<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1997
REGISTRATION NO. 333-26415
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 84-1259577
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
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<TABLE>
<S> <C>
1873 SOUTH BELLAIRE STREET, 17TH FLOOR TERRY CONSIDINE
DENVER, COLORADO 80222 CHAIRMAN OF THE BOARD OF DIRECTORS
(303)757-8101 1873 SOUTH BELLAIRE STREET, 17TH FLOOR
(Address, including zip code, and DENVER, COLORADO 80222
telephone number, including area code, (303)757-8101
of registrant's principal executive (Name, address, including zip code,
offices) and telephone number, including area
code, of agent for service)
</TABLE>
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COPY TO:
THOMAS C. JANSON, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If the Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
PROSPECTUS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
$1,000,000,000
DEBT SECURITIES
PREFERRED STOCK
CLASS A COMMON STOCK
WARRANTS
Apartment Investment and Management Company (the "Company") may offer from
time to time (i) senior, senior subordinated or subordinated debt securities
(the "Debt Securities") consisting of debentures, notes and/or other unsecured
evidences of indebtedness, (ii) shares of preferred stock, par value $.01 per
share (the "Preferred Stock"), (iii) shares of Class A Common Stock, par value
$.01 per share (the "Class A Common Stock"), and (iv) warrants to purchase Debt
Securities, Preferred Stock or Class A Common Stock, as shall be designated by
the Company at the time of the offering (the "Warrants"). The Debt Securities,
the Preferred Stock, the Class A Common Stock and the Warrants are collectively
referred to as the "Securities" and will have an aggregate initial offering
price of up to $1,000,000,000. The Securities may be offered separately or
together (in any combination) and as separate series, in any case, in amounts,
at prices and on terms to be determined at the time of sale.
The form in which the Securities are to be issued, and the terms of such
Securities, including without limitation, their specific designation, aggregate
principal amount or aggregate initial offering price, maturity, if any, rate and
times of payment of interest or dividends, if any, redemption, conversion,
exchange and sinking fund terms, if any, voting or other rights, if any,
exercise price and detachability, if any, and other specific terms will be set
forth in a Prospectus Supplement (the "Prospectus Supplement"), together with
the terms of offering of such Securities. If so specified in the applicable
Prospectus Supplement, Debt Securities of a series may be issued in whole or in
part in the form of one or more temporary or permanent global securities. The
Prospectus Supplement will also contain information, as applicable, about
certain material United States Federal income tax considerations relating to the
particular Securities offered thereby. The Prospectus Supplement will also
contain information, where applicable, as to any listing on a national
securities exchange of the Securities covered by such Prospectus Supplement.
The Securities may be offered directly, through agents designated from time
to time by the Company, or to or through underwriters or dealers. If any agents
or underwriters are involved in the sale of any of the Securities, their names,
and any applicable purchase price, fee, commission or discount arrangement
between or among them, will be set forth, or will be calculable from the
information set forth, in the applicable Prospectus Supplement. See "Plan of
Distribution." No Securities may be sold without delivery of the applicable
Prospectus Supplement describing the method and terms of the offering of such
Securities.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER
"RISK FACTORS" SET FORTH IN THE APPLICABLE PROSPECTUS SUPPLEMENT.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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May 22, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY OR BY ANY PROSPECTUS SUPPLEMENT OR OTHER SECURITIES OF THE
COMPANY. SUCH TRANSACTIONS MAY BE EFFECTED THROUGH THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION"
INCLUDED ELSEWHERE HEREIN AND IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; 7
World Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Room of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
can also be inspected at the New York Stock Exchange, 20 Broad Street, New York,
New York 10005. The Commission also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities offered hereby. As permitted
by the rules and regulations of the Commission, this Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto. Such additional information is available for inspection
and copying at the offices of the Commission. Statements contained in this
Prospectus, in any Prospectus Supplement or in any document incorporated by
reference herein or therein as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to, or incorporated by reference in, the Registration Statement, each
such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Company with the Commission
pursuant to the Exchange Act (File No. 1-13232), are incorporated herein by
reference:
(i) Annual Report on Form 10-K for the year ended December 31, 1996;
(ii) Quarterly Report on Form 10-Q/A for the quarter ended September 30,
1996;
(iii) Current Reports on Form 8-K dated December 19, 1996, February 19,
1997, April 16, 1997 and May 5, 1997 (and all amendments thereto); and
(iv) the description of the Class A Common Stock which is contained in a
Registration Statement on Form 8-A (File No. 1-13232) filed July 19, 1994,
including any amendment or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing such documents.
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Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document that is or is deemed to be incorporated by reference herein modifies or
supersedes such previous statement. Any statement so modified or superseded
shall not be deemed to constitute a part of this Prospectus, except as so
modified or superseded.
Copies of all documents which are incorporated herein by reference (other
than the exhibits to such documents, unless such exhibits are specifically
incorporated by reference herein), will be provided without charge to any person
to whom this Prospectus has been delivered, upon request. Requests for such
copies should be directed to Apartment Investment and Management Company, 1873
South Bellaire Street, 17th Floor, Denver, Colorado 80222, Attention: Corporate
Secretary, telephone number (303) 757-8101.
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No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus or
any Prospectus Supplement and, if given or made, such information or
representation must not be relied upon as having been authorized by the Company
or any underwriter or agent. This Prospectus and any Prospectus Supplement do
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction where, or to any person to whom,
it is unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sale made hereunder or
thereunder shall, under any circumstances, create any implication that the
information herein or therein is correct as of any time subsequent to their
respective dates.
3
<PAGE>
THE COMPANY
Apartment Investment and Management Company, a Maryland corporation
(together with its subsidiaries and other controlled entities, the "Company"),
is a self-administered and self-managed real estate investment trust (a "REIT")
engaged in the ownership, acquisition, development, expansion and management of
multifamily apartment properties. AIMCO Properties, L.P., a Delaware limited
partnership (the "Operating Partnership"), and its subsidiaries conduct
substantially all of the operations of the Company. As of March 31, 1997, the
Company held approximately an 86.0% interest in the Operating Partnership.
Through its controlling interests in the Operating Partnership and other limited
partnerships and limited liability companies (collectively, the "Subsidiary
Partnerships"), the Company owns or controls multifamily apartment properties
(the "Owned Properties") and manages other multifamily apartment properties (the
"Managed Properties").
As of March 31, 1997, the Company had 94 Owned Properties containing 23,764
units and 131 Managed Properties, including 17,731 apartment units managed for
third parties and affiliates. The Company's third-party property and asset
management business is principally conducted by Property Asset Management
Services, L.P., a Delaware limited partnership ("PAMS LP"). The Operating
Partnership owns a 1% interest in, and is the general partner of, PAMS LP. The
sole limited partner of PAMS LP is Property Asset Management Services, Inc., a
Delaware corporation ("PAMS Inc." and, together with PAMS LP, the "Management
Subsidiaries"), which owns a 99% interest in PAMS LP.
The Owned Properties are located in the Sunbelt regions of the United
States. The distribution of the Owned Properties reflects the Company's focus on
growth markets and its belief that geographic diversification will help to
insulate the portfolio from regional and economic fluctuations. The Company also
seeks to create concentrations of properties within each of its markets in order
to achieve economies of scale in management and operation.
In April 1997, the Company entered into agreements to acquire NHP
Incorporated, a Delaware corporation ("NHP"). NHP provides a broad array of real
estate services nationwide including property management, and asset management,
as well as a group of related services including equity investments, purchasing,
risk management and home health care. According to 1995 year-end data published
by the National Multi Housing Council and April 1994 data published by the
United States Department of Housing and Urban Development, NHP is the nation's
second largest property manager of multifamily properties, based on the number
of units managed. As of December 31, 1996, NHP's management portfolio includes
457 affordable properties and 260 conventional properties containing 58,504
affordable units and 74,540 conventional units located in 38 states, the
District of Columbia and Puerto Rico.
The Company is also continuing to negotiate the terms of a definitive
agreement with Demeter Holdings Corporation, a Massachusetts corporation, and
Capricorn Investors, L.P., a Delaware limited partnership, Phemus Corporation, a
Massachusetts corporation and an affiliate of Demeter, and J. Roderick Heller,
III, relating to the acquisition of certain entities formerly owned by NHP that
own direct and indirect interests in partnerships that own conventional and
affordable multifamily apartment properties managed primarily by NHP, along with
a captive insurance subsidiary and certain related assets (collectively, the
"NHP Real Estate Companies"). The proposed acquisitions of NHP and the NHP Real
Estate Companies are subject to a number of contingencies, including, in some
cases, obtaining approvals of governmental authorities (including HUD),
shareholders of the Company and NHP, and other third parties. Accordingly, there
can be no assurance that either of such transactions will be completed. If
completed, the NHP Acquisition is subject to a number of risks.
The Company's headquarters are located at 1873 South Bellaire Street, 17th
Floor, Denver, Colorado 80222 and its telephone number is (303) 757-8101.
4
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USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
working capital and general corporate purposes, which may include the repayment
of outstanding indebtedness, the financing of future acquisitions (which may
include real properties, interests therein or real estate-related securities)
and the improvement of the Owned Properties. Pending the use thereof, the
Company intends to invest any net proceeds in short-term, interest-bearing
securities. The Company will not receive any proceeds from the registered resale
of any Securities pursuant to this Prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the quarters ended
March 31, 1997 and March 31, 1996 was 1.5:1 and 1.5:1 respectively and for the
years ended December 31, 1996 and December 31, 1995 and the period from January
10, 1994 (the date of formation) to December 31, 1994 was 1.6:1, 2.1:1 and
5.8:1, respectively. Prior to the completion of the initial public offering (the
"Initial Offering"), the ratio of earnings to fixed charges of the AIMCO
Predecessors for the years ended December 31, 1993 and 1992 was 1.2:1 and 1.0:1,
respectively. The earnings of the AIMCO Predecessors for the period from January
1, 1994 to July 28, 1994 were inadequate to cover fixed charges by $1,463,000.
The Company's ratio of earnings to combined fixed charges and preferred
stock dividends for the quarters ended March 31, 1997 and March 31, 1996 was
1.5:1 and 1.5:1 respectively and for the years ended December 31, 1996 and
December 31, 1995 and the period from January 10, 1994 to December 31, 1994 was
1.6:1, 1.5:1 and 2.0:1, respectively. The AIMCO Predecessors did not have any
shares of Preferred Stock outstanding during the period from January 1, 1992
through July 28, 1994.
The ratio of earnings to fixed charges for the Company was computed by
dividing earnings by fixed charges. For this purpose, "earnings" consists of
income before minority interest plus fixed charges (other than any interest
which has been capitalized); and "fixed charges" consists of interest expense
(including amortization of loan costs) and interest which has been capitalized.
The ratio of earnings to combined fixed charges and preferred stock
dividends for the Company was computed by dividing earnings by the total of
fixed charges and preferred stock dividends. For this purpose, "earnings"
consists of income before minority interest plus fixed charges (other than any
interest which has been capitalized); "fixed charges" consists of interest
expense (including amortization of loan costs) and interest which has been
capitalized; and "preferred stock dividends" consists of the amount of pre-tax
earnings that would be required to cover preferred stock dividend requirements.
The ratio of earnings to fixed charges for the AIMCO Predecessors was
computed by dividing earnings by fixed charges. For this purpose, "earnings"
consists of income (loss) before extraordinary items and income taxes plus fixed
charges; and "fixed charges" consists of interest expense (including
amortization of loan costs). No preferred stock was issued by the AIMCO
Predecessors.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
5
<PAGE>
The Debt Securities may be issued, from time to time, in one or more series,
and will constitute either senior Debt Securities ("Senior Debt Securities"),
senior subordinated Debt Securities ("Senior Subordinated Debt Securities") or
subordinated Debt Securities ("Subordinated Debt Securities"). Senior Debt
Securities may be issued under an Indenture (the "Senior Debt Securities
Indenture") to be entered into between the Company and a trustee to be named in
the applicable Prospectus Supplement (the "Senior Debt Securities Trustee"). The
Senior Subordinated Debt Securities may be issued from time to time under an
Indenture (the "Senior Subordinated Debt Securities Indenture") to be entered
into between the Company and a trustee to be named in the applicable Prospectus
Supplement (the "Senior Subordinated Debt Securities Trustee"). The Subordinated
Debt Securities may be issued from time to time under an Indenture (the
"Subordinated Debt Securities Indenture") to be entered into between the Company
and a trustee to be named in the applicable Prospectus Supplement (the
"Subordinated Debt Securities Trustee").
The Senior Debt Securities Indenture, the Senior Subordinated Debt
Securities Indenture, and the Subordinated Debt Securities Indenture are
referred to herein individually as an "Indenture" and, collectively, as the
"Indentures." The Senior Debt Securities Trustee, the Senior Subordinated Debt
Securities Trustee and the Subordinated Debt Securities Trustee are referred to
herein individually as a "Trustee" and collectively as the "Trustees." Forms of
the Indentures are filed as exhibits to the Registration Statement of which this
Prospectus is a part. The Indentures will be subject to and governed by the
Trust Indenture Act of 1939, as amended (the "TIA"). Capitalized terms used in
this section which are not otherwise defined in this Prospectus shall have the
meanings set forth in the Indenture to which they relate. The statements made
under this heading relating to the Debt Securities and the Indentures are
summaries of the anticipated provisions of the Debt Securities and the
Indentures, do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Indentures and the
Debt Securities, including the definitions therein of certain terms.
The Debt Securities will be direct, unsecured obligations of the Company.
The Indentures do not limit the aggregate principal amount of Debt Securities
that may be issued thereunder and provide that Debt Securities may be issued
thereunder from time to time in one or more series. Under the Indentures, the
Company will have the ability to issue Debt Securities with terms different from
those of Debt Securities previously issued, without the consent of the holders
of previously issued series of Debt Securities, in an aggregate principal amount
determined by the Company.
The applicable Prospectus Supplement or Prospectus Supplements relating to
any Senior Subordinated Debt Securities or Subordinated Debt Securities will set
forth the aggregate amount of outstanding indebtedness, as of the most recent
practicable date, that by the terms of such Debt Securities would be senior to
such Debt Securities and any limitation on the issuance of additional senior
indebtedness.
Debt Securities may be issued and sold at a discount below their principal
amount ("Discount Securities"). Special United States Federal income tax
considerations applicable to Debt Securities issued with original issue
discount, including Discount Securities, will be described in more detail in any
applicable Prospectus Supplement. Even if Debt Securities are not issued at a
discount below their principal amount, such Debt Securities may, for United
States Federal income tax purposes, be deemed to have been issued with "original
issue discount" ("OID") because of certain interest payment characteristics. In
addition, special United States Federal tax considerations or other restrictions
or terms applicable to any Debt Securities offered exclusively to United States
Aliens or denominated in a currency other than United States dollars will be set
forth in a Prospectus Supplement relating thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Debt Securities offered
thereby (the "Offered Debt Securities"): (i) the title of the Offered Debt
Securities; (ii) any limit on the aggregate principal amount of the Offered Debt
Securities; (iii) whether the Offered Debt Securities may be represented
initially by a
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Debt Security in temporary or permanent global form, and if so, the initial
Depositary with respect to such temporary or permanent global Debt Security and
whether and the circumstances under which beneficial owners of interests in any
such temporary or permanent global Debt Security may exchange such interests for
Debt Securities of such series and of like tenor of any authorized form and
denomination; (iv) the price or prices at which the Offered Debt Securities will
be issued; (v) the date or dates on which the principal of the Offered Debt
Securities is payable or the method of determination thereof; (vi) the place or
places where and the manner in which the principal of and premium, if any, and
interest, if any, on such Offered Debt Securities will be payable and the place
or places where such Offered Debt Securities may be presented for transfer and,
if applicable, conversion or exchange; (vii) the rate or rates at which the
Offered Debt Securities will bear interest, or the method of calculating such
rate or rates, if any, and the date or dates from which such interest, if any,
will accrue; (viii) the dates (the "Interest Payment Dates"), if any, on which
any interest on the Offered Debt Securities will be payable, and the regular
record date (the "Regular Record Date") for any interest payable on any Offered
Debt Securities; (ix) the right or obligation, if any, of the Company to redeem
or purchase Debt Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a holder thereof, the conditions, if
any, giving rise to such right or obligation, and the period or periods within
which, and the price or prices at which and the terms and conditions upon which
Debt Securities of the series shall be redeemed or purchased, in whole or part,
and any provisions for the remarketing of such Debt Securities; (x) whether such
Offered Debt Securities are convertible or exchangeable into other debt or
equity securities of the Company, and, if so, the terms and conditions upon
which such conversion or exchange will be effected including the initial
conversion or exchange price or rate and any adjustments thereto, the conversion
or exchange period and other conversion or exchange provisions; (xi) any terms
applicable to such Offered Debt Securities issued at original issue discount
below their stated principal amount, including the issue price thereof and the
rate or rates at which such original issue discount will accrue; (xii) if other
than the principal amount thereof, the portion of the principal amount of the
Offered Debt Securities which will be payable upon declaration or acceleration
of the maturity thereof pursuant to an Event of Default; (xiii) any deletions
from, modifications of or additions to the Events of Default or covenants of the
Company with respect to such Offered Debt Securities, whether or not such Events
of Default or covenants are consistent with the Events of Default or covenants
set forth herein; (xiv) any special United States Federal income tax
considerations applicable to the Offered Debt Securities; and (xv) any other
terms of the Offered Debt Securities not inconsistent with the provisions of the
Indenture. The applicable Prospectus Supplement will also describe the following
terms of any series of Senior Subordinated Debt Securities or Subordinated Debt
Securities offered hereby in respect of which this Prospectus is being
delivered: (a) the rights, if any, to defer payments of interest on the Senior
Subordinated Debt Securities or Subordinated Debt Securities of such series by
extending the interest payment period, and the duration of such extensions, and
(b) the subordination terms of the Senior Subordinated Debt Securities or
Subordinated Debt Securities of such series. The foregoing is not intended to be
an exclusive list of the terms that may be applicable to any Offered Debt
Securities and shall not limit in any respect the ability of the Company to
issue Debt Securities with terms different from or in addition to those
described above or elsewhere in this Prospectus provided that such terms are not
inconsistent with the applicable Indenture. Any such Prospectus Supplement will
also describe any special provisions for the payment of additional amounts with
respect to the Offered Debt Securities.
