<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------------------
COMMISSION FILE NUMBER 1-13232
---------------------
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 84-1259577
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
1873 S. BELLAIRE STREET, SUITE 1700, DENVER, 80222-4348
COLORADO (Zip Code)
(Address of principal executive offices)
</TABLE>
(303) 757-8101
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
---------------------
The number of shares of Class A Common Stock outstanding as of April 30,
1999: 62,045,886
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1999 (unaudited)
and December 31, 1998..................................... 2
Consolidated Statements of Income for the Three Months Ended
March 31, 1999 and 1998 (unaudited)....................... 3
Consolidated Statements of Cash Flow for the Three Months
Ended March 31, 1999 and 1998 (unaudited)................. 4
Notes to Consolidated Financial Statements (unaudited)...... 7
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 14
ITEM 3. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 22
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds................... 23
ITEM 6. Exhibits and Reports on Form 8-K............................ 24
Signatures........................................................... 25
</TABLE>
1
<PAGE> 3
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
Real estate, net of accumulated depreciation of $261,228 and
$228,880.................................................. $2,591,249 $2,573,718
Property held for sale...................................... 26,794 27,304
Investments in unconsolidated real estate partnerships...... 998,917 945,035
Investments in unconsolidated subsidiaries.................. 79,501 84,417
Notes receivable from unconsolidated real estate
partnerships.............................................. 104,844 103,979
Notes receivable from unconsolidated subsidiaries........... 115,386 114,000
Cash and cash equivalents................................... 38,561 71,305
Restricted cash............................................. 55,265 55,826
Notes receivable............................................ 22,241 33,708
Goodwill.................................................... 126,716 128,658
Other assets................................................ 132,273 130,335
---------- ----------
Total assets................................................ $4,291,747 $4,268,285
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured notes payable....................................... $1,081,235 $ 843,791
Secured tax-exempt bond financing........................... 403,360 398,602
Unsecured short-term financing.............................. 124,300 310,300
Secured short-term financing................................ -- 108,022
---------- ----------
Total indebtedness................................ 1,608,895 1,660,715
---------- ----------
Accounts payable, accrued and other liabilities............. 146,322 208,300
Resident security deposits and prepaid rents................ 13,404 12,654
---------- ----------
Total liabilities................................. 1,768,621 1,881,669
---------- ----------
Commitments and contingencies............................... -- --
Company-obligated mandatory redeemable convertible preferred
securities of a subsidiary trust.......................... 149,500 149,500
Minority interest in other entities......................... 83,413 185,705
Minority interest in operating partnership.................. 137,600 148,847
Stockholders' equity
Preferred Stock........................................... 616,250 792,468
Class A Common Stock, $.01 par value, 478,277,500 shares
and 484,027,500 shares authorized, 61,657,687 and
48,451,388 shares issued and outstanding,
respectively........................................... 617 485
Additional paid-in capital................................ 1,709,527 1,246,962
Notes receivable on common stock purchases................ (52,121) (49,658)
Distributions in excess of earnings....................... (121,660) (87,693)
---------- ----------
Total stockholders' equity........................ 2,152,613 1,902,564
---------- ----------
Total liabilities and stockholders' equity.................. $4,291,747 $4,268,285
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------------
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues.......................... $112,586 $ 71,336
Property operating expenses................................. (43,170) (26,309)
Owned property management expense........................... (3,502) (2,132)
Depreciation................................................ (27,112) (13,977)
-------- --------
Income from property operations............................. 38,802 28,918
-------- --------
SERVICE COMPANY BUSINESS
Management fees and other income............................ 8,556 4,821
Management and other expenses............................... (8,902) (1,961)
Corporate overhead allocation............................... -- (151)
-------- --------
Income (loss) from service company business................. (346) 2,709
-------- --------
General and administrative expenses......................... (3,690) (1,974)
Interest expense............................................ (31,330) (15,441)
Interest income............................................. 10,367 6,076
Equity in earnings of unconsolidated subsidiaries........... 2,372 4,068
Equity in earnings (losses) of unconsolidated real estate
partnerships.............................................. 816 (653)
Minority interest in other entities......................... 111 (582)
Amortization of goodwill.................................... (1,942) (1,717)
-------- --------
