Thrippence Associates, Ltd. (GA) 2149. Thurber Manor Associates, L.P. (DE) 2150. Tiffany Rehab Associates (MO) 2151. Timberhill Associates LP 2152. Timberlake Apartments Limited Partnership (TX) 2153. Timberwoods Associates, LP 2154. Timuquana Park Associates 2155. Tinker Creek Limited Partnership 2156. Tompkins Terrace Associates 2157. Town North, a Limited Partnership 2158. Towne Parc-REO, L.P. (TX) 2159. Township at Highlands Partners, Ltd. (TX) 2160. Townview Towers I Partnership, Ltd. 2161. Treeslope Apartments Limited Partnership (SC) 2162. Tri-Properties Associates, LP (SC) 92 93 2163. Trianon Ltd. A LP 2164. Trinity Hills Village Apartments Ltd Partnership 2165. Trinity Towers 14th Street Associates Ltd Partnership 2166. Tumast Associates 2167. Turnberry-REO, L.P. (TX) 2168. Twin Gables Associates Ltd Partnership 2169. Twin Towers Associates 2170. Two Bridges Associates Ltd Partnership 2171. Tyee Associates 2172. U.S. Realty Partners, Limited Partnership (SC) 2173. U.S. Shelter, LP 2174. United Investors Income Properties (A Missouri Limited Partnership) 2175. United Investors Growth Properties II (MO) 2176. United Investors Growth Properties (A Missouri Limited Partnership) 2177. United Investors Income Properties II (MO) 2178. United Front Homes 2179. United Handicap Federation Apartments Associates (MN) 2180. United House Associates 2181. United Housing Partners-Cuthbert Ltd 2182. United Housing Partners Elmwood Ltd 2183. United Housing Partners Morristown Ltd Partnership 2184. United Housing Partners Welch Ltd 2185. United Housing Partnership Carbondale Ltd 2186. United Redevelopment Associates Ltd Partnership 93 94 2187. University Plaza Associates 2188. Urbanizacion Maria Lopez Housing Company Ltd Partnership 2189. US Realty I Limited Partnership 2190. Vantage '78 Ltd Partnership 2191. Verdes Del Oriente 2192. Villa De Guadalupe Associates (DC) 2193. Villa Nova, Ltd. (TN) 2194. Village Apts. 2195. Village Circle Apartments Ltd Partnership 2196. Village Green Limited Partnership (FL) 2197. Village Green Apartments Company Ltd 2198. Vineville Towers Associates Ltd 2199. Vista APX, Ltd. 2200. Vistas De San Juan Associates Ltd Partnership 2201. Vistula Heritage Village 2202. VMS Apartment Portfolio Associates III, a California Limited Partnership 2203. VMS 1985-253 Ltd (CA) 2204. VMS National Residential Properties Joint Venture (IL) 2205. VMS 1985-254 Ltd (CA) 2206. VMS Apartment Portfolio Associates II, a California Limited Partnership 2207. VMS National Residential Portfolio II 2208. VMS National Residential Portfolio I 2209. Voltaire Assocs. (GA) 94 95 2210. Waico Phase II Associates Ltd Partnership 2211. Waico Apartments Associates Ltd Partnership 2212. Waipahu Associates 2213. Walden Oaks Associates Ltd Partnership 2214. Walden Pond Assoc., Ltd. 2215. Walden Joint Venture Limited Partnership 2216. Walhalla Gardens LP 2217. Walker Springs, Limited (A Tennessee Limited Partnership) 2218. Walmsley Terrace Associates Limited Partnership (VA) 2219. Walnut Springs Associates (IL) 2220. Walnut Springs Limited Partnership (IL) 2221. Walnut Hills Associates Ltd 2222. Walters/Property Asset Management Services, L.L.C. (DE) 2223. Wash-West Properties 2224. Washington Manor Limited Partnership (TX) 2225. Washington Chinatown Associates Ltd Partnership 2226. Waterford Square Apartments, Ltd. 2227. Waterman Ltd Partnership 2228. Waters Towers Associates Ltd Partnership 2229. Waynesboro Ltd. 2230. West Trails Partners, Ltd. (TX) 2231. West Oak Village Limited Partnership 2232. West Lake Arms Limited Partnership (DE) 2233. Westbury Investors Limited Partnership (DE) 95 96 2234. Westbury Limited Partnership (MD) 2235. Westchase Midrise Office Partners, Ltd. (TX) 2236. Western Can Ltd 2237. Westgate Apartments 2238. Westlake Apts. Assocs. 