Since the operations of the Company are currently conducted principally
through subsidiaries, the Company's cash flow and its consequent ability to
service debt, including the Debt Securities, are dependent, in large part, upon
the earnings of its subsidiaries and the distribution of those earnings to the
Company, whether by dividends, loans or otherwise. The payment of dividends and
the making of loans and advances to the Company by its subsidiaries may be
subject to statutory or contractual restrictions, are contingent upon the
earnings of those subsidiaries and are subject to various business
considerations. Any right of the Company to receive assets of any of its
subsidiaries upon their liquidation or reorganization (and the consequent right
of the holders of the Debt Securities to
7
<PAGE>
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors (including trade creditors), except to the extent
that the Company is itself recognized as a creditor of such subsidiary, in which
case the claims of the Company would still be subordinate to any security
interests in the assets of such subsidiary and any indebtedness of such
subsidiary senior to that held by the Company.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities of a series may be issued solely as registered Debt
Securities. Debt Securities of a series may be issuable in whole or in part in
the form of one or more global Debt Securities, as described below under "Global
Debt Securities." Unless otherwise indicated in an applicable Prospectus
Supplement, Debt Securities will be issuable in denominations of $1,000 and
integral multiples thereof. Debt Securities of any series will be exchangeable
for other Debt Securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor.
Debt Securities may be presented for exchange as provided above and, unless
otherwise indicated in an applicable Prospectus Supplement, may be presented for
registration of transfer, at the office or agency of the Company designated as
registrar or co-registrar with respect to such series of Debt Securities,
without service charge and upon payment of any taxes, assessments or other
governmental charges as described in the Indenture. Such transfer or exchange
will be effected on the books of the registrar or any other transfer agent
appointed by the Company upon such registrar or transfer agent, as the case may
be, being satisfied with the documents of title and identity of the person
making the request. The Company intends to initially appoint the Trustee for the
Offered Debt Securities as the registrar for such Offered Debt Securities and
the name of any different or additional registrar designated by the Company with
respect to the Offered Debt Securities will be included in the Prospectus
Supplement relating thereto. If a Prospectus Supplement refers to any transfer
agents (in addition to the registrar) designated by the Company with respect to
any series of Debt Securities, the Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Company will be
required to maintain a transfer agent in the Borough of Manhattan, The City of
New York. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities.
In the event of any partial redemption of Debt Securities of any series, the
Company will not be required to (i) issue, register the transfer of or exchange
Debt Securities of that series during a period beginning at the opening of
business 15 days before any selection of Debt Securities of that series to be
redeemed and ending at the close of business on the day of mailing of the
relevant notice of redemption; or (ii) register the transfer of or exchange any
Debt Security, or portion thereof, called for redemption, except the unredeemed
portion of any Debt Security being redeemed in part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, and interest, if any, on, Debt Securities will be made at the
office of such paying agent or paying agents as the Company may designate from
time to time, except that, at the option of the Company, payment of principal or
interest may be made by check or by wire transfer to an account maintained by
the payee. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on Debt Securities will be made to the
person in whose name such Debt Security is registered at the close of business
on the Regular Record Date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee for the Offered Debt Securities will be designated as the Company's sole
paying agent for payments with respect to the Offered Debt Securities. Any other
paying agents initially designated by the Company for the Offered Debt
Securities will be named in an applicable Prospectus Supplement. The Company may
at any time designate additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any paying agent
acts, except that the Company will be required to maintain a paying agent in the
Borough of Manhattan, The City of New York.
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All moneys paid by the Company to a paying agent for the payment of
principal of, or interest, if any, on, any Debt Security which remains unclaimed
at the end of two years after such principal or interest shall have become due
and payable will be repaid to the Company, and the holder of such Debt Security
or any coupon will thereafter look only to the Company for payment thereof.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
depositary, which will be identified in the applicable Prospectus Supplement. A
global Debt Security may be issued only in registered form and in either
temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole to the depositary for such Debt Security or to a
nominee or successor of such depositary. If any Debt Securities of a series are
issuable in global form, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of interests in any such
global Debt Security may exchange such interests for definitive Debt Securities
of such series and of like tenor and principal amount in any authorized form and
denomination, the manner of payment of principal of and interest, if any, on any
such global Debt Security and the specific terms of the depositary arrangement
with respect to any such global Debt Security.
MERGERS AND SALES OF ASSETS
The Company may not consolidate with or merge into any other person or
convey, transfer or lease its properties and assets substantially as an entirety
to another person, unless, among other things, (i) the resulting, surviving or
transferee person (if other than the Company) is organized and existing under
the laws of the United States, any state thereof or the District of Columbia and
such person expressly assumes all obligations of the Company under the Debt
Securities and the Indenture, and (ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred or be continuing
under the Indenture. Upon the assumption of the Company's obligations by a
person to whom such properties or assets are conveyed, transferred or leased,
subject to certain exceptions, the Company shall be discharged from all
obligations under the Debt Securities and the Indenture.
EVENTS OF DEFAULT
Each Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, with respect to each series of the Debt
Securities outstanding thereunder individually, the Trustee or the holders of
not less than 25% in aggregate principal amount of the outstanding Debt
Securities of such series may declare the principal amount (or, if any of the
Debt Securities of such series are Discount Securities, such portion of the
principal amount of such Debt Securities as may be specified by the terms
thereof) of the Debt Securities of such series to be immediately due and
payable. Under certain circumstances, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series may rescind
such a declaration.
Under each Indenture, an Event of Default is defined as, with respect to
each series of Debt Securities outstanding thereunder individually, any of the
following: (i) default in payment of the principal of any Debt Securities of
such series; (ii) default in payment of any interest on any Debt Securities of
such series when due, continuing for 30 days (or 60 days, in the case of Senior
Subordinated Debt Securities or Subordinated Debt Securities); (iii) default by
the Company in compliance with its other agreements in the Debt Securities of
such series or the Indenture relating to the Debt Securities of such series upon
the receipt by the Company of notice of such default given by the Trustee for
such Debt Securities or the holders of at least 25% in aggregate principal
amount of the outstanding Debt Securities of such series and the Company's
failure to cure such default within 60 days after receipt by the Company of such
notice; (iv) certain events of bankruptcy or insolvency; and (v) any other Event
of Default set forth in an applicable Prospectus Supplement with respect to the
Debt Securities of such series.
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The Trustee shall give notice to holders of the Debt Securities of any
continuing default known to the Trustee within 90 days after the occurrence
thereof; PROVIDED, that the Trustee may withhold such notice, as to any default
other than a payment default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding Debt
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Debt Securities of such
series; PROVIDED that such direction shall not be in conflict with any law or
the Indenture and subject to certain other limitations. Before proceeding to
exercise any right or power under the Indenture at the direction of such
holders, the Trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with any such direction.
With respect to each series of Debt Securities, no holder will have any right to
pursue any remedy with respect to the Indenture or such Debt Securities, unless
(i) such holder shall have previously given the Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of such series;
(ii) the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of such series shall have made a written request to
the Trustee to pursue such remedy; (iii) such holder or holders have offered to
the Trustee reasonable indemnity satisfactory to the Trustee; (iv) the holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of such series have not given the Trustee a direction inconsistent with such
request within 60 days after receipt of such request; and (v) the Trustee shall
have failed to comply with the request within such 60-day period.
Notwithstanding the foregoing, the right of any holder of any Debt
Securities to receive payment of the principal of and interest in respect of
such Debt Securities on the date specified in such Debt Securities as the fixed
date on which an amount equal to the principal of such Debt Securities or an
installment of principal thereof or interest thereon is due and payable (the
"Stated Maturity" or "Stated Maturities") or to institute suit for the
enforcement of any such payments shall not be impaired or adversely affected
without such holder's consent. The holders of at least a majority in aggregate
principal amount of the outstanding Debt Securities of any series may waive an
existing default with respect to such series and its consequences, other than
(i) any default in any payment of the principal of, or interest on, any Debt
Securities of such series or (ii) any default in respect of certain covenants or
provisions in the Indenture which may not be modified without the consent of the
holder of each of the outstanding Debt Securities of such series affected as
described in "Modification and Waiver," below.
Each Indenture provides that the Company shall deliver to the Trustee within
120 days after the end of each fiscal year of the Company an officers'
certificate stating whether or not the signers know of any default that occurred
during such period.
MODIFICATION AND WAIVER
The Company and the Trustee may execute a supplemental indenture without the
consent of the holders of the Debt Securities (i) to add to the covenants,
agreements and obligations of the Company for the benefit of the holders of all
the Debt Securities of any series or to surrender any right or power conferred
in the Indenture upon the Company; (ii) to evidence the succession of another
corporation to the Company and the assumption by it of the obligations of the
Company under the Indenture and the Debt Securities; (iii) to establish the form
or terms of Debt Securities of any series as permitted by the Indenture; (iv) to
provide for the acceptance of appointment under the Indenture of a successor
Trustee with respect to the Debt Securities of one or more series and to add to
or change any provisions of the Indenture as shall be necessary to provide for
or facilitate the administration of the trusts by more than one Trustee; (v) to
cure any ambiguity, defect or inconsistency; (vi) to add to, change or eliminate
any provisions (which addition, change or elimination may apply to one or more
series of Debt Securities), PROVIDED that any such addition, change or
elimination does not (a) apply to any Debt Securities of any series created
prior to the execution of such supplemental indenture that is
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entitled to the benefit of such provision or (b) modify the rights of the holder
of any such Debt Securities with respect to such provision; (vii) to secure the
Debt Securities; or (viii) to make any other change that does not adversely
affect the rights of any holder of Debt Securities.
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt Securities
of the series affected by such supplemental indenture, the Company and the
Trustee may also execute a supplemental indenture to add provisions to, or
change in any manner or eliminate any provisions of, the Indenture with respect
to such series of Debt Securities or modify in any manner the rights of the
holders of the Debt Securities of such series; PROVIDED that no such
supplemental indenture will, without the consent of the holder of each such
outstanding Debt Security affected thereby (i) change the stated maturity of the
principal of, or any installment of principal or interest on, any such Debt
Security or any premium payable upon redemption or repurchase thereof, or reduce
the amount of principal of any Debt Security that is a Discount Security and
that would be due and payable upon declaration of acceleration of maturity
thereof; (ii) reduce the principal amount of, or the rate of interest on, any
such Debt Security; (iii) change the place or currency of payment of principal
or interest, if any, on any such Debt Security; (iv) impair the right to
institute suit for the enforcement of any payment on or with respect to any such
Debt Security; (v) reduce the above-stated percentage of holders of Debt
Securities of any series necessary to modify or amend the Indenture for such
Debt Securities; (vi) modify the foregoing requirements or reduce the percentage
in principal amount of outstanding Debt Securities of any series necessary to
waive any covenant or past default; or (vii) in the case of Senior Subordinated
Debt Securities or Subordinated Debt Securities, amend or modify any of the
provisions of such Indenture relating to subordination of the Debt Securities in
any manner adverse to the holders of such Debt Securities. Holders of not less
than a majority in principal amount of the outstanding Debt Securities of any
series may waive certain past defaults and may waive compliance by the Company
with certain of the restrictive covenants described above with respect to the
Debt Securities of such series.
DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, each
Indenture provides that the Company may satisfy and discharge obligations
thereunder with respect to the Debt Securities of any series by delivering to
the Trustee for cancellation all outstanding Debt Securities of such series or
depositing with the Trustee, after such outstanding Debt Securities have become
due and payable, cash sufficient to pay at Stated Maturity all of the
outstanding Debt Securities of such series and paying all other sums payable
under the Indenture with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each Indenture provides that: the Company (a) shall be discharged
from its obligations in respect of the Debt Securities of such series
("defeasance and discharge"), or (b) may cease to comply with certain
restrictive covenants ("covenant defeasance"), including those described under
"Mergers and Sales of Assets," and any such omission shall not be an Event of
Default with respect to the Debt Securities of such series, in each case, at any
time prior to the Stated Maturity or redemption thereof, when the Company has
irrevocably deposited with the Trustee, in trust, (i) sufficient funds to pay
the principal of and interest to Stated Maturity (or redemption) on, the Debt
Securities of such series, or (ii) such amount of direct obligations of, or
obligations the principal of (and premium, if any) and interest on which are
fully guaranteed by, the government of the United States and which are not
subject to prepayment, redemption or call, as will, together with the
predetermined and certain income to accrue thereon without consideration of any
reinvestment thereof, be sufficient to pay when due the principal of (and
premium, if any) and interest to Stated Maturity (or redemption) on, the Debt
Securities of such series. Upon such defeasance and discharge, the holders of
the Debt Securities of such series shall no longer be entitled to the benefits
of the Indenture, except for the purposes of registration of transfer and
exchange of the Debt Securities of such series and replacement of lost, stolen
or mutilated Debt Securities and shall look only to such deposited funds or
obligations for payment.
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THE TRUSTEES
The Senior Debt Securities Trustee, the Senior Subordinated Debt Securities
Trustee and the Subordinated Debt Securities Trustee will be named in the
applicable Prospectus Supplement. Each Trustee will be permitted to engage in
other transactions with the Company and each of its subsidiaries; HOWEVER, if a
Trustee acquires any conflicting interest, it must eliminate such conflict or
resign.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The Company may issue, from time to time, shares of one or more series or
classes of Preferred Stock. The following description sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The particular terms of any series of Preferred Stock and the
extent, if any, to which such general provisions may apply to the series of
Preferred Stock so offered will be described in the Prospectus Supplement
relating to such Preferred Stock. The following summary of certain provisions of
the Preferred Stock do not purport to be complete and is subject to, and is
qualified in its entirety by express reference to, the provisions of the
Company's Charter (the "Charter") relating to a specific series of the Preferred
Stock, which will be in the form filed as an exhibit to or incorporated by
reference in the Registration Statement of which this Prospectus is a part at or
prior to the time of issuance of such series of Preferred Stock.
Under the Charter, the Company has the authority to issue up to 10,000,000
shares of Preferred Stock. The Board of Directors of the Company is authorized
to issue shares of Preferred Stock, in one or more classes or subclasses, and
may classify or reclassify any unissued shares of Preferred 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 Preferred Stock
including, but not limited to, ownership restrictions consistent with the
Ownership Limit (defined below) with respect to each class or subclass of
Preferred Stock, and the number of shares constituting each class or subclass,
and to increase or decrease the number of shares of any such class or subclass,
to the extent permitted by the Maryland General Corporation Law (the "MGCL").
The Board of Directors of the Company shall be authorized to determine for
each series of Preferred Stock, and the Prospectus Supplement shall set forth
with respect to such series: (i) the designation of such shares and the number
of shares that constitute such series, (ii) the dividend rate (or the method of
calculation thereof), if any, on the shares of such series and the priority as
to payment of dividends with respect to other classes or series of capital stock
of the Company, (iii) the dividend periods (or the method of calculation
thereof), (iv) the voting rights of the shares, (v) the liquidation preference
and the priority as to payment of such liquidation preference with respect to
other classes or series of capital stock of the Company and any other rights of
the shares of such series upon any liquidation or winding-up of the Company,
(vi) whether or not and on what terms the shares of such series will be subject
to redemption or repurchase at the option of the Company, (vii) whether and on
what terms the shares of such series will be convertible into or exchangeable
for other debt or equity securities of the Company, (viii) whether the shares of
such series of Preferred Stock will be listed on a securities exchange, (x) any
special United States Federal income tax considerations applicable to such
series, and (ix) the other rights and privileges and any qualifications,
limitations or restrictions of such rights or privileges of such series not
inconsistent with the Charter and the MGCL.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when and
as declared by the applicable Board of Directors out of funds of the Company
legally available therefor, an annual cash dividend payable at such dates and at
such rates, if any, per share per annum as set forth in the applicable
Prospectus Supplement.
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Unless otherwise set forth in the applicable Prospectus Supplement, each
series of Preferred Stock will rank junior as to dividends to any Preferred
Stock that may be issued in the future that is expressly senior as to dividends
to the Preferred Stock. If at any time the Company has failed to pay accrued
dividends on any such senior shares at the time such dividends are payable, the
Company may not pay any dividend on the Preferred Stock or redeem or otherwise
repurchase shares of Preferred Stock until such accumulated but unpaid dividends
on such senior shares have been paid or set aside for payment in full by the
Company.