Income from operations...................................... 15,160 21,404
Gain on disposition of properties........................... 15 2,526
-------- --------
Income before minority interest in operating partnership.... 15,175 23,930
Minority interest in operating partnership.................. (1,219) (2,288)
-------- --------
Net income.................................................. 13,956 21,642
Net income attributable to preferred stockholders........... 13,620 3,681
-------- --------
Net income attributable to common stockholders.............. $ 336 $ 17,961
======== ========
COMPREHENSIVE INCOME
Net income.................................................. $ 13,956 $ 21,642
Other comprehensive income:
Net unrealized loss on investment in securities........... -- (160)
-------- --------
Comprehensive income........................................ $ 13,956 $ 21,482
======== ========
Basic earnings per common share............................. $ 0.01 $ 0.44
======== ========
Diluted earnings per common share........................... $ 0.01 $ 0.43
======== ========
Weighted average common shares outstanding.................. 56,468 41,128
======== ========
Weighted average common shares and common share equivalents
outstanding............................................... 58,412 41,310
======== ========
Dividends paid per common share............................. $ 0.6250 $ 0.5625
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
-------------------------------
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income................................................ $ 13,956 $ 21,642
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 33,381 15,872
Gain on disposition of properties....................... (15) (2,526)
Minority interest in operating partnership.............. 1,219 2,288
Minority interests in other entities.................... (111) (582)
Equity in (earnings) losses of unconsolidated real
estate partnerships.................................... (816) 653
Equity in earnings of unconsolidated subsidiaries....... (2,372) (4,068)
Changes in operating assets and operating liabilities... 19,180 (23,618)
--------- --------
Total adjustments 50,466 (11,981)
--------- --------
Net cash provided by operating activities.......... 64,422 9,661
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of real estate................................... -- (6,804)
Additions to real estate.................................. (19,562) (7,942)
Proceeds from sale of property............................ 3,845 11,477
Additions to property held for sale....................... (146) (1,874)
Purchase of limited partnerships interests................ (18,201) (5,790)
Purchase of/additions to notes receivable from
unconsolidated real estate partnerships................. (8,966) (36,092)
Proceeds from repayment of notes receivable from
unconsolidated real estate partnerships................. 6,444 --
Purchase of notes receivable.............................. (6,350) --
Proceeds from sale of notes receivable.................... 17,788 --
Cash paid for merger related costs........................ (54,907) --
Distributions from investments in unconsolidated real
estate partnerships..................................... 17,860 --
--------- --------
Net cash used in investing activities.............. (62,195) (47,025)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from secured notes payable borrowings............ 175,963 --
Principal repayments on secured notes payable............. (32,686) (31,756)
Proceeds from secured tax-exempt bond financing........... 7,500 --
Principal repayments on secured tax-exempt bond
financing............................................... (1,172) (450)
Repayments on secured short-term financing................ -- (19,099)
Net borrowings (repayments) on the Company's revolving
credit facilities....................................... (236,000) 7,400
Payment of loan costs, net of proceeds from interest rate
hedge................................................... (5,697) (2,041)
Proceeds from issuances of Class A Common Stock........... -- 9,636
Proceeds from issuances of Preferred Stock................ 114,095 100,294
Proceeds from exercises of employee stock options and
warrants................................................ 812 --
Principal repayments received on notes due from officers
on Class A Common Stock purchases....................... 2,230 5,783
Repurchase of Class A common stock........................ -- (5,982)
Payment of common stock dividends......................... (35,141) (23,248)
Payment of distributions to minority interest in AIMCO
operating partnership................................... (4,365) (2,928)
Payment of distributions to minority interest in other
entities................................................ (7,710) --
Payment of preferred stock dividends...................... (12,800) (1,385)
--------- --------
Net cash (used in) provided by financing
activities....................................... (34,971) 36,224
--------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS................... (32,744) (1,140)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 71,305 37,088
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 38,561 $ 35,948
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
(IN THOUSANDS EXCEPT SHARE AND OPERATING PARTNERSHIP UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Interest Paid................................ $32,292 $14,848
</TABLE>
1999 NON-CASH INVESTING AND FINANCING ACTIVITIES
Redemption of Operating Units
During the three months ended March 31, 1999, 322,801 operating partnership
units with a recorded value of $7,747 were redeemed in exchange for an equal
number of shares of Class A Common Stock.