2239. Westlake East Associates, L.P. 2240. Westminster Ltd Partnership 2241. Whispering Pines AIP 6 LP 2242. Whitefield Place Ltd Partnership 2243. Wigar Ltd Partnership 2244. Williamsburg South Apartments LP 2245. Williamsburg East-REO, L.P. 2246. Williamsburg Limited Partnership (IL) 2247. Willow Creek, L.P. (DE) 2248. Winchester Gardens, Ltd. 2249. Windsor Apartments Associates Limited Partnership 2250. Windsor Crossings Limited Partnership 2251. Windsor Hills I LP (DE) 2252. Wingfield Club Investors, Limited Partnership (KS) 2253. Wingfield Investors LP 2254. Winnsboro Arms LP 2255. Winrock Houston Limited Partnership (DE) 2256. Winter Park Associates LP 96 97 2257. Winthrop Houston Associates Limited Partnership (DE) 2258. Winthrop Apartment Investors Limited Partnership (MD) 2259. Winthrop Growth Investors I Limited Partnership (MA) 2260. Winthrop Texas Investors Limited Partnership (MD) 2261. Wolf Ridge Apartments, Ltd. 2262. Wollaston Manor Associates 2263. Wood Creek CPGF 22, LP 2264. Woodberry Forest-REO, L.P. (TX) 2265. Woodcrest Apartments, Ltd. (TX) 2266. Woodhaven Associates, a Virginia Limited Partnership 2267. Woodhill Associates (IL) 2268. Woodland Ridge Associates (IL) 2269. Woodland Ridge II Partners (IL) 2270. Woodland Apartments L.P. 2271. Woodlawn Village Associates, L.P. (DE) 2272. Woodmark Limited Partnership 2273. Woodmere Associates, L.P. (DE) 2274. Woods Mortgage Associates (PA) 2275. Woods of Inverness CPF 16, L.P. 2276. Woodside Village 2277. Woodside Villas of Arcadia Ltd 2278. Woodway Office Partners, Ltd. (TX) 2279. Worcester Episcopal Housing Company 2280. Wyckford Commons, L.P. (DE) 97 98 2281. Wyntre Brook Associates (PA) 2282. Yadkin Associates Ltd Partnership 2283. Yorktown Towers Associates (IL) 98 EX-23.1 9 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements listed below of Apartment Investment and Management Company and in the related Prospectuses of our report dated January 20, 2000, with respect to the consolidated financial statements and schedule of Apartment Investment and Management Company included in this Annual Report (Form 10-K) for the year ended December 31, 1999. Form S-3 (No. 333-828) Form S-3 (No. 333-8997) Form S-3 (No. 333-17431) Form S-3 (No. 333-20755) Form S-3 (No. 333-4546) Form S-3 (No. 333-36531) Form S-3 (No. 333-36537) Form S-3 (No. 333-4542) Form S-8 (No. 333-4550) Form S-8 (No. 333-4548) Form S-8 (No. 333-14481) Form S-8 (No. 333-36803) Form S-8 (No. 333-41719) Form S-4 (No. 333-49075) Form S-3 (No. 333-47201) Form S-8 (No. 333-57617) Form S-4 (No. 333-60663) Form S-8 (No. 333-70409) Form S-3 (No. 333-61409) Form S-3 (No. 333-69121) Form S-3 (No. 333-75109) Form S-4 (No. 333-60355) Form S-8 (No. 333-75349) Form S-3 (No. 333-77257) Form S-3 (No. 333-77067) Form S-3 (No. 333-81689) Form S-3 (No. 333-92743) Form S-3 (No. 333-31718) /s/ ERNST & YOUNG LLP Denver, Colorado March 10, 2000 EX-27.1 10 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-K AND IS QUALIFIED IN ITS ENTIRETY TO SUCH 10-K 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 186,199 0 231,508 0 0 0 4,508,535 (416,497) 5,684,951 0 2,584,289 149,500 641,250 668 1,620,910 5,684,951 577,372 640,093 387,345 406,317 0 0 140,094 80,959 0 80,959 0 0 0 80,959 0.39 0.38
EX-99.1 11 AGREEMENT RE: DISCLOSURE OF LONG-TERM DEBT 1 EXHIBIT 99.1 Agreement Regarding Disclosure of Long-Term Debt Instruments In reliance upon Item 601(b)(4)(iii)(A), of Regulation S-K, Apartment Investment and Management Company, a Maryland corporation (the "Company") has not filed as an exhibit to its Annual Report on Form 10-K for the fiscal year ended December 31, 1999, any instrument with respect to long-term debt not being registered where the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the Company and its subsidiaries on a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A), of Regulation S-K, the Company hereby agrees to furnish a copy of any such agreement to the Securities Exchange Commission upon request. APARTMENT INVESTMENT AND MANAGEMENT COMPANY By: /s/ PETER KOMPANIEZ ------------------------------------ Peter Kompaniez President -----END PRIVACY-ENHANCED MESSAGE-----