Unless otherwise set forth in the applicable Prospectus Supplement, no
dividends (other than in common stock or other capital stock ranking junior to
the Preferred Stock of any series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment, nor shall any other distribution be
declared or made upon the common stock, or any other capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of such series
as to dividends, nor shall any common stock or any other capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of such series
as to dividends or upon liquidation be redeemed, purchased or otherwise acquired
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) by the Company (except
by conversion into or exchange for other capital stock of the Company ranking
junior to the Preferred Stock of such series as to dividends and upon
liquidation) unless (i) if such series of Preferred Stock has a cumulative
dividend, full cumulative dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for all past dividend periods and the then
current dividend period and (ii) if such series of Preferred Stock does not have
a cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period; PROVIDED, HOWEVER, that any monies theretofore deposited in any sinking
fund with respect to any preferred stock in compliance with the provisions of
such sinking fund may thereafter be applied to the purchase or redemption of
such preferred stock in accordance with the terms of such sinking fund,
regardless of whether at the time of such application full cumulative dividends
upon shares of the Preferred Stock outstanding on the last dividend payment date
shall have been paid or declared and set apart for payment; and provided,
further, that any such junior or parity preferred stock or common stock may be
converted into or exchanged for stock of the Company ranking junior to the
Preferred Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear
interest.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable Prospectus
Supplement, which will set forth the terms and conditions upon which such
conversion or exchange may be effected, including the initial conversion or
exchange rate and any adjustments thereto, the conversion or exchange period and
any other conversion or exchange provisions.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or be entitled to receive
the benefit of a sinking fund except as set forth in the applicable Prospectus
Supplement, which will set forth the terms and conditions therof, including the
dates and redemption prices of any such redemption, any conditions thereto, and
any other redemption or sinking fund provisions.
LIQUIDATION RIGHTS
Unless otherwise set forth in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of the Company, the holders
of shares of each series of Preferred Stock are entitled to receive out of
assets of the Company available for distribution to stockholders, before any
distribution of assets is made to holders of: (i) any other shares of preferred
stock ranking junior
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to such series of Preferred Stock as to rights upon liquidation, dissolution or
winding up; and (ii) shares of common stock, liquidating distributions per share
in the amount of the liquidation preference specified in the applicable
Prospectus Supplement for such series of Preferred Stock plus any dividends
accrued and accumulated but unpaid to the date of final distribution; but the
holders of each series of Preferred Stock will not be entitled to receive the
liquidating distribution of, plus such dividends on, such shares until the
liquidation preference of any shares of the Company's capital stock ranking
senior to such series of the Preferred Stock as to the rights upon liquidation,
dissolution or winding up shall have been paid (or a sum set aside therefor
sufficient to provide for payment) in full. If upon any liquidation, dissolution
or winding up of the Company, the amounts payable with respect to the Preferred
Stock, and any other Preferred Stock ranking as to any such distribution on a
parity with the Preferred Stock are not paid in full, the holders of the
preferred stock and such other parity preferred stock will share ratably in any
such distribution of assets in proportion to the full respective preferential
amount to which they are entitled. Unless otherwise specified in a Prospectus
Supplement for a series of Preferred Stock, after payment of the full amount of
the liquidating distribution to which they are entitled, the holders of shares
of Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company. Neither a consolidation or merger of the
Company with another corporation nor a sale of securities shall be considered a
liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Holders of Preferred Stock will not have any voting right except as set
forth below or in the applicable Prospectus Supplement or as otherwise from time
to time required by law. Whenever dividends on any applicable series of
Preferred Stock or any other class or series of stock ranking on a parity with
the applicable series of Preferred Stock with respect to the payment of
dividends shall be in arrears for the equivalent of six quarterly dividend
periods, whether or not consecutive, the holders of shares of such series of
Preferred Stock (voting separately as a class with all other series of Preferred
Stock then entitled to such voting rights) will be entitled to vote for the
election of two of the authorized number of directors of the Company at the next
annual meeting of stockholders and at each subsequent meeting until all
dividends accumulated on such series of Preferred Stock shall have been fully
paid or set apart for payment. The term of office of all directors elected by
the holders of such Preferred Stock shall terminate immediately upon the
termination of the right of the holders of such Preferred Stock to vote for
directors. Unless otherwise set forth in the applicable Prospectus Supplement,
holders of shares of Preferred Stock will have one vote for each share held.
So long as any shares of any series of Preferred Stock remain outstanding,
the Company shall not, without the consent of holders of at least two-thirds of
the shares of such series of Preferred Stock outstanding at the time, voting
separately as a class with all other series of Preferred Stock of the Company
upon which like voting rights have been conferred and are exercisable, (i) issue
or increase the authorized amount of any class or series of stock ranking prior
to the outstanding Preferred Stock as to dividends or upon liquidation or (ii)
amend, alter or repeal the provisions of the Company's Charter relating to such
series of Preferred Stock, whether by merger, consolidation or otherwise, so as
to materially adversely affect any power, preference or special right of such
series of Preferred Stock or the holders thereof; PROVIDED, HOWEVER, that any
increase in the amount of the authorized common stock or authorized preferred
stock or any increase or decrease in the number of shares of any series of
preferred stock or the creation and issuance of other series of common stock or
preferred stock ranking on a parity with or junior to Preferred Stock as to
dividends and upon liquidation, dissolution or winding up shall not be deemed to
materially adversely affect such powers, preferences or special rights.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The Preferred
Stock, upon issuance against full payment of the purchase price therefor, will
be fully paid and nonassessable. Shares of Preferred Stock redeemed or otherwise
reacquired by the Company shall resume the status of authorized and unissued
shares of Preferred Stock undesignated as to series, and shall be available
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for subsequent issuance. There are no restrictions on repurchase or redemption
of the Preferred Stock while there is any arrearage on sinking fund installments
except as may be set forth in an applicable Prospectus Supplement. Payment of
dividends on, and the redemption or repurchase of, any series of Preferred Stock
may be restricted by loan agreements, indentures and other agreements entered
into by the Company. The accompanying Prospectus Supplement will describe any
material contractual restrictions on such dividend payments.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the applicable Prospectus Supplement or the
Charter or as otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Preferred Stock will be
designated in the applicable Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
GENERAL
The Charter authorizes the issuance of up to 150,000,000 shares of Class A
Common Stock with a par value of $.01 per share. As of March 31, 1997, there
were 17,587,036 shares of Class A Common Stock issued and outstanding.
Subsequent to that date, the Company issued an aggregate of 2,300,000 shares of
Class A Common Stock in separate public offerings. In addition, at such date,
the Company had entered into agreements to acquire NHP which, if completed,
would result in the issuance of up to 7,570,000 additional shares of Class A
Common Stock. In addition, up to 150,000, 500,000 and 500,000 shares of Class A
Common Stock have been reserved for issuance under the Company's 1994 Stock
Option Plan (the "1994 Plan"), the 1996 Stock Award and Incentive Plan (the
"1996 Plan") and the Non-Qualified Employee Stock Option Plan (the
"Non-Qualified Plan"), respectively. The 1997 Stock Award and Incentive Plan
(the "1997 Plan") covers 10% of the shares of the Company's Common Stock
outstanding as of the first day of the fisal year during which any award is made
but in no event more than 20,000,000 shares of Common Stock. The Class A Common
Stock is traded on the NYSE under the symbol "AIV." ChaseMellon Shareholder
Services, L.L.C. serves as transfer agent and registrar of the Class A Common
Stock. In addition, the Charter originally authorized 750,000 shares of Class B
Common Stock with a par value of $.01 per share (the "Class B Common Stock" and,
together with the Class A Common Stock, the "Common Stock"), which number of
authorized shares is subject to automatic reduction by the number of shares of
Class B Common Stock that have been converted into Class A Common Stock. As of
March 31, 1997, 325,000 shares of Class B Common Stock had been so converted,
leaving a total of 425,000 shares of Class B Common Stock authorized. (See "--
Class B Common Stock" below.)
Holders of the Class A Common Stock are entitled to receive dividends, when
and as declared by the Board of Directors, out of funds legally available
therefor. The holders of shares of Class A Common Stock, upon any liquidation,
dissolution or winding-up of the Company, are entitled to receive ratably any
assets remaining after payment in full of all liabilities of the Company and the
liquidation preferences of preferred stock. The shares of Class A Common Stock
possess ordinary voting rights for the election of Directors and in respect of
other corporate matters, each share entitling the holder thereof to one vote.
Holders of shares of Class A Common Stock do not have cumulative voting rights
in the election of Directors, which means that holders of more than 50% of the
shares of Class A Common Stock voting for the election of Directors can elect
all of the Directors if they choose to do so and the holders of the remaining
shares cannot elect any Directors. Holders of shares of Class A Common Stock do
not have preemptive rights, which means they have no right to acquire any
additional shares of Class A Common Stock that may be issued by the Company at a
subsequent date.
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RESTRICTIONS ON TRANSFER
For the Company to qualify as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"), not more than 50% in value of its outstanding
capital stock may be owned, directly or indirectly, by five or fewer individuals
(as defined in the Code to include certain entities) during the last half of a
taxable year and the shares of common stock must be beneficially owned by 100 or
more persons during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year (see "Certain Federal Income Tax
Considerations -- Taxation of the Company -- Income Tests"). Because the Board
of Directors believes that it is essential for the Company to continue to
qualify as a REIT, the Board of Directors has adopted, and the shareholders have
approved, provisions of the Company's Charter restricting the acquisition of
shares of Common Stock.
Subject to certain exceptions specified in the Company's Charter, no holder
may own, or be deemed to own by virtue of various attribution and constructive
ownership provisions of the Code and Rule 13d-3 under the Exchange Act, more
than 8.7% (or 15% in the case of certain pension trusts described in the Code,
investment companies registered under the Investment Company Act of 1940 and Mr.
Considine) of the outstanding shares of Common Stock (the "Ownership Limit").
The Board of Directors may waive the Ownership Limit if evidence satisfactory to
the Board of Directors and the Company's tax counsel is presented that such
ownership will not then or in the future jeopardize the Company's status as a
REIT. However, in no event may such holder's direct or indirect ownership of
Common Stock exceed 9.8% of the total outstanding shares of Common Stock. As a
condition of such waiver, the Board of Directors may require opinions of counsel
satisfactory to it and/or an undertaking from the applicant with respect to
preserving the REIT status of the Company. The foregoing restrictions on
transferability and ownership will not apply if the Board of Directors
determines that it is no longer in the best interests of the Company to attempt
to qualify, or to continue to qualify, as a REIT and a resolution terminating
the Company's status as a REIT and amending the Company's Charter to remove the
foregoing restrictions is duly adopted by the Board of Directors and a majority
of the Company's shareholders. If shares of Common Stock in excess of the
Ownership Limit, or shares of Common Stock which would cause the REIT to be
beneficially owned by less than 100 persons, or which would result in the
Company being "closely held," within the meaning of Section 856(h) of the Code,
or which would otherwise result in the Company failing to qualify as a REIT, are
issued or transferred to any person, such issuance or transfer shall be null and
void to the intended transferee, and the intended transferee would acquire no
rights to the stock. Shares of Common Stock transferred in excess of the
Ownership Limit or other applicable limitations will automatically be
transferred to a trust for the exclusive benefit of one or more qualifying
charitable organizations to be designated by the Company. Shares transferred to
such trust will remain outstanding, and the trustee of the trust will have all
voting and dividend rights pertaining to such shares. The trustee of such trust
may transfer such shares to a person whose ownership of such shares does not
violate the Ownership Limit or other applicable limitation. Upon a sale of such
shares by the trustee, the interest of the charitable beneficiary will
terminate, and the sales proceeds would be paid, first, to the original intended
transferee, to the extent of the lesser of (a) such transferee's original
purchase price (or the original market value of such shares if purportedly
acquired by gift or devise) and (b) the price received by the trustee, and,
second, any remainder to the charitable beneficiary. In addition, shares of
stock held in such trust are purchasable by the Company for a 90-day period at a
price equal to the lesser of the price paid for the stock by the original
intended transferee (or the original market value of such shares if purportedly
acquired by gift or devise) and the market price for the stock on the date that
the Company determines to purchase the stock. The 90-day period commences on the
date of the violation transfer or the date that the Board of Directors
determines in good faith that a violative transfer has occurred, whichever is
later. All certificates representing shares of Common Stock bear a legend
referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of
the Code and Rule 13d-3 under the Exchange Act, more than a specified percentage
of the outstanding shares of Common Stock must file an affidavit with the
Company containing the information specified in the Company's Charter within 30
days after January 1 of each year. In addition, each stockholder shall upon
demand
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be required to disclose to the Company in writing such information with respect
to the direct, indirect and constructive ownership of shares as the Board of
Directors deems necessary to comply with the provisions of the Code applicable
to a REIT or to comply with the requirements of any taxing authority or
governmental agency.
The ownership limitations may have the effect of precluding acquisition of
control of the Company by certain third parties unless the Board of Directors
determines that maintenance of REIT status is no longer in the best interests of
the Company.
CLASS B COMMON STOCK
The Class B Common Stock does not have voting or dividend rights and, unless
converted into Class A Common Stock, as described below, is subject to
repurchase by the Company as described below. As of December 31 of each of the
years 1994 through 1998 (each, a "Year-End Testing Date"), a number of the
shares of Class B Common Stock outstanding as of such date (the "Eligible Class
B Shares") become eligible for automatic conversion (subject to the Ownership
Limit) into an equal number of shares of Class A Common Stock (subject to
adjustment upon the occurrence of certain events in respect of the Class A
Common Stock, including stock dividends, subdivisions, combinations and
reclassifications). Once converted or forfeited, the Class B Common Stock may
not be reissued by the Company.
The Eligible Class B Shares convert to Class A Common Stock if (i) the
Company's Funds from Operations Per Share (as defined below) reaches certain
annual and cumulative growth targets and (ii) the average market price for a
share of Class A Common Stock for a 90-calendar day period beginning on any day
on or after the October 1 immediately preceding the relevant Year-End Testing
Date equals or exceeds a specified target price. "Funds from Operations Per
Share" or "FFO Per Share" means, for any period, (i) net income (loss), computed
in accordance with generally accepted accounting principles, excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures, less any preferred stock dividend payments, divided by (ii) the sum of
(a) the number of shares of the Class A Common Stock outstanding on the last day
of such period (excluding any shares of the Class A Common Stock into which
shares of the Class B Common Stock shall have been converted as a result of the
conversion of shares of the Class B Common Stock on the last day of such period)
and (b) the number of shares of the Class A Common Stock issuable to acquire
units of limited partnership that (x) may be tendered for redemption in any
limited partnership in which the Company serves as general partner and (y) are
outstanding on the last day of such period.
Set forth below for each of the remaining Year-End Testing Dates is (i) the
number of shares of Class B Common Stock that become Eligible Class B Shares as
of such date, (ii) the annual FFO Per Share growth target (as a percentage
increase in FFO Per Share from the prior year), (iii) the cumulative FFO Per
Share growth target (in FFO Per Share) and (iv) the average market price target:
<TABLE>
<CAPTION>
ELIGIBLE CLASS CUMULATIVE FFO
YEAR-END TESTING B ANNUAL FFO PER PER SHARE AVERAGE MARKET
DATE SHARES (1) SHARE GROWTH TARGET GROWTH TARGET PRICE TARGET
- ----------------------------------------- --------------- ----------------------- --------------- --------------
<S> <C> <C> <C> <C>
December 31, 1997........................ 162,500 8.5% $ 2.544 $ 24.307
December 31, 1998........................ 162,500 8.5% $ 2.760 $ 26.373
</TABLE>
- ------------------------
(1) Assumes that only the shares of Class B Common Stock outstanding as of
December 31, 1996 remain outstanding until converted into shares of Class A
Common Stock.
If the annual growth target is not met for a particular Year-End Testing
Date, the Eligible Class B Shares for that date may be converted as of a
subsequent Year-End Testing Date if all of the targets are met for that
subsequent Year-End Testing Date. Any Class B Common Stock that has not been
converted into Class A Common Stock following December 31, 1998 will be subject
to repurchase by the Company at a price of $0.10 per share. Class B Common Stock
is also subject to automatic conversion upon the occurrence of certain events,
including a change of control (as defined in the
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Company's Charter). The Board of Directors may increase the number of shares
which are eligible for conversion as of any Year-End Testing Date and may, under
certain circumstances, accelerate the conversion of outstanding Class B Common
Stock at such time and in such amount as it may determine appropriate.
BUSINESS COMBINATIONS
Under the MGCL certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns 10% or more of the voting power
of the corporation's shares or an affiliate of the corporation who, at any time
within the two-year period prior to the date in question, was the beneficial
owner of 10% or more of the voting power of the then-outstanding voting stock of
the corporation (an "Interested Stockholder") or an affiliate thereof are
prohibited for five years after the most recent date on which the Interested
Stockholder became an Interested Stockholder. Thereafter, any such business
combination must be recommended by the board of directors of the corporation and
approved by the affirmative vote of at least (a) 80% of the votes entitled to be
cast by holders of outstanding voting shares of the corporation, voting together
as a single voting group, and (b) two-thirds of the votes entitled to be cast by
holders of outstanding voting shares of the corporation other than shares held
by the Interested Stockholder with whom the business combination is to be
effected, unless, among other conditions, the corporation's shareholders receive
a minimum price (as defined in the MGCL) for their shares and the consideration
is received in cash or in the same form as previously paid by the Interested
Stockholder for its shares. The business combination statute could have the
effect of discouraging offers to acquire the Company and of increasing the
difficulty of consummating any such offer. These provisions of the MGCL do not
apply, however, to business combinations that are approved or exempted by the
board of directors of the corporation prior to the time that the Interested
Stockholder becomes an Interested Stockholder.