Notes Receivable from Officers
From time to time, the Company makes loans to its officers to finance their
purchases of shares of Class A Common Stock from the company. During the three
months ended March 31, 1999, the company sold to certain officers 125,070 shares
of Class A Common Stock for an aggregate price of $4.7 million. In payment for
such shares, the officers executed notes payable to the company bearing interest
at 7.0% per annum, payable quarterly, and due in 2009. The loans are 25%
recourse to the officers.
Consolidation of Properties
During the three months ended March 31, 1999, the acquisition of additional
ownership interests by the company resulted in ownership levels increasing for
one previously unconsolidated property such that the company achieved control.
Accordingly, the company began consolidating the property. The non-cash effect
of this consolidation is as follows:
<TABLE>
<S> <C>
Real estate.............................................. $ 16,627
Secured notes payable.................................... (15,489)
Other assets and liabilities............................. (1,138)
</TABLE>
Merger with Insignia Properties Trust
On February 26, 1999, Insignia Properties Trust was merged into the
company. Approximately 4.3 million shares of Class A Common Stock (with a
recorded value of approximately $158.8 million) were issued in connection with
the merger. The non-cash effect of the merger is as follows:
<TABLE>
<S> <C>
Real Estate............................................. $ 10,382
Investment in unconsolidated real estate partnerships... 40,850
Other assets............................................ 700
Accounts payable, accrued and other liabilities......... 1,131
Minority interest....................................... 109,395
Common stock and additional paid in capital............. 158,796
</TABLE>
Conversion of Class E Preferred Stock
On January 15, 1999, all outstanding shares of Class E Cumulative
Convertible Preferred Stock (with an aggregate liquidation preference of
approximately $301.2 million) were converted into approximately 8.4 million
shares of Class A Common Stock in accordance with the terms of the Class E
Cumulative Convertible Preferred Stock.
5
<PAGE> 7
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
(IN THOUSANDS EXCEPT SHARE AND OPERATING PARTNERSHIP UNIT DATA) -- (CONTINUED)
(UNAUDITED)
1998 NON-CASH INVESTING AND FINANCING ACTIVITIES
Purchase of Real Estate
<TABLE>
<S> <C>
Secured notes payable assumed in connection with purchase of
real estate............................................... $46,971
Issuance of 499,506 operating partnership units in
connection with the purchase of real estate............... 16,423
Delayed issuance of 166,503 operating partnership units in
connection with the purchase of real estate............... 5,474
-------
$68,868
=======
</TABLE>
Redemption of Operating Partnership Units
During the three months ended March 31, 1998, 167,445 operating partnership
units with a recorded value of $3,184 were redeemed in exchange for an equal
number of shares of Class A Common Stock.
Property Held for Sale
During the three months ended March 31, 1998, the company entered into
sales agreements to sell two multifamily properties with a net book value of
$27.3 million. These assets were reclassified to property held for sale.
Notes Receivable from Officers
From time to time, the company makes loans to its officers to finance their
purchases of shares of Class A Common Stock from the company. During the three
months ended March 31, 1998, the company sold to certain officers 336,030 shares
of Class A Common Stock for an aggregate price of $12.3 million. In payment for
such shares, the officers executed notes payable to the company bearing interest
at 7.0%, per annum, payable quarterly, and due in 2008. The loans are 25%
recourse to the officers.
6
<PAGE> 8
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
NOTE 1 -- ORGANIZATION
Apartment Investment and Management Company, a Maryland corporation
incorporated on January 10, 1994 ("AIMCO" and, together with its subsidiaries
and other controlled entities, the "Company"), owns a majority of the ownership
interests in AIMCO Properties, L.P., (the "AIMCO operating partnership") through
its wholly owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP, Inc. The Company
held an approximate 91% interest in the AIMCO operating partnership as of March
31, 1999. AIMCO-GP, Inc. is the sole general partner of the AIMCO operating
partnership.
At March 31, 1999, AIMCO had 61,657,687 shares of Class A Common Stock
outstanding and the AIMCO operating partnership had 5,961,904 Partnership Common
Units ("Common OP Units") outstanding (excluding units held by the Company), for
a combined total of 67,619,591 shares and Common OP Units outstanding.
As of March 31, 1999, AIMCO:
- owned or controlled 63,069 units in 240 apartment properties;
- held an equity interest in 168,817 units in 891 apartment properties;
and
- managed 141,523 units in 940 apartment properties for third party
owners and affiliates.