CONTROL SHARE ACQUISITIONS
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror or by officers or directors who
are employees of the corporation. "Control shares" are voting shares of stock
that, if aggregated with all other shares of stock previously acquired by that
person, would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power: (i) one-fifth or
more but less than one-third, (ii) one-third or more but less than a majority,
or (iii) a majority or more of all voting power. Control shares do not include
shares the acquiring person is then entitled to vote as a result of having
previously obtained stockholder approval.
A "control share acquisition" means the acquisition of control shares,
subject to certain exceptions. A person who has made or proposes to make a
control share acquisition, upon satisfaction of certain conditions (including an
undertaking to pay expenses), may compel the corporation's board of directors to
call a special meeting of shareholders, to be held within 50 days of demand, to
consider the voting rights of the shares. If no request for a meeting is made,
the corporation may itself present the question at any shareholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an "acquiring person statement" as required by the statute,
then, subject to certain conditions and limitations, the corporation may redeem
any or all of the control shares (except those for which voting rights have
previously been approved) for fair value determined, without regard to voting
rights, as of the date of the last control share acquisition or of any meeting
of shareholders at which the voting rights of such shares were considered and
not approved. If voting rights for control shares are approved at a shareholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other shareholders may exercise appraisal rights. The fair
value of the shares as
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<PAGE>
determined for purposes of the appraisal rights may not be less than the highest
price per share paid in the control share acquisition, and certain limitations
and restrictions otherwise applicable to the exercise of dissenters' rights do
not apply in the context of a control share acquisition.
The control share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the corporation's
articles of incorporation or bylaws prior to the control share acquisition. The
control share acquisition statute could have the effect of discouraging offers
to acquire the Company and of increasing the difficulty of consummating any such
offer.
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue, together with other Securities or separately,
warrants for the purchase of Debt Securities, Preferred Stock or Class A Common
Stock (the "Warrants"). The Warrants may be issued under a Warrant Agreement
(each, a "Warrant Agreement") to be entered into between the Company and a bank
or trust company, as warrant agent (the "Warrant Agent"), as set forth in the
applicable Prospectus Supplement relating to any or all Warrants in respect of
which this Prospectus is being delivered. The Warrant Agent will act solely as
an agent of the Company in connection with the Warrants of a particular series
and will not assume any obligation or relationship of agency or trust for or
with any holders or beneficial owners of Warrants. The Warrant Agreement for
each Warrant, including the forms of certificates representing the Warrants
("Warrant Certificates"), will be filed as an exhibit to, or incorporated by
reference in, the Registration Statement of which this Prospectus forms a part
at or prior to the time of the issuance of such Warrants.
The following description sets forth certain general terms and provisions of
the Warrants to which any Prospectus Supplement may relate. The particular terms
of the Warrants to which any Prospectus Supplement may relate and the extent, if
any, to which such general provisions may apply to the Warrants so offered will
be described in the applicable Prospectus Supplement. Capitalized terms used in
this section which are not otherwise defined in this Prospectus shall have the
meanings set forth in the Warrant Agreement and Warrant Certificate. The
following summary of certain provisions of the Warrants, Warrant Agreement and
Warrant Certificate does not purport to be complete and is subject to, and is
qualified in its entirety by express reference to, all the provisions of the
Warrant Agreement and Warrant Certificate, including the definitions therein of
certain terms.
Reference is made to the applicable Prospectus Supplement for the terms of
Warrants in respect of which this Prospectus is being delivered, the Warrant
Agreement relating to such Warrants and the Warrant Certificates representing
such Warrants, including the following: (i) the designation, aggregate principal
amount and terms of the Debt Securities or the designation and terms of the
Preferred Stock, if any, purchasable upon exercise of such Warrants; (ii) the
procedures and conditions relating to the exercise of such Warrants; (iii) the
designation and terms of any related Securities with which such Warrants are
issued and the number of such Warrants issued with each such Security; (iv) the
date, if any, on and after which such Warrants and the related Securities will
be separately transferable; (v) the offering price of the Warrants, if any; (vi)
the principal amount of Debt Securities or the number of shares of Preferred
Stock or Common Stock purchasable upon exercise of each Warrant and the price at
which such principal amount of Debt Securities or shares of Preferred Stock or
Class A Common Stock may be purchased upon such exercise, or the method of
determining such number and price; (vii) the date on which the right to exercise
such Warrants shall commence and the date on which such right shall expire;
(viii) a discussion of United States Federal income tax considerations
applicable to the ownership or exercise of such Warrants; (ix) whether the
Warrants represented by the Warrant Certificates will be issued in registered or
bearer form, and, if registered, where they may be transferred and registered;
(x) call provisions of such Warrants, if any; and (xi) any other terms of the
Warrants.
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<PAGE>
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations and Warrants may be exercised at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement. Prior to the exercise of their Warrants, holders of
Warrants will not have any of the rights of holders of the Securities
purchasable upon such exercise and will not be entitled to payments of principal
of (or premium, if any) or interest, if any, on the Debt Securities purchasable
upon such exercise or to any dividend payments or voting rights that holders of
the Preferred Stock or Common Stock purchasable upon such exercise may be
entitled to.
Each Warrant will entitle the holder to purchase for cash such principal
amount of Debt Securities, or such number of shares of Preferred Stock or Class
A Common Stock, at such exercise price as shall, in each case, be set forth in,
or be determinable as set forth in, the applicable Prospectus Supplement
relating to the Warrants offered thereby. Unless otherwise specified in the
applicable Prospectus Supplement, Warrants may be exercised at any time up to
5:00 p.m. New York City time on the expiration date set forth in the applicable
Prospectus Supplement. After 5:00 p.m. New York City time on the expiration
date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating to the Warrants. Upon receipt of payment and the Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent on any other office indicated in the applicable Prospectus
Supplement, the Company will, as soon as practicable, forward the Securities
purchasable upon such exercise. If less than all of the Warrants represented by
such Warrant Certificate are exercised, a new Warrant Certificate will be issued
for the remaining amount of Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents or dealers. Any such underwriter, agent or dealer involved in the
offer and sale of the Securities will be named in the applicable Prospectus
Supplement.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to the prevailing market prices at the time of
sale or at negotiated prices. The Company also may, from time to time, authorize
underwriters acting as the Company's agents to offer and sell the Securities
upon the terms and conditions set forth in the applicable Prospectus Supplement.
In connection with the sale of Securities, underwriters may be deemed to have
received compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Securities for
whom they may act as agent. Underwriters may sell Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions (which may be changed from time to time) from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers, will be set forth
in the applicable Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters under the Securities Act, and any discounts and commissions
received by them and any profit realized by them on resale of the Securities may
be deemed to be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.
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<PAGE>
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to such
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date or dates
stated in such Prospectus Supplement. Each Contract will be for an amount not
less than, and the aggregate principal amount of Securities sold pursuant to
Contracts shall not be less nor more than, the respective amounts stated in the
applicable Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but will, in all cases, be subject to the
approval of the Company. The terms and conditions of any Contracts will be set
forth in any Prospectus Supplement relating to the Securities being offered.
Agents and underwriters will have no responsibility in respect of the delivery
or performance of Contracts.
Until the distribution of the Securities offered pursuant to any Prospectus
Supplement is completed, the Commission's rules may limit the ability of any
underwriter participating in such distribution to bid for and purchase the
Securities offered thereby and other securities of the Company. As an exception
to these rules, the underwriters are permitted to engage in certain transactions
that stabilize or maintain the price of such securities. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of such securities. If any such underwriter creates a short position
in such securities in connection with the offering, such underwriter may reduce
such short position by purchasing securities.
In general, bids for or purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might otherwise be in the absence of such bids or
purchases.
Neither the Company nor any underwriter participating in any distribution
makes any representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the
offered Securities or other securities of the Company. In addition, neither the
Company nor any such underwriter makes any representation that such underwriter
will engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.
Certain of the underwriters, if any, and their affiliates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
The Securities may or may not be listed on a national securities exchange.
No assurances can be given that there will be a market for any of the
Securities.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of material Federal income tax considerations
regarding an investment in Securities of the Company is based on current law, is
for general information only and is not tax advice. This discussion does not
purport to deal with all aspects of taxation that may be relevant to particular
investors in light of their personal investment or tax circumstances, or, except
to the extent discussed under the headings "Taxation of Tax-Exempt Stockholders"
and "Taxation of Non-U.S. Stockholders," to certain types of investors
(including insurance companies, tax-exempt organizations, financial institutions
or broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) that are subject to special treatment under the
Federal income tax laws.
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EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE, OWNERSHIP
AND SALE OF THE SECURITIES AND OF THE COMPANY'S ELECTION TO BE TAXED AS A REAL
ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN INCOME AND
OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION, AND OF
POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
GENERAL. The REIT provisions of the Code are highly technical and complex.
The following sets forth the material aspects of the provisions of the Code that
govern the Federal income tax treatment of a REIT and its stockholders. This
summary is qualified in its entirety by the applicable Code provisions, rules
and regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all of which are subject to change which may apply
retroactively.
The Company has elected to be taxed as a REIT under the Code commencing with
its taxable year ending December 31, 1994, and the Company intends to continue
to operate in such a manner. In the opinion of Skadden, Arps, Slate, Meagher &
Flom LLP, commencing with the Company's taxable year ending December 31, 1994,
the Company was organized in conformity with the requirements for qualification
as a REIT, and its proposed method of operation and its actual method of
operation since formation, will enable it to meet the requirements for
qualification and taxation as a REIT under the Code. It must be emphasized that
this opinion is based and conditioned upon certain assumptions and
representations made by the Company as to factual matters (including
representations of the Company concerning its business and properties as set
forth in this Prospectus). The opinion is expressed as of its date and Skadden,
Arps, Slate, Meagher & Flom LLP has no obligation to advise holders of
Securities of any subsequent change in the matters stated, represented or
assumed or any subsequent change in the applicable law. Moreover, such
qualification and taxation as a REIT depends upon the Company's ability to meet,
through actual annual operating results, distribution levels and diversity of
stock ownership, the various qualification tests imposed under the Code as
discussed below, the results of which will not be reviewed by Skadden, Arps,
Slate, Meagher & Flom LLP. Accordingly, no assurance can be given that the
actual results of the Company's operation for any one taxable year will satisfy
such requirements. See "-- Failure to Qualify." An opinion of counsel is not
binding on the Internal Revenue Service (the "Service"), and no assurance can be
given that the Service will not challenge the Company's eligibility for taxation
as a REIT.
If the Company qualifies for taxation as a REIT, it generally will not be
subject to 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. However, the Company will be subject to Federal
income tax as follows: First, the Company will be taxed at regular corporate
rates on any undistributed REIT taxable income, including undistributed net
capital gains. Second, under certain circumstances, the Company may be subject
to the "alternative minimum tax" on its items of tax preference. Third, if the
Company has net income from prohibited transactions (which are, in general,
certain sales or other dispositions of property held primarily for sale to
customers in the ordinary course of business other than foreclosure property),
such income will be subject to a 100% tax. Fourth, if the Company should fail to
satisfy the 75% gross income test or the 95% gross income test (as discussed
below), but has nonetheless maintained its qualification as a REIT because
certain other requirements have been met, it will be subject to a 100% tax on an
amount equal to (a) the gross income attributable to the greater of the amount
by which the Company fails the 75% or 95% test multiplied by (b) a fraction
intended to reflect the Company's profitability. Fifth, if the Company should
fail to distribute during each calendar year at least the sum of (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital gain net income
for such year, and (iii) any undistributed taxable income from prior
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periods, the Company would be subjected to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. In addition, the
Company could also be subject to tax in certain situations and on certain
transactions not presently contemplated.
REQUIREMENTS FOR QUALIFICATION. The Code defines a REIT as a corporation,
trust or association (1) that is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest; (3) which would be taxable as
a domestic corporation, but for the special Code provisions applicable to REITs;
(4) that is neither a financial institution nor an insurance company subject to
certain provisions of the Code; (5) the beneficial ownership of which is held by
100 or more persons; (6) in which, during the last half of each taxable year,
not more than 50% in value of the outstanding stock is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities); and (7) which meets certain other tests described below
(including with respect to the nature of its income and assets). The Code
provides that conditions (1) through (4) must be met during the entire taxable
year, and that condition (5) must be met during at least 335 days of a taxable
year of 12 months, or during a proportionate part of a taxable year of less than
12 months. The Company's Charter provides for restrictions regarding transfer of
its shares, which provisions are intended to assist the Company in continuing to
satisfy the share ownership requirements described in conditions (5) and (6)
above. Such transfer restrictions are described in "Description of Common Stock
- -- Restrictions on Transfer."
To monitor the Company's compliance with the share ownership requirements,
the Company is required to maintain records regarding the actual ownership of
its shares. To do so, the Company must demand written statements each year from
the record holders of certain percentages of its stock in which the record
holders are to disclose the actual owners of the shares (I.E., the persons
required to include in gross income the REIT dividends). A list of those persons
failing or refusing to comply with this demand must be maintained as part of the
Company's records. A stockholder who fails or refuses to comply with the demand
must submit a statement with its tax return disclosing the actual ownership of
the shares and certain other information.
In addition, a corporation may not elect to become a REIT unless its taxable
year is the calendar year. The Company satisfies this requirement.
OWNERSHIP OF PARTNERSHIP INTERESTS. In the case of a REIT that is a partner
in a partnership, regulations provide that the REIT is deemed to own its
proportionate share of the partnership's assets and to earn its proportionate
share of the partnership's income. In addition, the assets and gross income of
the partnership retain the same character in the hands of the REIT for purposes
of the gross income and asset tests applicable to REITs as described below.
Thus, the Company's proportionate share of the assets, liabilities and items of
income of the Subsidiary Partnerships will be treated as assets, liabilities and
items of income of the Company for purposes of applying the REIT requirements
described herein. A summary of the rules governing the Federal income taxation
of partnerships and their partners is provided below in "Tax Aspects of the
Company's Investments in Partnerships."
INCOME TESTS. In order to maintain qualification as a REIT, the Company
annually must satisfy three gross income requirements. First, at least 75% of
the Company's gross income (excluding gross income from "prohibited
transactions," i.e., certain sales of property held primarily for sale to
customers in the ordinary course of business) for each taxable year must be
derived directly or indirectly from investments relating to real property or
mortgages on real property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments. Second,
at least 95% of the Company's gross income (excluding gross income from
prohibited transactions) for each taxable year must be derived from such real
property investments, and from other dividends, interest and gain from the sale
or disposition of stock or securities (or from any combination of the
foregoing). Third, short-term gain from the sale or other disposition of stock
or securities, gain from certain sales of property held primarily for sale, and
gain on the sale or other
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disposition of real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property) must, in the
aggregate, represent less than 30% of the Company's gross income for each
taxable year.
Rents received by the Company through the Subsidiary Partnerships will
qualify as "rents from real property" in satisfying the gross income
requirements described above, only if several conditions are met. If rent
attributable to personal property leased in connection with a lease of real
property is greater than 15% of the total rent received under the lease, then
the portion of rent attributable to such personal property will not qualify as
"rents from real property." Moreover, for rents received to qualify as "rents
from real property," the REIT generally must not operate or manage the property
or furnish or render services to the tenants of such property, other than
through an "independent contractor" from which the REIT derives no revenue.
However, the Company (or its affiliates) are permitted to, and do directly
perform services that are "usually or customarily rendered" in connection with
the rental of space for occupancy only and are not otherwise considered rendered
to the occupant of the property.
The Management Subsidiaries will receive management fees and other income. A
portion of such fees and other income will accrue to the Company through the
Operating Partnership's interest in PAMS LP. Such fee and other income generally
will not qualify under the 95% gross income test. The Company also expects to
receive distributions indirectly from the Management Subsidiaries through PAMS
Inc. that will be classified as dividend income to the extent of the earnings
and profits of PAMS Inc. Such distributions will qualify under the 95% gross
income test but not under the 75% gross income test.
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests (though not the 30% gross income test) for any taxable year, it may
nevertheless qualify as a REIT for such year if it is entitled to relief under
certain provisions of the Code. These relief provisions will be generally
available if the Company's failure to meet such tests was due to reasonable
cause and not due to willful neglect, the Company attaches a schedule of the
sources of its income to its return, and any incorrect information on the
schedule was not due to fraud with intent to evade tax. It is not possible,
however, to state whether in all circumstances the Company would be entitled to
the benefit of these relief provisions. If these relief provisions are
inapplicable to a particular set of circumstances involving the Company, the
Company will not qualify as a REIT. As discussed above in "-- General," even
where these relief provisions apply, a tax is imposed with respect to the excess
net income.
ASSET TESTS. The Company, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets must be represented by real
estate assets (including its allocable share of real estate assets held by the
Subsidiary Partnerships), stock or debt instruments held for not more than one
year purchased with the proceeds of a stock offering or long-term (at least five
years) debt offering of the Company, cash, cash items and government securities.
Second, not more than 25% of the Company's total assets may be represented by
securities other than those in the 75% asset class. Third, of the investments
included in the 25% asset class, the value of any one issuer's securities owned
by the Company may not exceed 5% of the value of the Company's total assets, and
the Company may not own more than 10% of any one issuer's outstanding voting
securities.
The Company indirectly owns interests in the Management Subsidiaries. As set
forth above, the ownership of more than 10% of the voting securities of any one
issuer by a REIT is prohibited by the asset tests. The Company believes that its
indirect ownership interest in PAMS Inc. qualifies under these rules. Skadden,
Arps, Slate, Meagher & Flom LLP, in rendering its opinion as to the
qualification of the Company as a REIT, has relied on representations of the
Company as to the value of the Operating Partnership's total assets and the
value of the Operating Partnership's interest in PAMS Inc. No independent
appraisals have been obtained to support the Company's conclusions as to the
values of the Operating Partnership's interest in PAMS Inc., and this value is
subject to change in
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the future. Accordingly, there can be no assurance that the Service will not
contend that the Operating Partnership's ownership interests in the PAMS Inc.
disqualifies the Company from treatment as a REIT.
The Company's indirect interests in the Operating Partnership and other
Subsidiary Partnerships are held through wholly owned corporate subsidiaries of
the Company organized and operated as "qualified REIT subsidiaries" within the
meaning of the Code. Qualified REIT subsidiaries are not treated as separate
entities from their parent REIT for Federal income tax purposes. Instead, all
assets, liabilities and items of income, deduction and credit of each qualified
REIT subsidiary are treated as assets, liabilities and items of the Company.
Each qualified REIT subsidiary therefore will not be subject to federal
corporate income taxation, although it may be subject to state or local
taxation. In addition, the Company's ownership of the voting stock of each
qualified REIT subsidiary does not violate the general restriction against
ownership of more than 10% of the voting securities of any issuer.
ANNUAL DISTRIBUTION REQUIREMENTS. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its shareholders in an amount at least equal to (A) the sum of (i) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Company's net capital gain) and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of noncash income. Such distributions must be paid in the taxable year to
which they relate, or in the following taxable year if declared before the
Company timely files its tax return for such year and if paid with or before the
first regular dividend payment after such declaration. To the extent that the
Company does not distribute all of its net capital gain or distributes at least
95%, but less than 100%, of its "REIT taxable income," as adjusted, it will be
subject to tax thereon at the capital gains or ordinary corporate tax rates, as
the case may be. Furthermore, if the Company should fail to distribute during
each calendar year at least the sum of (i) 85% of its REIT ordinary income for
such year, (ii) 95% of its REIT capital gain income for such year, and (iii) any
undistributed taxable income from prior periods, the Company would be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. The Company believes that it has made, and intends to
make, timely distributions sufficient to satisfy this annual distribution
requirement.
It is possible that the Company, from time to time, may not have sufficient
cash or other liquid assets to meet the 95% distribution requirement due to
timing differences between (i) the actual receipt of income (including receipt
of distributions from the Operating Partnership) and actual payment of
deductible expenses and (ii) the inclusion of such income and deduction of such
expenses in arriving at taxable income of the Company. In the event that such
timing differences occur, in order to meet the 95% distribution requirement, the
Company may find it necessary to arrange for short-term, or possibly long-term,
borrowings or to pay dividends in the form of taxable distributions of property.
Under certain circumstances, the Company may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends" to
shareholders in a later year, which may be included in the Company's deduction
for dividends paid for the earlier year. Thus, the Company may be able to avoid
being taxed on amounts distributed as deficiency dividends; however, the Company
will be required to pay interest based on the amount of any deduction taken for
deficiency dividends.
FAILURE TO QUALIFY. If the Company fails to qualify for taxation as a REIT
in any taxable year, and the relief provisions do not apply, the Company will be
subject to tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. Distributions to stockholders in any year in
which the Company fails to qualify will not be deductible by the Company nor
will they be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to shareholders will be
taxable as ordinary income, and, subject to certain limitations of the Code,
corporate distributees may be eligible for the dividends received deduction.
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<PAGE>
Unless entitled to relief under specific statutory provisions, the Company will
also be disqualified from taxation as a REIT for the four taxable years
following the year during which qualification was lost. It is not possible to
state whether in all circumstances the Company would be entitled to such
statutory relief.
TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN PARTNERSHIPS
GENERAL. Substantially all of the Company's investments are held indirectly
through the Operating Partnership. In general, partnerships are "pass-through"
entities that are not subject to Federal income tax. Rather, partners are
allocated their proportionate shares of the items of income, gain, loss,
deduction and credit of a partnership, and are potentially subject to tax
thereon, without regard to whether the partners receive a distribution from the
partnership. The Company will include in its income its proportionate share of
the foregoing partnership items for purposes of the various REIT income tests
and in the computation of its REIT taxable income. Moreover, for purposes of the
REIT asset tests, the Company will include its proportionate share of assets
held by the Partnerships. See "-- Taxation of the Company -- Ownership of
Partnership Interests."
ENTITY CLASSIFICATION. The Company's direct and indirect investment in
partnerships involves special tax considerations, including the possibility of a
challenge by the Service of the status of any of the Partnerships as a
partnership (as opposed to an association taxable as a corporation) for Federal
income tax purposes. If any of these entities were treated as an association for
Federal income tax purposes, it would be taxable as a corporation and therefore
subject to an entity-level tax on its income. In such a situation, the character
of the Company's assets and items of gross income would change and could
preclude the Company from satisfying the asset tests and the income tests (see
"-- Taxation of the Company -- Asset Tests" and "-- Taxation of the Company --
Income Tests"), and in turn could prevent the Company from qualifying as a REIT.
See "-- Taxation of the Company -- Failure to Qualify" above for a discussion of
the effect of the Company's failure to meet such tests for a taxable year. In
addition, any change in the status of any of the Subsidiary Partnerships for tax
purposes might be treated as a taxable event, in which case the Company might
incur a tax liability without any related cash distributions.
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, which opinion is
based upon certain assumptions and representations by the Company and on
opinions of local counsel with respect to matters of local law, each of the
Subsidiary Partnerships will be treated as a partnership for federal income tax
purposes. The opinion is expressed as of its date and Skadden, Arps, Slate,
Meagher & Flom LLP has no obligation to advise holders of Securities of any
subsequent change in the matters stated, represented or assumed or any
subsequent change in the applicable law. An opinion of counsel, however, is not
binding on the Service, and no assurance can be given that the Service will not
challenge the status of these entities as partnerships for Federal income tax
purposes.
TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES. Pursuant to the Code and
the regulations thereunder, income, gain, loss and deduction attributable to
appreciated or depreciated property that is contributed to a partnership in
exchange for an interest in the partnership must be allocated in a manner such
that the contributing partner is charged with, or benefits from, respectively,
the unrealized gain or unrealized loss associated with the property at the time
of the contribution. The amount of such unrealized gain or unrealized loss is
generally equal to the difference between the fair market value of contributed
property at the time of contribution, and the adjusted tax basis of such
property at the time of contribution (a "Book-Tax Difference"). Such allocations
are solely for Federal income tax purposes and do not affect the book capital
accounts or other economic or legal arrangements among the partners. The
Operating Partnership was formed by way of contributions of appreciated property
(including certain of the Owned Properties). Consequently, allocations must be
made in a manner consistent with these requirements. Where a partner contributes
cash to a partnership that holds appreciated property, the Treasury regulations
provide for a similar allocation of such items to the other partners. These
rules apply to the contribution by the Company to the Operating Partnership of
the cash proceeds received in any offerings of its stock.
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In general, certain holders of partnership interests in the Operating
Partnership ("OP Units") will be allocated lower amounts of depreciation
deductions for tax purposes and increased taxable income and gain on sale by the
Operating Partnership or the Property Partnerships of the contributed Owned
Properties. This will tend to eliminate the Book-Tax Difference over the life of
these partnerships. However, the special allocations do not always entirely
rectify the Book-Tax Difference on an annual basis or with respect to a specific
taxable transaction such as a sale. Thus, the carryover basis of the contributed
Owned Properties in the hands of the Partnerships may cause the Company to be
allocated lower depreciation and other deductions, and possibly greater amounts
of taxable income in the event of a sale of such contributed assets in excess of
the economic or book income allocated to it as a result of such sale. This may
cause the Company to recognize taxable income in excess of cash proceeds, which
might adversely affect the Company's ability to comply with the REIT
distribution requirements. See "-- Taxation of the Company -- Annual
Distribution Requirements."
With respect to any property purchased or to be purchased by any of the
Partnerships (other than through the issuance of OP Units) subsequent to the
formation of the Company, such property will initially have a tax basis equal to
its fair market value and the special allocation provisions described above will
not apply.
SALE OF THE PROPERTIES. The Company's share of any gain realized by the
Operating Partnership or a Property Partnership on the sale of any property held
as inventory or primarily for sale to customers in the ordinary course of
business will be treated as income from a prohibited transaction that is subject
to a 100% penalty tax. See "-- Requirements for Qualification -- Income Tests."
Under existing law, whether property is held as inventory or primarily for sale
to customers in the ordinary course of a partnership's trade or business is a
question of fact that depends on all the facts and circumstances with respect to
the particular transaction. The Operating Partnership and the Property
Partnerships intend to hold the Owned Properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing,
owning, and operating the Owned Properties (and other apartment properties) and
to make such occasional sales of the Owned Properties, including peripheral
land, as are consistent with the Company's investment objectives.
TAXATION OF MANAGEMENT SUBSIDIARIES
A portion of the amounts to be used to fund distributions to stockholders is
expected to come from the Management Subsidiaries, through dividends paid on the
non-voting preferred stock of PAMS Inc. held by the Operating Partnership,
distributions paid to the Operating Partnership as the general partner of PAMS
LP and interest paid by PAMS Inc. on certain installment notes held by the
Operating Partnership. PAMS Inc. will not qualify as a REIT and will pay
Federal, state and local income taxes on their taxable income at normal
corporate rates. The Management Subsidiaries intend to claim annual deductions
for interest and amortization. No assurance can be given that the Service will
not challenge such deductions. Any Federal, state or local income taxes that
PAMS Inc. is required to pay will reduce the Company's cash flow from operating
activities and its ability to make payments to holders of its securities.
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
GENERAL. As long as the Company qualifies as a REIT, distributions made to
the Company's taxable domestic stockholders out of current or accumulated
earnings and profits (and not designated as capital gain dividends) will be
taken into account by them as ordinary income and will not be eligible for the
dividends received deduction for corporations. Distributions that are designated
as capital gain dividends will be taxed as long-term capital gains (to the
extent that they do not exceed the Company's actual net capital gain for the
taxable year) without regard to the period for which the stockholder has held
its stock. However, corporate shareholders may be required to treat up to 20% of
certain capital gain dividends as ordinary income.
Distributions in excess of current and accumulated earnings and profits will
not be taxable to a stockholder to the extent that they do not exceed the
adjusted basis of the stockholder's shares, but rather will reduce the adjusted
basis of such shares. To the extent that such distributions exceed the
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adjusted basis of a stockholder's shares, they will be included in income as
long-term capital gain (or short-term capital gain if the shares have been held
for one year or less) provided that the shares are a capital asset in the hands
of the stockholder. In addition, any dividend declared by the Company in
October, November or December of any year and payable to a stockholder of record
on a specified date in any such month shall be treated as both paid by the
Company and received by the stockholder on December 31 of such year, provided
that the dividend is actually paid by the Company during January of the
following calendar year. Stockholders may not include in their individual income
tax returns any net operating losses or capital losses of the Company.
In general, any loss upon a sale or exchange of shares by a stockholder who
has held such shares for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such stockholder as
long-term capital gain.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
Based upon a published ruling by the Service, distributions by the Company
to a stockholder that is a tax-exempt entity will not constitute "unrelated
business taxable income" ("UBTI"), provided that the tax-exempt entity has not
financed the acquisition of its shares with "acquisition indebtedness" within
the meaning of the Code and the shares are not otherwise used in an unrelated
trade or business of the tax-exempt entity.
Notwithstanding the preceding paragraph, however, a portion of the dividends
paid by the Company may be treated as UBTI to certain domestic private pension
trusts if the Company is treated as a "pension-held REIT." The Company believes
that it is not, and does not expect to become, a "pension-held REIT." If the
Company were to become a pension-held REIT, these rules generally would only
apply to certain pension trusts that hold more than 10% of the Company's stock.
TAXATION OF FOREIGN STOCKHOLDERS
The following is a discussion of certain anticipated U.S. federal income and
estate tax consequences of the ownership and disposition of the Company's stock
applicable to Non-U.S. Holders of such stock. A "Non-U.S. Holder" is any person
other than (i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in the United States or under the laws of the
United States or of any state thereof, or (iii) an estate or trust whose income
is includable in gross income for U.S. Federal income tax purposes regardless of
its source. The discussion is based on current law and is for general
information only. The discussion addresses only certain and not all aspects of
U.S. Federal income and estate taxation.
ORDINARY DIVIDENDS. The portion of dividends received by Non-U.S. Holders
payable out of the Company's earnings and profits which are not attributable to
capital gains of the Company and which are not effec-tively connected with a
U.S. trade or business of the Non-U.S. Holder will be subject to U.S.
withholding tax at the rate of 30% (unless reduced by treaty). In general,
Non-U.S. Holders will not be considered engaged in a U.S. trade or business
solely as a result of their ownership of stock of the Company. In cases where
the dividend income from a Non-U.S. Holder's investment in stock of the Company
is (or is treated as) effectively connected with the Non-U.S. Holder's conduct
of a U.S. trade or business, the Non-U.S. Holder generally will be subject to
U.S. tax at graduated rates, in the same manner as U.S. stockholders are taxed
with respect to such dividends (and may also be subject to the 30% branch
profits tax in the case of a Non-U.S. Holder that is a foreign corporation).
NON-DIVIDEND DISTRIBUTION. Unless the Class A Common Stock constitutes a
United States Real Property Interest (a "USRPI"), distributions by the Company
which are not dividends out of the earnings and profits of the Company will not
be subject to U.S. income or withholding tax. If it cannot be determined at the
time a distribution is made whether or not such distribution will be in excess
of current and accumulated earnings and profits, the distribution will be
subject to withholding at the rate applicable to dividends. However, the
Non-U.S. Holder may seek a refund of such amounts from the IRS if it is
subsequently determined that such distribution was, in fact, in excess of
current and
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accumulated earnings and profits of the Company. If the Class A Common Stock
constitutes a USRPI, such distributions will be subject to 10% withholding and
taxed pursuant to the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA") at a rate of 35% to the extent such distributions exceed a
stockholder's basis in his or her Class A Common Stock.
CAPITAL GAIN DIVIDENDS. Under FIRPTA, a distribution made by AIMCO to a
Non-U.S. Holder, to the extent attributable to gains from dispositions of USRPIs
such as the properties beneficially owned by AIMCO ("USRPI Capital Gains"), will
be considered effectively connected with a U.S. trade or business of the
Non-U.S. Holder and subject to U.S. income tax at the rate applicable to U.S.
individuals or corporations, without regard to whether such distribution is
designated as a capital gain dividend. In addition, AIMCO will be required to
withhold tax equal to 35% of the amount of dividends to the extent such
dividends constitute USRPI Capital Gains. Distributions subject to FIRPTA may
also be subject to a 30% branch profits tax in the hands of a foreign corporate
stockholder that is not entitled to treaty exemption.
DISPOSITION OF STOCK OF THE COMPANY. Unless the Company's stock constitutes
a USRPI, a sale of such stock by a Non-U.S. Holder generally will not be subject
to U.S. taxation under FIRPTA. The stock will not constitute a USRPI if the
Company is a "domestically controlled REIT." A domestically controlled REIT is a
REIT in which, at all times during a specified testing period, less than 50% in
value of its shares is held directly or indirectly by Non-U.S. Holders. The
Company believes that it is, and it expects to continue to be a domestically
controlled REIT, and therefore that the sale of the Company's stock will not be
subject to taxation under FIRPTA. Because the Company's stock will be publicly
traded, however, no assurance can be given the Company will continue to be a
domestically controlled REIT.
If the Company does not constitute a domestically controlled REIT, a
Non-U.S. Holder's sale of stock generally will still not be subject to tax under
FIRPTA as a sale of a USRPI provided that (i) the stock is "regularly traded"
(as defined by applicable Treasury regulations) on an established securities
market (e.g., the NYSE, on which the Company's Class A Common Stock is listed)
and (ii) the selling Non-U.S. Holder held 5% or less of the Company's
out-standing stock at all times during a specified testing period.
If gain on the sale of stock of the Company were subject to taxation under
FIRPTA, the Non-U.S. Holder would be subject to the same treatment as a U.S.
stockholder with respect to such gain (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of nonresident alien
individuals) and the pur-chaser of the stock could be required to withhold 10%
of the purchase price and remit such amount to the Service.
Capital gains not subject to FIRPTA will nonetheless be taxable in the
United States to a Non-U.S. Holder in two cases: (i) if the Non-U.S. Holder's
investment in the stock of the Company is effectively connected with a U.S.
trade or business conducted by such Non-U.S. holder, the Non-U.S. Holder will be
subject to the same treatment as a U.S. stockholder with respect to such gain,
or (ii) if the Non-U.S. Holder is a nonresident alien individual who was present
in the United States for 183 days or more during the taxable year and has a "tax
home" in the United States, the nonresident alien individual will be subject to
a 30% tax on the individual's capital gain.
ESTATE TAX. Stock of the Company owned or treated as owned by an individual
who is not a citizen or resident (as specially defined for U.S. Federal estate
tax purposes) of the United States at the time of death will be includable in
the individual's gross estate for U.S. Federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise. Such individual's estate may be
subject to U.S. Federal estate tax on the property includable in the estate for
U.S. Federal estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Company must report
annually to the Service and to each Non-U.S. Holder the amount of dividends
(including any capital gain dividends) paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements
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apply regardless of whether withholding was reduced or eliminated by an
applicable tax treaty. Copies of these returns may also be made available under
the provisions of a specific treaty or agreement with the tax authorities in the
country in which the Non-U.S. Holder resides.