NOTE 2 -- BASIS OF PRESENTATION
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
AIMCO, the AIMCO operating partnership, majority owned subsidiaries and
controlled real estate limited partnerships. Interests held by limited partners
in real estate partnerships controlled by the Company are reflected as minority
interest in other entities. All significant intercompany balances and
transactions have been eliminated in consolidation. The assets of
property-owning limited partnerships and limited liability companies owned or
controlled by AIMCO or the AIMCO operating partnership are generally not
available to pay creditors or secure the obligations of AIMCO or the AIMCO
operating partnership.
After payment of distributions to holders of partnership preferred units
("Preferred OP Units" and together with Common OP Units, "OP Units"), the AIMCO
operating partnership's remaining income is allocated to holders of Common OP
Units based on the weighted average number of Common OP Units outstanding during
the period. The AIMCO operating partnership records the issuance of Common OP
Units and the assets acquired in purchase transactions based on the market price
of the Company's Class A Common Stock at the date of execution of the purchase
contract. The holders of the Common OP Units receive distributions, prorated
from the date of admittance, in an amount equivalent to the dividends paid to
holders of Class A Common Stock.
After holding the Common OP Units for one year, the limited partners
generally have the right to redeem their Common OP Units for cash.
Notwithstanding that right, the AIMCO operating partnership may elect to acquire
some or all of the Common OP Units tendered for redemption in exchange for
shares of Class A Common Stock in lieu of cash.
Investments in Unconsolidated Subsidiaries
The Company has investments in numerous subsidiaries. Investments in
entities in which the Company does not have control are accounted for under the
equity method. Under the equity method, the Company's pro-rata share of the
earnings or losses of the entity for the periods being presented is included in
equity in earnings (losses) from unconsolidated subsidiaries.
7
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Investments in Unconsolidated Real Estate Partnerships
The Company owns general and limited partnership interests in numerous
partnerships that own multi-family apartment properties. Investments in real
estate partnerships in which the Company does not have control, are accounted
for under the equity method. Under the equity method, the Company's pro-rata
share of the earnings or losses of the entity for the periods being presented is
included in equity in earnings (losses) from unconsolidated real estate
partnerships.
Notes Receivable from Unconsolidated Subsidiaries and Real Estate Partnerships
Notes receivable from unconsolidated subsidiaries and real estate
partnerships are recorded at original basis, net of any allowance for
impairment. The Company recognizes interest income on notes receivable as
earned, in accordance with the terms of the notes. Interest income is not
recorded on individual notes receivable if management believes the interest is
not collectible.
Earnings per Share
Earnings per share is calculated based on the weighted average number of
shares of common stock, common stock equivalents and dilutive convertible
securities outstanding during the period.
Interim Information
The accompanying unaudited consolidated financial statements of the Company
as of March 31, 1999 and for the three months ended March 31, 1999 and 1998 have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included and all such
adjustments are of a recurring nature.
The consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto included in the
Annual Report on Form 10-K for the year ended December 31, 1998. It should be
understood that accounting measurements at interim dates inherently involve
greater reliance on estimates than at year-end. The results of operations for
the interim periods presented are not necessarily indicative of the results for
the entire year.
Reclassification
Certain reclassifications have been made to prior period financial
statements to conform to the current period presentation.
NOTE 3 -- IPT MERGER
As a result of its merger with Insignia Financial Group, Inc. on October 1,
1998, AIMCO acquired approximately 51% of the outstanding shares of beneficial
interest of Insignia Properties Trust ("IPT"). On February 26, 1999, AIMCO
acquired, through a merger, the remaining 49% of IPT. Pursuant to the merger,
each of the outstanding shares of IPT that were not held by AIMCO were converted
into the right to receive 0.3601 shares of Class A Common Stock for each share
of IPT common stock, resulting in the issuance of approximately 4.3 million
shares of Class A Common Stock (with a recorded value of approximately $158.8
million).
8
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- COMMITMENTS
High Performance Units
In January 1998, AIMCO's operating partnership sold an aggregate of 15,000
of its Class I High Performance Partnership Units (the "High Performance Units")
to a joint venture formed by fourteen members of AIMCO's senior management, and
to three of its independent directors for $2.1 million in cash. The High
Performance Units have nominal value unless the Company's total return, defined
as dividend income plus share price appreciation, over the three year period
ending December 31, 2000, is at least 30% and exceeds the industry average, as
determined by a peer group index, by at least 15% (the "Total Return"). At the
conclusion of the three year period, if the Company's Total Return satisfies
these criteria, the holders of the High Performance Units will receive
distributions and allocations of income and loss from the AIMCO operating
partnership in the same amounts and at the same times as would holders of a
number of Common OP Units equal to the quotient obtained by dividing (i) the
product of (a) 15% of the amount by which the Company's cumulative Total Return
over the three year period exceeds the greater of 115% of a peer group index or
30% (such excess being the "Excess Return"), multiplied by (b) the weighted
average market value of the Company's outstanding Class A Common Stock and
Common OP Units, by (ii) the market value of one share of Class A Common Stock
at the end of the three year period. The three year measurement period will be
shortened in the event of a change of control of the Company. Unlike Common OP
Units, the High Performance Units are not redeemable or convertible into Class A
Common Stock unless a change of control of the Company occurs. Because there is
substantial uncertainty that the High Performance Units will have more than
nominal value due to the required Total Return over the three year term, the
Company has not recorded any value to the High Performance Units. If the
measurement period would have ended March 31, 1999, the Excess Return would have
been $0 and the value of the High Performance Units would have been $0, and such
High Performance Units would have had no dilutive effect on net income per
share.
NOTE 5 -- DEBT
In February 1999, the Company terminated its $50 million secured credit
facility with Washington Mortgage Financial Group, Ltd. and repaid all
outstanding borrowings with proceeds from new long-term, fully amortizing notes
payable totaling $58.2 million secured by certain properties that previously
secured the credit facility.
In February and March 1999, the Company incurred in the aggregate $125.4
million of long-term, fixed rate, fully amortizing notes payable secured by 20
properties in separate loan transactions. The Company used $8.2 million of the
net proceeds from the financings to refinance existing notes payable and $117.2
million of net proceeds from the financings to repay debt under the interim loan
agreement with Lehman Brothers Inc. As of March 31, 1999, the balance
outstanding under the interim loan agreement was $21 million, under the credit
facility was $58.3 million, and under the IPT credit agreement was $45 million.
The amount available under the credit facility at March 31, 1999 was $40.5
million.
9
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6 -- STOCKHOLDERS' EQUITY
Preferred Stock
At March 31, 1999 and December 31, 1998, the Company had the following
classes of preferred stock outstanding:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
-------------------
<S> <C> <C>
Class B Cumulative Convertible Preferred Stock, $.01 par
value, 750,000 shares authorized, 750,000 and 750,000
shares issued and outstanding............................. $ 75,000 $ 75,000
Class C Cumulative Preferred Stock, $.01 par value,
2,760,000 shares authorized, 2,400,000 and 2,400,000
shares issued and outstanding; dividends payable at 9.0%,
per annum................................................. 60,000 60,000
Class D Cumulative Preferred Stock, $.01 par value,
4,600,000 shares authorized, 4,200,000 and 4,200,000
shares issued and outstanding; dividends payable at 8.75%,
per annum................................................. 105,000 105,000
Class G Cumulative Preferred Stock, $.01 par value,
4,050,000 shares authorized, 4,050,000 and 4,050,000
shares issued and outstanding; dividends payable at
9.375%, per annum......................................... 101,250 101,250
Class H Cumulative Preferred Stock, $.01 par value,
2,300,000 shares authorized, 2,000,000 and 2,000,000
shares issued and outstanding; dividends payable at 9.5%,
per annum................................................. 50,000 50,000
Class J Cumulative Convertible Preferred Stock, $.01 par
value, 2,000,000 shares authorized, 1,000,000 and
1,000,000 shares issued and outstanding................... 100,000 100,000
Class K Convertible Cumulative Preferred Stock, $.01 par
value, 5,750,000 shares authorized, 5,000,000 and no
shares issued and outstanding; dividends payable at 8%,
per annum................................................. 125,000 --
Class E Cumulative Convertible Preferred Stock, $.01 par
value, 10,000,000 shares authorized, no and 8,423,658
shares issued and outstanding............................. -- 301,218
-------- --------
$616,250 $792,468
======== ========
</TABLE>
All classes of preferred stock, except the Class E Cumulative Convertible
Preferred Stock (the "Class E Preferred Stock"), are on equal parity and are
senior to the Class E Preferred Stock, the Class A Common Stock. The Class E
Preferred Stock was senior to the Class A Common Stock. None of the classes of
preferred stock have the right to vote, generally, for the election of
directors.