U.S. backup withholding (which generally is imposed at the rate of 31% on
certain payments to persons that fail to furnish the information required under
the U.S. information reporting requirements) and information reporting will
generally not apply to dividends (including any capital gain dividends) paid on
stock of the Company to a Non-U.S. Holder at an address outside the United
States.
The payment of the proceeds from the disposition of stock of the Company to
or through a U.S. office of a broker will be subject to information reporting
and backup withholding unless the owner, under penalties of perjury, certifies,
among other things, its status as a Non-U.S. Holder, or otherwise establishes an
exemption. The payment of the proceeds from the disposition of stock to or
through a non-U.S. office of a non-U.S. broker generally will not be subject to
backup withholding and information reporting.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Service.
These information reporting and backup withholding rules are under review by
the U.S. Treasury and their application to the Securities could be changed by
future regulations. On April 15, 1996, the Service issued proposed Treasury
Regulations concerning the withholding of tax and reporting for certain amounts
paid to non-resident individuals and foreign corporations. The proposed Treasury
Regulations, if adopted in their present form, would be effective for payments
made after December 31, 1997. Prospective purchasers should consult their tax
advisors concerning the potential adoption of such proposed Treasury Regulations
and the potential effect on their ownership of Securities.
OTHER TAX CONSEQUENCES
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING TAX
CONSEQUENCES. Prospective investors in the Securities should recognize that the
present Federal income tax treatment of an investment in the Operating
Partnership or the Company may be modified by legislative, judicial or
administrative action at any time, and that any such action may affect
investments and commitments previously made. The rules dealing with Federal
income taxation are constantly under review by persons involved in the
legislative process and by the Service and the U.S. Treasury Department,
resulting in revisions of regulations and revised interpretations of established
concepts as well as statutory changes. Revisions in Federal tax laws and
interpretations thereof could adversely affect the tax consequences of an
investment in the Operating Partnership or the Company. For example, a recent
Federal budget proposal contains language which, if enacted in its present form,
would result in the immediate taxation of all gain inherent in a corporation's
assets upon an election by the corporation to become a REIT, and thus would
effectively preclude the Company from re-electing REIT status following a
termination of its REIT qualification.
STATE AND LOCAL TAXES. The Company and its shareholders 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 shareholders may not conform to the federal
income tax consequences discussed above. Consequently, prospective shareholders
should consult their own tax advisors regarding the effect of state and local
tax laws on an investment in the Company.
LEGAL MATTERS
Certain tax matters will be passed upon for the Company by Skadden, Arps,
Slate, Meagher & Flom LLP, Los Angeles, California. The validity of the
Securities offered hereby will be passed upon for
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the Company by Piper & Marbury L.L.P., Baltimore, Maryland. Certain matters as
to Maryland law will be passed upon for the Company by Piper & Marbury L.L.P.
Certain matters as to Florida law will be passed upon for the Company by
Shumaker, Loop & Kendrick, Tampa, Florida.
EXPERTS
The consolidated financial statements of Apartment Investment and Management
Company and the combined financial statements of The AIMCO Predecessors included
in Apartment Investment and Management Company's Annual Report on Form 10-K for
the year ended December 31, 1996 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated and combined financial
statements are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of NHP Incorporated for the years
ended December 31, 1996, 1995 and 1994 included in the Company's Current Report
on Form 8-K dated April 16, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as set forth in their report thereon included
therein and incorporated by reference herein. Such consolidated financial
statements are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
As noted in their report, Arthur Andersen LLP did not audit the 1994
financial statements of certain real estate partnerships whose operating results
are included in "income (loss) from discontinued real estate operations, net of
income taxes" in the 1994 consolidated financial statements. The financial
statements of these real estate partnerships were audited by other auditors,
whose reports are filed as exhibits to the Company's Current Report on Form 8-K,
dated April 16, 1997, and Arthur Andersen LLP's opinion, insofar as it relates
to the amounts included in the consolidated financial statements for these real
estate partnerships, is based solely on the reports of those auditors included
therein and incorporated herein by reference. The auditors on whose reports
Arthur Andersen LLP relied are: Anders, Minkler & Diehl LLP; Dauby O'Connor &
Zaleski, LLC; Deloitte & Touche LLP; Edwards Leap & Sauer; George A. Hieronymous
& Company, LLC; Goldenberg Rosenthal Friedlander, LLP; Hansen, Hunter & Kibbee,
P.C.; J.H. Cohn LLP; J.A. Plumer & Co., P.A.; Marks Shron & Company, LLP;
Reznick Fedder & Silverman; and Russell Thompson Butler & Houston.
The Historical Summary of Gross Income and Direct Operating Expenses of
Villa Ladera Apartments for the year ended December 31, 1995 included in the
Company's Current Report on Form 8-K, dated December 19, 1996, has been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such Historical Summary
is incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
Any financial statements and schedules hereafter filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and
incorporated by reference in this Prospectus that have been examined and are the
subject of a report by independent accountants will be so incorporated herein by
reference in reliance upon such reports given and upon the authority of such
firms as experts in accounting and auditing to the extent covered by consents
filed with the Commission.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS.
The estimated expenses, other than underwriting discounts and commissions,
in connection with the offering of the Securities, are as follows:
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission........... $ 303,033
Printing and Engraving Expenses.................................. 125,000
Legal Fees and Expenses (other than Blue Sky).................... 50,000
Accounting Fees and Expenses..................................... 75,000
Blue Sky Fees and Expenses (including fees of counsel)........... 20,000
Trustee's and registrar's fees and expenses...................... 5,000
Miscellaneous.................................................... 10,000
---------
TOTAL............................................................ $ 588,033
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Charter limits the liability of the Company's directors and
officers to the Company and its stockholders to the fullest extent permitted
from time to time by Maryland law. Maryland law presently permits the liability
of directors and officers to a corporation or its stockholders for money damages
to be limited, except (i) to the extent that it is proved that the director or
officer actually received an improper benefit or profit in money, property or
services for the amount of the benefit or profit in money, property or services
actually received, or (ii) if a judgment or other final adjudication is entered
in a proceeding based on a finding that the director's or officer's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. This provision
does not limit the ability of the Company or its stockholders to obtain other
relief, such as an injunction or rescission.
The Charter and Bylaws require the Company to indemnify its directors,
officers and certain other parties to the fullest extent permitted from time to
time by Maryland law. The MGCL permits a corporation to indemnify its directors,
officers and certain other parties against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service to
or at the request of the corporation, unless it is established that (i) the act
or omission of the indemnified party was material to the matter giving rise to
the proceeding and (x) was committed in bad faith or (y) was the result of
active and deliberate dishonesty, (ii) the indemnified party actually received
an improper personal benefit in money, property or services or (iii) in the case
of any criminal proceeding, the indemnified party had reasonable cause to
believe that the act or omission was unlawful. Indemnification may be made
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by the director or officer in connection with the proceeding;
PROVIDED, HOWEVER, that if the proceeding is one by or in the right of the
corporation, indemnification may not be made with respect to any proceeding in
which the director or officer has been adjudged to be liable to the corporation.
In addition, a director or officer may not be indemnified with respect to any
proceeding charging improper personal benefit to the director or officer in
which the director or officer was adjudged to be liable on the basis that
personal benefit was improperly received. The termination of any proceeding by
conviction, or upon a plea of nolo contendere or its equivalent, or an entry of
any order of probation prior to judgment, creates a rebuttable presumption that
the director or officer did not meet the requisite standard of conduct required
for indemnification to be permitted. It is the position of the Securities and
Exchange Commission that indemnification of directors and officers for
liabilities arising under the Securities Act is against public policy and is
unenforceable pursuant to Section 14 of the Securities Act.
The Company has entered into agreements with certain of its officers,
pursuant to which the Company has agreed to indemnify such officers to the
fullest extent permitted by applicable law.
II-1
<PAGE>
The Agreement of Limited Partnership (the "Operating Partnership Agreement")
of the Operating Partnership, also provides for indemnification of the Company,
or any director or officer of the Company, in its capacity as the previous
general partner of the Partnership, from and against all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees), fines,
settlements and other amounts incurred in connection with any actions relating
to the operations of the Operating Partnership, as set forth in the Operating
Partnership Agreement.
Section 11.6 of the 1997 Plan, Section 2.8 of the Non-Qualified Plan,
Section 2.8 of the 1996 Plan, and Section 6.7 of the 1994 Plan, specifically
provide that, to the fullest extent permitted by law, each of the members of the
Board of Directors of the Company, the Compensation Committee of the Board and
each of the directors, officers and employees of the Company, any Company
subsidiary, the Operating Partnership and any subsidiary of the Operating
Partnership shall be held harmless and indemnified by the Company for any
liability, loss (including amounts paid in settlement), damages or expenses
(including reasonable attorneys' fees) suffered by virtue of any determinations,
acts or failures to act, or alleged acts or failures to act, in connection with
the administration of the 1997 Plan, Non-Qualified Plan, the 1996 Plan or the
1994 Plan, as the case may be, so long as such person is not determined by a
final adjudication to be guilty of willful misconduct with respect to such
determination, action or failure to act.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
**1.1 Form of Underwriting Agreement for Debt Securities.
**1.2 Form of Underwriting Agreement for Preferred Stock.
**1.3 Form of Underwriting Agreement for Class A Common Stock.
**1.4 Form of Underwriting Agreement for Warrants.
*4.1 Form of Senior Debt Securities Indenture (including form of Note).
*4.2 Form of Senior Subordinated Debt Securities Indenture (including form of Note).
*4.3 Form of Subordinated Debt Securities Indenture (including form of Note).
*4.4 Form of Warrant Agreement (including form of Warrant Certificate).
**4.5 Form of Preferred Stock Certificate.
***4.6 Specimen certificate for Class A Common Stock.
5.1 Opinion of Piper & Marbury L.L.P. regarding the validity of the Securities offered
hereby.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding tax matters.
12.1 Computation of ratio of earnings to fixed charges.
12.2 Computation of ratio of earnings to combined fixed charges and preferred stock
dividends.
*23.1 Consent of Ernst & Young LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in their opinion
filed as Exhibit 8.1).
23.3 Consent of Piper & Marbury L.L.P. (included in their opinion filed as Exhibit
5.1).
*23.4 Consent of Shumaker, Loop & Kendrick.
*23.5 Consent of Arthur Andersen LLP dated April 28, 1997
*23.6 Consent of Deloitte & Touche LLP dated April 30, 1997
*23.7 Consent of Anders, Minkler & Diehl LLP dated April 28, 1997
*23.8 Consent of Dauby O'Connor & Zaleski, LLC dated April 28, 1997
*23.9 Consent of Edwards Leap & Sauer dated April 28, 1997
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
*23.10 Consent of George A. Hieronymous & Company, LLC dated April 28, 1997
*23.11 Consent of Goldenberg Rosenthal Friedlander, LLP dated April 28, 1997
*23.12 Consent of Hansen, Hunter & Kibbee, P.C. dated April 28, 1997
*23.13 Consent of J.H. Cohn LLP dated April 28, 1997
*23.14 Consent of J.A. Plumer & Co., P.A. dated April 28, 1997
*23.15 Consent of Marks Shron & Company, LLP dated April 28, 1997
*23.16 Consent of Reznick Fedder & Silverman dated April 28, 1997
*23.17 Consent of Russell Thompson Butler & Houston dated April 28, 1997
*24 Power of Attorney (included on page II-5).
*25.1 Statement of Eligibility and Qualification of Trustee under the Senior Debt
Securities Indenture.
*25.2 Statement of Eligibility and Qualification of Trustee under the Senior
Subordinated Debt Securities Indenture.
*25.3 Statement of Eligibility and Qualification of Trustee under the Senior
Subordinated Debt Securities Indenture.
</TABLE>
- ------------------------
* Filed previously.
** To be filed by amendment or incorporated by reference prior to the offering
of Securities.
*** Incorporated by reference from the Company's Registration Statement on Form
8-A filed on July 19, 1994.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Securities Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on this Amendment No. 1 to Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, State of Colorado, on the 22nd
day of May, 1997.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ LEEANN MOREIN
-----------------------------------
Leeann Morein,
SENIOR VICE PRESIDENT, CHIEF
FINANCIAL
OFFICER AND SECRETARY
(PRINCIPAL FINANCIAL OFFICER)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Form S-3 Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board,
* President and Chief
- ------------------------------ Executive Officer May 22, 1997
Terry Considine (Principal Executive
Officer)
<C> <S> <C>
Senior Vice President,
/s/ LEEANN MOREIN Chief Financial Officer
- ------------------------------ and Secretary (Principal May 22, 1997
Leeann Morein Financial Officer)
Vice President and Chief
* Accounting Officer
- ------------------------------ (Principal Accounting May 22, 1997
Patricia K. Heath Officer)
*
- ------------------------------ Vice Chairman and Director May 22, 1997
Peter K. Kompaniez
- ------------------------------ Director May , 1997
Richard S. Ellwood
*
- ------------------------------ Director May 22, 1997
J. Landis Martin
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Director May 22, 1997
Thomas L. Rhodes
- ------------------------------ Director May , 1997
John D. Smith
*By: LEEANN
MOREIN
- ----------------------------
Leeann
Morein
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
- ----------- ---------------------------------------------------------------------------------------- -------------
<C> <S> <C>
**1.1 Form of Underwriting Agreement for Debt Securities.
**1.2 Form of Underwriting Agreement for Preferred Stock.
**1.3 Form of Underwriting Agreement for Class A Common Stock.
**1.4 Form of Underwriting Agreement for Warrants.
*4.1 Form of Senior Debt Securities Indenture.
*4.2 Form of Senior Subordinated Debt Securities Indenture.
*4.3 Form of Subordinated Debt Securities Indenture.
*4.4 Form of Warrant Agreement (including form of Warrant Certificate).
**4.5 Form of Preferred Stock Certificate.
***4.6 Specimen certificate for Class A Common Stock.
5.1 Opinion of Piper & Marbury L.L.P. regarding the validity of the Securities offered
hereby.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding tax matters.
12.1 Computation of ratio of earnings to fixed charges.
12.2 Computation of ratio of earnings to combined fixed charges and preferred stock
dividends.
*23.1 Consent of Ernst & Young LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in their opinion filed as
Exhibit 8.1).
23.3 Consent of Piper & Marbury L.L.P. (included in their opinion filed as Exhibit 5.1).
*23.4 Consent of Shumaker, Loop & Kendrick.
*23.5 Consent of Arthur Andersen LLP dated April 28, 1997
*23.6 Consent of Deloitte & Touche LLP dated April 30, 1997
*23.7 Consent of Anders, Minkler & Diehl LLP dated April 28, 1997
*23.8 Consent of Dauby O'Connor & Zaleski, LLC dated April 28, 1997
*23.9 Consent of Edwards Leap & Sauer dated April 28, 1997
*23.10 Consent of George A. Hieronymous & Company, LLC dated April 28, 1997
*23.11 Consent of Goldenberg Rosenthal Friedlander, LLP dated April 28, 1997
*23.12 Consent of Hansen, Hunter & Kibbee, P.C. dated April 28, 1997
*23.13 Consent of J.H. Cohn LLP dated April 28, 1997
*23.14 Consent of J.A. Plumer & Co., P.A. dated April 28, 1997
*23.15 Consent of Marks Shron & Company, LLP dated April 28, 1997
*23.16 Consent of Reznick Fedder & Silverman dated April 28, 1997
*23.17 Consent of Russell Thompson Butler & Houston dated April 28, 1997
*24 Power of Attorney (included on page II-5).
*25.1 Statement of Eligibility and Qualification of Trustee under the Senior Debt Securities
Indenture.
*25.2 Statement of Eligibility and Qualification of Trustee under the Senior Subordinated Debt
Securities Indenture.
*25.3 Statement of Eligibility and Qualification of Trustee under the Subordinated Debt
Securities Indenture.
</TABLE>
- ------------------------
* Filed previously.
** To be filed by amendment or incorporated by reference prior to the offering
of Securities.
*** Incorporated by reference from the Company's Registration Statement on Form
8-A filed on July 19, 1994.
<PAGE>
EXHIBIT 5.1
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET WASHINGTON
BALTIMORE, MARYLAND 21201-3018 NEW YORK
PHILADELPHIA
410-539-2530 EASTON
FAX: 410-539-0489
May 22, 1997
Apartment Investment and Management Company
1873 South Bellaire Street, Suite 1700
Denver, Colorado 80222
Registration Statement of Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as Maryland counsel to Apartment Investment and Management
Company, a Maryland corporation (the "Company"), in connection with the
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to a registration statement (the "Registration Statement") on Form
S-3 of the Company filed with the Securities and Exchange Commission (the
"Commission") on May 2, 1997, including the prospectus included therein at
the time the Registration Statement is declared effective (the "Prospectus"),
for offering by the Company from time to time of up to $1,000,000,000
aggregate initial offering price of: (i) senior, senior subordinated, or
subordinated debt securities (the "Debt Securities") consisting of
debentures, notes, and/or other unsecured evidences of indebtedness; (ii)
shares of preferred stock, par value $0.01 per share (the "Preferred Stock");
(iii) shares of Class A Common Stock, par value $0.01 per share (the "Common
Stock"); and (iv) warrants to purchase Debt Securities (the "Debt Securities
Warrants"), Preferred Stock (the "Preferred Stock Warrants"), or Common Stock
(the "Common Stock Warrants"), as shall be designated by the Company at the
time of the offering (collectively, the "Warrants"). The Debt Securities,
the Preferred Stock, the Common Stock, and the Warrants are collectively
referred to herein as the "Securities." The Registration Statement provides
that the Securities may be offered separately or together, in separate
series, in amounts, at prices, and on terms to be set forth in one or more
supplements to the Prospectus (each a "Prospectus Supplement"). This opinion
is being provided at your request in connection with the filing of the
Registration Statement.
In our capacity as Maryland counsel, we have reviewed the following:
<PAGE>
Apartment Investment and Management Company
May 22, 1997
Page 2
(a) The Registration Statement.
(b) The Charter of the Company, certified by the Department of
Assessments and Taxation of the State of Maryland (the "Department").
(c) A copy of the By-Laws (the "By-Laws") of the Company, as
amended and restated and in effect on the date hereof.
(d) The Preliminary Prospectus, dated May 2, 1997 (the
"Preliminary Prospectus") relating to the issuance of the Securities,
which forms a part of the Registration Statement.
(e) Certified resolutions of the Board of Directors of the
Company relating to the Company's organization and to the Board's
authorization of the filing of the Registration Statement.
(f) A short-form good standing certificate for the Company,
dated May 21, 1997, issued by the Department.
(g) An Officer's Certificate (the "Certificate") of the Company,
dated the date hereof, as to certain factual matters.
(h) Such other documents as we have considered necessary to the
rendering of the opinion expressed below.
In our examination of the aforesaid documents, we have assumed, without
independent investigation, the genuineness of all signatures, the legal capacity
of all individuals who have executed any of the aforesaid documents, the
authenticity of all documents submitted to us as originals, and the conformity
with originals of all documents submitted to us as copies (and the authenticity
of the originals of such copies), and that all public records reviewed are
accurate and complete. In making our examination of documents executed by
parties other than the Company, we have assumed that such parties had the power,
corporate or other, to enter into and perform all obligations thereunder, and we
have also assumed the due authorization by all requisite action, corporate or
other, and the valid execution and delivery by such parties of such documents
and the validity, binding effect and enforceability thereof with respect to such
parties. As to any facts material to this opinion which we did not
independently establish or verify, we have relied solely upon the Certificate.
<PAGE>
Apartment Investment and Management Company
May 22, 1997
Page 3
We further assume that:
(a) The issuance, sale, amount, and terms of the Securities to
be offered from time to time will be authorized and determined by
proper action of the Board of Directors of the Company (each, a "Board
Action") in accordance with the Company's Charter and By-Laws and with
applicable Maryland law, in each case so as not to result in a default
under or breach of any agreement or instrument binding upon the
Company and so as to comply with any requirement or restriction
imposed by any court or governmental or regulatory body having
jurisdiction over the Company.
(b) Any Debt Securities will be issued under a valid and legally
binding indenture (an "Indenture") that conforms to the description
thereof set forth in the Prospectus Supplement.
(c) Prior to the issuance of any of the Debt Securities Warrants
(if the Debt Securities are convertible into shares of the Preferred
Stock or the Common Stock), there will exist, under the Charter of the
Company, the requisite number of authorized but unissued shares of the
Preferred Stock (and securities of any class into which any Preferred
Stock may be convertible) or the Common Stock, as the case may be, and
that all actions necessary to the creation of any such Preferred Stock
(and securities of any class into which any Preferred Stock may be
convertible), whether by Charter amendment or by classification or
reclassification of existing capital stock and the filing of Articles
Supplementary.
(d) Appropriate debentures, notes, and/or other unsecured
evidences of indebtedness evidencing the Debt Securities will be
executed and authenticated in accordance with the Indenture, will be
delivered upon the issuance and sale of the Debt Securities, and will
comply with the Indenture, the Company's Charter and By-Laws, and
applicable Maryland law.
(e) Prior to the issuance of any shares of the Preferred Stock
or the Common Stock or of the Preferred Stock Warrants or the Common
Stock Warrants, there will exist, under the Charter of the Company,
the requisite number of authorized but unissued shares of the
Preferred Stock (and securities of any class into which any Preferred
Stock may be convertible) or the Common Stock, as the case may be, and
that all actions necessary to
<PAGE>
Apartment Investment and Management Company
May 22, 1997
Page 4
the creation of any such Preferred Stock (and securities of any class into
which any Preferred Stock may be convertible), whether by Charter amendment
or by classification or reclassification of existing capital stock and the
filing of Articles Supplementary, will have been taken.
(f) Appropriate certificates representing shares of Preferred
Stock or Common Stock will be executed and delivered upon issuance and
sale of any shares of Preferred Stock or Common Stock, as the case may
be, and will comply with the Company's Charter and By-Laws and all
applicable requirements of Maryland law.
(g) Any Debt Securities Warrants will be issued under a valid
and legally binding warrant agreement (a "Debt Securities Warrant
Agreement") that conforms to the description thereof set forth in the
Prospectus Supplement; any Preferred Stock Warrants will be issued
under a valid and legally binding warrant agreement (a "Preferred
Stock Warrant Agreement") that conforms to the description thereof set
forth in the Prospectus Supplement; and any Common Stock Warrants will
be issued under a valid and legally binding warrant agreement (a
"Common Stock Warrant Agreement") that conforms to the description
thereof set forth in the Prospectus Supplement.
(h) The underwriting agreements for offerings of the Debt
Securities, the Preferred Stock, the Common Stock, the Debt Securities
Warrants, the Preferred Stock Warrants, and the Common Stock Warrants
(each, an "Underwriting Agreement," and collectively, the
"Underwriting Agreements") will be valid and legally binding contracts
that conform to the description thereof set forth in the applicable
Prospectus Supplement.
(i) To the extent that the obligations of the Company under any
Debt Securities or related Indenture may be dependent upon such
matters, the financial institution to be identified in such Indenture
as Trustee (the "Trustee") will be duly organized, validly existing,
and in good standing under the laws of its jurisdiction of
organization; the Trustee will be duly qualified to engage in the
activities contemplated by such Indenture; such Indenture will have
been duly authorized, executed, and delivered by the Trustee and will
constitute the legally valid and binding obligation of the Trustee
enforceable against the Trustee in accordance with its terms; the
Trustee will be in compliance, generally, with respect to acting as
Trustee
<PAGE>
Apartment Investment and Management Company
May 22, 1997
Page 5
under such Indenture, with all applicable laws and regulations; and the
Trustee will have the requisite organizational and legal power and
authority to perform its obligations under such Indenture.
(j) To the extent that the obligations of the Company under any
Debt Securities Warrant Agreement, Preferred Stock Warrant Agreement,
or Common Stock Warrant Agreement (collectively, a "Warrant
Agreement") may be dependent upon such matters, the financial
institution to be identified in such Warrant Agreement as warrant
agent (the "Warrant Agent") will be duly organized, validly existing,
and in good standing under the laws of its jurisdiction of
organization; the Warrant Agent will be duly qualified to engage in
the activities contemplated by such Warrant Agreement; such Warrant
Agreement will have been duly authorized, executed, and delivered by
the Warrant Agent and will constitute the legally valid and binding
obligation of the Warrant Agent enforceable against the Warrant Agent
in accordance with its terms; the Warrant Agent will be in compliance,
generally, with respect to acting as Warrant Agent under such Warrant
Agreement, with all applicable laws and regulations; and the Warrant
Agent will have the requisite organizational and legal power and
authority to perform its obligations under such Warrant Agreement.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof:
1. When a series of the Debt Securities (and securities of any
class into which any Debt Securities may be convertible) has been duly
authorized and established in accordance with the applicable Board
Action, the terms of the Indenture, the Company's Charter and By-Laws,
and applicable Maryland law, and, upon issuance and delivery of
debentures, notes, and/or other unsecured evidences of indebtedness
for such series of Debt Securities against payment therefor in
accordance with the terms and provisions of such Board Action, the
Indenture, the Registration Statement (as declared effective under the
Act), the Prospectus or the applicable Prospectus Supplement and, if
applicable, an Underwriting Agreement, or upon issuance and delivery
of debentures, notes, and/or other unsecured evidences of indebtedness
for such series of Debt Securities pursuant to the exercise of one or
more Debt Securities
<PAGE>
Apartment Investment and Management Company
May 22, 1997
Page 6
Warrants, the Debt Securities will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms.
2. When a series of the Preferred Stock (and securities of any
class into which any Preferred Stock may be convertible) has been duly
authorized and established in accordance with the applicable Board
Action, the terms of the Company's Charter and By-Laws, and applicable
Maryland law, and, upon issuance and delivery of certificates for
shares of such series of Preferred Stock against payment therefor in
accordance with the terms and provisions of such Board Action, the
Registration Statement (as declared effective under the Act), the
Prospectus or the applicable Prospectus Supplement and, if applicable,
an Underwriting Agreement, or upon issuance and delivery of
certificates for shares of such series of Preferred Stock pursuant to
the exercise of one or more Preferred Stock Warrants, the shares of
Preferred Stock represented by such certificates will be duly
authorized, validly issued, fully paid and non-assessable.
3. Upon due authorization by Board Action of an issuance of
Common Stock, and upon issuance and delivery of certificates for
shares of such Common Stock against payment therefor in accordance
with the terms and provisions of such Board Action, the Registration
Statement (as declared effective under the Act), the Prospectus or the
applicable Prospectus Supplement and, if applicable, an Underwriting
Agreement, or upon issuance and delivery of certificates for shares of
such Common Stock pursuant to the exercise of one or more Common Stock
Warrants, the shares of Common Stock represented by such certificates
will be duly authorized, validly issued, fully paid and non-
assessable.
4. When a series of the Debt Securities (and securities of any
class into which such Debt Securities may be convertible) has been
duly authorized and established in accordance with the applicable
Board Action, the terms of the Company's Charter and By-Laws, and
applicable Maryland law, when the Debt Securities Warrants for such
series of Debt Securities have been duly established by the related
Debt Securities Warrant Agreement, duly authenticated by the Warrant
Agent and duly authorized and established by the applicable Board
Action, and when warrant certificates representing the Debt Securities
Warrants have been duly executed and delivered on behalf of the
Company against payment
<PAGE>
Apartment Investment and Management Company
May 22, 1997
Page 7
therefor in accordance with the terms and provisions of such Board Action,
the Debt Securities Warrant Agreement, the Registration Statement (as
declared effective under the Act), the Prospectus or the applicable
Prospectus Supplement and, if applicable, an Underwriting Agreement, the
Debt Securities Warrants will be duly authorized and will constitute valid
obligations of the Company.
5. When a series of the Preferred Stock (and securities of any
class into which such Preferred Stock may be convertible) has been
duly authorized and established in accordance with the applicable
Board Action, the terms of the Company's Charter and By-Laws, and
applicable Maryland law, when the Preferred Stock Warrants for such
series of Preferred Stock have been duly established by the related
Preferred Stock Warrant Agreement, duly authenticated by the Warrant
Agent and duly authorized and established by the applicable Board
Action, and when warrant certificates representing the Preferred Stock
Warrants have been duly executed and delivered on behalf of the
Company against payment therefor in accordance with the terms and
provisions of such Board Action, the Preferred Stock Warrant
Agreement, the Registration Statement (as declared effective under the
Act), the Prospectus or the applicable Prospectus Supplement and, if
applicable, an Underwriting Agreement, the Preferred Stock Warrants
will be duly authorized and will constitute valid obligations of the
Company.
6. When the Common Stock Warrants have been duly established by
the related Common Stock Warrant Agreement, duly authenticated by the
Warrant Agent and duly authorized and established by the applicable
Board Action, and when warrant certificates representing the Common
Stock Warrants have been duly executed and delivered on behalf of the
Company against payment therefor in accordance with the terms and
provisions of such Board Action, the Common Stock Warrant Agreement,
the Registration Statement (as declared effective under the Act), the
Prospectus or the applicable Prospectus Supplement and, if applicable,
an Underwriting Agreement, the Common Stock Warrants will be duly
authorized and will constitute valid obligations of the Company.
The opinions stated herein relating to the validity and binding nature of
obligations of the Company are subject to (i) the effect of any applicable
bankruptcy,
<PAGE>
Apartment Investment and Management Company
May 22, 1997
Page 8
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium, or similar laws affecting creditors'
rights generally and (ii) the effect of general principles of equity (regardless
of whether considered in a proceeding in equity or at law).
The opinions expressed above are limited to the laws of the State of
Maryland, exclusive of the securities or "blue sky" laws of the State of
Maryland. All of the foregoing opinions are rendered as of the date hereof. We
assume no obligation to update such opinions to reflect any facts or
circumstances which may hereafter come to our attention or changes in the law
which may hereafter occur. To the extent that any documents referred to herein
are governed by the law of a jurisdiction other than Maryland, we have assumed
that the laws of such jurisdiction are the same as the law of Maryland.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement and to the reference to our firm under
the heading "Legal Matters" in the Registration Statement. We further consent
to the reliance on this opinion by Skadden, Arps, Slate, Meagher & Flom LLP, in
rendering their opinion to the Company in connection with the filing of the
Registration Statement. The opinions expressed above are limited to the matters
set forth herein, and no other opinion should be inferred beyond the matters
expressly stated.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE>
EXHIBIT 8.1
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
May 22, 1997
Apartment Investment and
Management Company
1873 South Bellaire Street
Suite 1700
Denver, Colorado 80222
Re: CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
-----------------------------------------
Ladies and Gentlemen:
You have requested our opinion concerning certain Federal income tax
considerations in connection with an offering for sale, from time to time, of
Class A Common Stock (the "Offering") of Apartment Investment and Management
Company, a Maryland corporation ("AIMCO"), by certain stockholders pursuant to
the Registration Statement on Form S-3 (File No. 333-26415) filed with the
Securities and Exchange Commission (the "Registration Statement"). Unless
otherwise specifically defined herein, all capitalized terms have the meanings
assigned to them in the Registration Statement, as amended to date.
In connection with the Offering and with certain previous offerings of
Class A Common Stock by AIMCO we have acted as counsel to AIMCO, and we have
assisted in the preparation of the Registration Statement and certain other
documents. In formulating our opinion, we have reviewed the Registration
Statement, the partnership agreements or organizational documents (including any
amendments thereof) for each of the partnerships and limited liability companies
indicated on Exhibit A attached hereto in which AIMCO holds a direct or indirect
interest (the "Partnerships"), and such other documentation and information
provided by you as is relevant to the Offering and necessary to prepare the
Regis-
<PAGE>
Apartment Investment and
Management Company
May 22, 1997
Page 2
tration Statement. In addition, you have provided us with certain
representations of officers of AIMCO relating to, among other things, the
actual and proposed operation of AIMCO. For purposes of our opinion, we have
not made an independent investigation of the facts set forth in such
representations, the partnership agreements and organizational documents for
the Partnerships, the Registration Statement or any other document. We have,
consequently, relied on your representations that the information presented
in such documents or otherwise furnished to us accurately and completely
describes all material facts relevant to our opinion. No facts have come to
our attention, however, that would cause us to question the accuracy and
completeness of such facts or documents in a material way. We have also
relied upon the opinion of Piper & Marbury L.L.P. dated May 22, 1997 with
respect to certain matters of Maryland law, and the opinion of Shumaker, Loop
& Kendrick dated October 18, 1995 with respect to certain matters of Florida
law.
In rendering our opinion, we have assumed that the transactions
contemplated by the foregoing documents have been consummated in accordance with
the operative documents, and that such documents accurately reflect the material
facts of such transactions. In addition, our opinion is based on the
correctness of the following specific assumptions: (i) each of AIMCO, the
Partnerships, Property Asset Management Services, Inc., AIMCO/NHP Holdings,
Inc., and any "qualified REIT subsidiary" of AIMCO (within the meaning of
section 856(i)(2) of the Internal Revenue Code of 1986, as amended (the
"Code")), has been and will continue to be operated in accordance with the laws
of the jurisdiction in which it was formed and in the manner described in the
relevant partnership agreement or other organizational documents and in the
Registration Statement; and (ii) there have been no changes in the applicable
laws of the State of Maryland or any other state under the laws of which any of
the Partnerships have been formed. In rendering our opinion, we have also
considered and relied upon the Code, the regulations promulgated thereunder by
the Treasury Department (the "Regulations"), administrative rulings and the
other interpretations of the Code and the Regulations by the courts and the
Internal Revenue Service, all as they exist at the date of this letter. With
respect to the latter assumption, it should be noted that statutes, regulations,
judicial decisions, and administrative interpretations are subject to change at
any time and, in some circumstances, with retroactive effect. Of course, a
material change which is
<PAGE>
Apartment Investment and
Management Company
May 22, 1997
Page 3
made after the date hereof in any of the foregoing bases for our opinion
could affect our conclusions.
We express no opinion as to the laws of any jurisdiction other than
the Federal laws of the United States of America to the extent specifically
referred to herein.
Based on the foregoing, we are of the opinion that:
1. Commencing with AIMCO's initial taxable year ended December 31,
1994, AIMCO was organized in conformity with the requirements for qualification
as a real estate investment trust ("REIT") under the Code, and AIMCO's proposed
method of operation, and its actual method of operation since its formation,
will enable it to meet the requirements for qualification and taxation as a
REIT. As noted in the Registration Statement, the qualification and taxation as
a REIT depends upon AIMCO's ability to meet, through actual annual operating
results, certain requirements, including requirements relating to distribution
levels and diversity of stock ownership, and the various qualification tests
imposed under the Code, the results of which will not be reviewed by us.
Accordingly, no assurance can be given that the actual results of AIMCO's
operation for any one taxable year will satisfy such requirements.
2. Each of the Partnerships (i) will be treated as a partnership for
Federal income tax purposes and not as an association taxable as a corporation,
and (ii) will not be a "publicly traded partnership" within the meaning of
Section 7704(b) of the Code.
3. The discussion in the Registration Statement under the heading
"CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" is, in all material respects, a fair
and accurate summary of the Federal income tax consequences of the purchase,
ownership, and disposition of the Class A Common Stock, subject to the
qualifications set forth therein.
Other than as expressly stated above, we express no opinion on any
issue relating to AIMCO, the Partnerships, or to any investment therein.
<PAGE>
Apartment Investment and
Management Company
May 22, 1997
Page 4
This opinion is intended for the exclusive use of the person to whom
it is addressed, except as set forth herein, and it may not be used, circulated,
quoted or relied upon for any other purpose without our prior written consent.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the references to Skadden, Arps, Slate, Meagher & Flom LLP in
the Registration Statement. In giving this consent, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules or regulations
of the Securities and Exchange Commission thereunder. This opinion is expressed
as of the date hereof, and we disclaim any undertaking to advise you of any
subsequent changes of the matters stated, represented, or assumed herein or any
subsequent changes in applicable law.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
<PAGE>
EXHIBIT A
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
SUBSIDIARY PARTNERSHIPS
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
AIMCO/Bluffs, L.L.C., a Delaware AIMCO Holdings, L.P., a Delaware
limited liability company limited partnership
AIMCO/Boardwalk, L.P., a Delaware AIMCO Holdings, L.P., a Delaware
limited partnership limited partnership
AIMCO/Boardwalk Finance, L.P., AIMCO Holdings, L.P., a Delaware
a Delaware limited partnership limited partnership
AIMCO/Brandywine, L.P., a AIMCO Holdings, L.P., a Delaware
Delaware limited partnership limited partnership
AIMCO/HIL, L.L.C., a Delaware AIMCO Holdings, L.P., a Delaware
limited liability company limited partnership
AIMCO Holdings, L.P., a AIMCO Holdings QRS, Inc., a Delaware
Delaware limited partnership corporation
AIMCO/Montecito, L.P., a AIMCO Holdings, L.P., a Delaware
Delaware limited partnership limited partnership
AIMCO LT, L.P., a Delaware AIMCO Holdings, L.P., a Delaware
limited partnership limited partnership
AIMCO/OTC L.L.C., a Delaware AIMCO Holdings, L.P., a Delaware
limited liability company limited partnership
AIMCO/OTC, L.P., a Delaware AIMCO Holdings, L.P., a Delaware
limited partnership limited partnership
AIMCO/PAM Properties, L.P., a AIMCO Properties, L.P., a Delaware
Delaware limited partnership limited partnership
AIMCO/Penn Square, L.L.C., a AIMCO Holdings, L.P., a Delaware
Delaware limited liability company limited partnership
<PAGE>
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
AIMCO Properties, L.P., a Delaware AIMCO-GP, Inc., a Delaware corporation
limited partnership
AIMCO Properties Finance Partnership, AIMCO Properties Finance, Corp., a
L.P., a Delaware limited partnership Delaware corporation
AIMCO/RALS, L.P., a Delaware AIMCO Holdings, L.P., a Delaware
limited partnership limited partnership
AIMCO/SA, L.L.C., a Delaware AIMCO Holdings, L.P., a Delaware
limited liability company limited partnership
AIMCO/Stonegate, L.P., a AIMCO Holdings, L.P., a Delaware
Delaware limited partnership limited partnership
AIMCO/Teal Pointe, L.P., a AIMCO Holdings, L.P., a Delaware
Delaware limited partnership limited partnership
AIMCO UT, L.P., a Delaware AIMCO Holdings, L.P., a Delaware
limited partnership limited partnership
AIMCO/Villa Ladera, L.P., a Delaware AIMCO Holdings, L.P., a Delaware
limited partnership limited partnership
AIMCO/Williams Cove, L.P., a AIMCO Holdings, L.P., a Delaware
Delaware limited partnership limited partnership
AIMCO/Woodlands-Tyler, L.P., a AIMCO Holdings, L.P., a Delaware
Delaware limited partnership limited partnership
Everest Investors 5, LLC, a Everest Properties, LLC, a California
California limited liability company limited liability company
HomeCorp Investments, Ltd., an AIMCO/HIL, L.L.C., a Delaware limited
Alabama limited partnership liability company
AIMCO Holdings, L.P., a Delaware limited
partnership
OTC Apartments Limited Partnership, AIMCO/OTC, L.L.C., a Delaware limited
a Florida limited partnership liability company
Property Asset Management Services, AIMCO Properties, L.P., a Delaware
L.P., a Delaware limited partnership limited partnership
<PAGE>
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
Property Asset Manangement Brokerage Property Asset Management Services,
of Florida, a Florida general Inc., a Delaware corporation
partnership
Property Asset Mangement Property Asset Management Services of
Services-California, L.L.C., a the Southwest, L.L.C., a Delaware
California limited liability company limited liability company
S.A. Apartments Ltd., an Alabama AIMCO Holdings, L.P., a Delaware limited
limited partnership partnership
Seasons Apartments, L.L.C., a Texas AIMCO Holdings, L.P., a Delaware limited
limited liability company partnership
Seasons Apartments, L.P., a AIMCO Holdings, L.P., a Delaware
Delaware limited partnership limited partnership
Somerset Utah L.P., a Colorado AIMCO Somerset, Inc., a Delaware
limited partnership corporation
Anchorage Partners, a Texas AIMCO Anchorage, L.P., a Delaware
limited partnership limited partnership
Coventry Square Partners, a AIMCO Group, L.P., a Delaware limited
Texas limited partnership partnership
Fisherman's Wharf Partners, a AIMCO Group, L.P., a Delaware limited
Texas limited partnership partnership
J.W. English Swiss Village Partners, AIMCO Group, L.P., a Delaware limited
a Texas limited partnership partnership
8503 Westheimer Partners, Ltd., AIMCO Group, L.P., a Delaware limited
a Texas limited partnership partnership
J.W. English Camelot Apartments, AIMCO Group, L.P., a Delaware limited
a Texas limited partnership partnership
English Manor Partners, a Texas AIMCO Group, L.P., a Delaware limited
limited partnership partnership
CRA Investors, Ltd., a Texas AIMCO Group, L.P., a Delaware limited
limited partnership partnership
Gulfgate Partners, Ltd., a AIMCO Hampton Hill, L.P., a Delaware
Texas limited partnership limited partnership
<PAGE>
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
Hampton Hill Partners, a Texas AIMCO Hampton Hill, L.P., a Delaware
limited partnership limited partnership
Hastings Place Partners, a AIMCO Hastings Place, L.P., a Delaware
Texas limited partnership limited partnership
Oak Falls Partners, a Texas AIMCO Oak Falls, L.P., a Delaware
limited partnership limited partnership
Peppermill Place Partners, a AIMCO Peppermill Place, L.P., a Delaware
Texas limited partnership limited partnership
Houston Recovery Fund, a Texas AIMCO Recovery Fund, L.P., a Delaware
limited partnership limited partnership
Stirling Court Partners, a AIMCO Stirling Court, L.P., a Delaware
Texas limited partnership limited partnership
Bridgewater Partners, Ltd., a AIMCO Bridgewater, L.P., a Delaware
Texas limited partnership limited partnership
Copperfield Partners, Ltd., a AIMCO Copperfield, L.P., a Delaware
Texas limited partnership limited partnership
Crows Nest Partners, Ltd., a AIMCO Crows Nest, L.P., a Delaware
Texas limited partnership limited partnership
J.W. English Fondren Court Partners, AIMCO Fondren Court, L.P., a Delaware
a Texas limited partnership limited partnership
Fondren Court, Ltd., a Texas AIMCO Fondren Court, L.P., a Delaware
limited partnership limited partnership
Galleria Office Partners, Ltd., AIMCO Galleria Office, L.P., a Delaware
a Texas limited partnership limited partnership
Hastings Green Partners, Ltd., AIMCO Hastings Green, L.P., a Delaware
a Texas limited partnership limited partnership
The Park at Cedar Lawn, Ltd., AIMCO Park at Cedar Lawn, L.P., a
a Texas limited partnership Delaware limited partnership
Seaside Point Partners, Ltd., AIMCO Seaside Point, L.P., a Delaware
a Texas limited partnership limited partnership
<PAGE>
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
Clear Lake Land Partners, Ltd., AIMCO Signature Point, L.P.,
a Texas limited partnership a Delaware limited partnership
Signature Point Partners, AIMCO Signature Point, L.P.,
Ltd., a Texas limited partnership a Delaware limited partnership
Sunbury Partners, Ltd., AIMCO Sunbury, L.P.,
a Texas limited partnership a Delaware limited partnership
Township at Highlands Partners, Ltd., AIMCO Township at Highlands, L.P.,
a Delaware limited partnership a Delaware limited partnership
Westchase Midrise Office Partners, AIMCO Westchase Midrise, L.P.,
Ltd., a Texas limited partnership a Delaware limited partnership
West Trails Partners, Ltd., AIMCO West Trails, L.P.,
a Texas limited partnership a Delaware limited partnership
Woodway Office Partners, Ltd., AIMCO Woodbury Office, L.P.,
a Texas limited partnership a Delaware limited partnership
AIMCO Anchorage, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Group, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Hampton Hill, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Hastings Place, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Oak Falls, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Peppermill Place, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Recovery Fund, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Stirling Court, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
<PAGE>
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
AIMCO Bridgewater, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Copperfield, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Crows Nest, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Fondren Court, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Galleria Office, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Hastings Green, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Park at Cedar Lawn, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Seaside Point, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Signature Point, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Sunbury, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Township at Highlands, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Westchase Midrise, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO West Trails, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Woodbury Office, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
<PAGE>
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
English Manor Joint Venture, J.W. English Camelot Apartments,
a Texas joint venture a Texas limited partnership
English Manor Partners,
a Texas limited partnership
Castlerock Joint Venture, English Manor Joint Venture,
a Texas joint venture a Texas joint venture
CRA Investors, Ltd.,
a Texas limited partnership
The Fondren Court Joint Venture, J.W. English Fondren Court Partners,
a Texas joint venture a Texas limited partnership
Fondren Court Partners, Ltd.,
a Texas limited partnership
Signature Point Joint Venture, Clear Lake Land Partners, Ltd.,
a Texas joint venture a Texas limited partnership
Signature Point Partners, Ltd.,
a Texas limited partnership
RC Associates, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Ridgecrest Associates, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Highland Park Partners, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
AIMCO/Easton Falls, L.P., AIMCO Properties, L.P.,
a Delaware limited partnership a Delaware limited partnership
Cypress Landing Limited Partnership, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Meadows Limited Partnership, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Greentree Associates, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
<PAGE>
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
Copper Chase Partners Limited AIMCO LT, L.P.,
Partnership, an Illinois limited a Delaware limited partnership
partnership
Heather Associates, Balcor/Sportvest-II,
an Illinois limited partnership an Illinois limited partnership
Southridge Associates, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Walnut Springs Limited Partnership, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Woodhill Associates, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Woodland Ridge II Partners, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Meadowbrook Drive Limited Partnership, AIMCO LT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Cypress Landing Associates, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Anderson Mill Associates, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Copper Chase Associates, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Balcor/Sportvest-II, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Southridge Investors, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Walnut Springs Associates, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Woodland Ridge Associates, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Randol Crossing Partners, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
<PAGE>
Subsidiary Partnerships and General Partner or Managing Member
Limited Liability Companies
- --------------------------------------------------------------------------
Randol Crossing Investors, AIMCO UT, L.P.,
an Illinois limited partnership a Delaware limited partnership
Walters/Property Asset Management Property Asset Management
Services, L.P., Services, L.P.,
a Delaware limited partnership a Delaware limited partnership
Property Asset Brokerage of Florida, Property Asset Management
a Florida general partnership Services, Inc.,
a Delaware corporation
CB Associates, AIMCO Bay Club, L.P.,
a Florida general partnership a Delaware limited partnership
AIMCO Bay Club II, L.P.,
a Delaware limited partnership
CB L-2 B Associates, AIMCO Bay Club, L.P.,
a Florida general partnership a Delaware limited partnership
AIMCO Bay Club II, L.P.,
a Delaware limited partnership
CB L-2 C Associates, AIMCO Bay Club, L.P.,
a Florida general partnership a Delaware limited partnership
AIMCO Bay Club II, L.P.,
a Delaware limited partnership
AIMCO Bay Club, L.P., AIMCO Holdings, L.P.,
a Delaware limited partnership a Delaware limited partnership
AIMCO Bay Club II, L.P., AIMCO Bay Club, L.P.,
a Delaware limited partnership a Delaware limited partnership
Placid Lake Associates, Ltd., AIMCO Holdings, L.P.,
a Florida limited partnership a Delaware limited partnership
<PAGE>
EXHIBIT 12.1
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER JANUARY 10, 1994
MARCH 31, 31, (INCEPTION)
-------------------- -------------------- THROUGH
1997 1996 1996 1995 DECEMBER 31, 1994
--------- --------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C>
Historical:
Income before gain on disposition of property,
extraordinary item and minority interests..... $ 4,853 $ 2,810 $ 15,740 $ 14,988 $ 7,702
Fixed charges:
Interest expense............................. 9,452 5,395 24,802 13,322 1,576
Capitalized interest......................... 231 136 821 113 29
--------- --------- --------- --------- --------
Total fixed charges (A).................... 9,683 5,531 25,623 13,435 1,605
--------- --------- --------- --------- --------
Earnings before fixed charges (1)(B)........... $ 14,305 $ 8,205 $ 40,542 $ 28,310 $ 9,278
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
Ratio of earnings to fixed charges (B divided by
A).............................................. 1.5:1.0 1.5:1.0 1.6:1.0 2.1:1.0 5.8:1.0
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
</TABLE>
AIMCO PREDECESSORS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
JANUARY 1, 1994 31,
THROUGH --------------------
JULY 28, 1994 1993 1992
--------------- --------- ---------
<S> <C> <C> <C>
Historical:
Income (loss) before extraordinary item and income taxes............... $ (1,463) $ 627 $ 54
Fixed charges:
Interest expense..................................................... 4,214 3,510 2,741
Capitalized interest................................................. 0 0 0
------- --------- ---------
Total fixed charges (A)............................................ 4,214 3,510 2,741
------- --------- ---------
Earnings before fixed charges (1)(B)................................... $ 2,751 $ 4,137 $ 2,795
------- --------- ---------
------- --------- ---------
Ratio of earnings to fixed charges (B divided by A)...................... (2) 1.2:1.0 1.0:1.0
------- --------- ---------
------- --------- ---------
</TABLE>
- ------------------------
(1) Earnings before fixed charges excludes capitalized interest.
(2) Earnings for the period January 1, 1994 through July 28, 1994 were
inadequate to cover fixed charges. The deficiency for the period was $1,463.
<PAGE>
EXHIBIT 12.2
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER JANUARY 10, 1994
MARCH 31, 31, (INCEPTION)
-------------------- -------------------- THROUGH
1997 1996 1996 1995 DECEMBER 31, 1994
--------- --------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C>
Historical:
Income before gain on disposition of property,
extraordinary item and minority interests..... $ 4,853 $ 2,810 $ 15,740 $ 14,988 $ 7,702
Fixed charges:
Interest expense............................. 9,452 5,395 24,802 13,322 1,576
Capitalized interest......................... 231 136 821 113 29
Preferred stock dividends.................... 0 0 0 5,169 3,114
--------- --------- --------- --------- -------
Total fixed charges (A).................... 9,683 5,531 25,623 18,604 4,719
--------- --------- --------- --------- -------
Earnings before fixed charges (1)(B)........... $ 14,305 $ 8,205 $ 40,542 $ 28,310 $ 9,278
--------- --------- --------- --------- -------
--------- --------- --------- --------- -------
Ratio of earnings to combined fixed charges and
preferred stock dividends (B divided by A)...... 1.5:1.0 1.5:1.0 1.6:1.0 1.5:1.0 2.0:1.0
--------- --------- --------- --------- -------
--------- --------- --------- --------- -------
</TABLE>
AIMCO PREDECESSORS
<TABLE>
<CAPTION>
JANUARY 1, 1994 YEAR ENDED DECEMBER 31,
THROUGH -------------------------
JULY 28, 1994 1993 1992
--------------- ----------- ------------
<S> <C> <C> <C>
Historical:
Income (loss) before extraordinary item and income taxes........... $ (1,463) $ 627 $ 54
Fixed charges:
Interest expense................................................. 4,214 3,510 2,741
Capitalized interest............................................. 0 0 0
Preferred stock dividends (2).................................... 0 0 0
--------------- ----------- ------------
Total fixed charges (A)........................................ 4,214 3,510 2,741
--------------- ----------- ------------
--------------- ----------- ------------
Earnings before fixed charges (1)(B)............................... $ 2,751 $ 4,137 $ 2,795
--------------- ----------- ------------
--------------- ----------- ------------
Ratio of earnings to combined fixed charges and preferred stock
dividends (B divided by A).......................................... (3) 1.2:1.0 1.0:1.0
--------------- ----------- ------------
--------------- ----------- ------------
</TABLE>
- ------------------------
(1) Earnings before fixed charges excludes capitalized interest and preferred
stock dividends.
(2) The AIMCO Predecessors did not have any shares of Preferred Stock
outstanding during the period from January 1, 1992 through July 28, 1994.
(3) Earnings for the period January 1, 1994 through July 28, 1994 were
inadequate to cover fixed charges. The deficiency for the period was $1,463.