Holders of the Class B Cumulative Convertible Preferred Stock (the "Class B
Preferred Stock") are entitled to receive, when, as and if declared by the Board
of Directors, quarterly cash dividends per share equal to the greater of
$1.78125 or the cash dividends declared on the number of shares of Class A
Common Stock into which one share of Class B Preferred Stock is convertible.
Each share of Class B Preferred Stock is convertible at the option of the
holder, beginning August 1998, into 3.28407 shares of Class A Common Stock,
subject to certain anti-dilution adjustments.
Holders of Class J Cumulative Convertible Preferred Stock (the "Class J
Preferred Stock") are entitled to receive cash dividends at the rate of 7% per
annum of the $100 liquidation preference (equivalent to $7 per annum per share)
for the period beginning on November 6, 1998 and lasting until November 15,
1998, 8% per annum of the $100 liquidation preference (equivalent to $8 per
annum per share) for the period beginning on
10
<PAGE> 12
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and including November 15, 1998 and lasting until November 15, 1999, 9% per
annum of the $100 liquidation preference (equivalent to $9 per annum per share)
for the period beginning on and including November 15, 1999 and lasting until
November 15, 2000, and 9 1/2% per annum of the $100 liquidation preference
(equivalent to $9.50 per annum per share) thereafter.
The Company may convert any or all of the Class J Preferred Stock into
Class A Common Stock at a conversion rate of 2.5 shares of Class A Common Stock
for each share of Class J Preferred Stock (plus payment of accumulated and
unpaid dividends on the converted shares) (a) on or after November 6, 2002, if
the market price of the Class A Common Stock in the five most recent trading
days, as defined, is equal to or greater than $40 or; (b) at any time on or
prior to November 6, 2002, if the internal rate of return on such shares exceeds
12.5%.
On February 18, 1999, AIMCO issued 5,000,000 shares of newly created Class
K Convertible Cumulative Preferred Stock, par value $.01 per share ("Class K
Preferred Stock"), in a public offering. The net proceeds of $120.6 million were
used to repay certain indebtedness and for working capital. For three years,
holders of the Class K Preferred Stock are entitled to receive, when, as and if
declared by the Board of Directors, annual cash dividends in an amount per share
equal to the greater of (i) $2.00 per year (equivalent to 8% of the liquidation
preference), or (ii) the cash dividends payable on the number of shares of Class
A Common Stock into which a share of Class K Preferred Stock is convertible.
Beginning with the third anniversary of the date of original issuance, holders
of Class K Preferred Stock will be entitled to receive an amount per share equal
to the greater of (i) $2.50 per year (equivalent to 10% of the liquidation
preference), or (ii) the cash dividends payable on the number of Class A Common
Stock into which a share of Class K Preferred is convertible. Upon any
liquidation, dissolution or winding up of AIMCO, before payment or distributions
by AIMCO shall be made to any holders of Class A Common Stock, the holders of
the Class K Preferred Stock shall be entitled to receive a liquidation
preference of $25 per share, plus accumulated, accrued and unpaid dividends.
The Class E Preferred Stock was issued in connection with the Insignia
Financial Group merger ("Insignia merger"). Holders of Class E Preferred Stock
were entitled to receive the same cash dividends per share as holders of Class A
Common Stock. In addition, on January 15, 1999, holders of Class E Preferred
Stock received a special dividend in an aggregate amount of approximately $50
million. Concurrently with the payment of such special dividend, all outstanding
shares of Class E Preferred Stock automatically converted into an equal number
of shares of Class A Common Stock.
11
<PAGE> 13
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7 -- EARNINGS PER SHARE
The following table illustrates the calculation of basic and diluted
earnings per share for the three months ended March 31, 1999 and 1998 (in
thousands, except per share data):
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
NUMERATOR:
Net income.................................................. $ 13,956 $21,642
Preferred stock dividends................................... (13,620) (3,681)
-------- -------
Numerator for basic and diluted earnings per share -- income
attributable to common stockholders....................... $ 336 $17,961
======== =======
DENOMINATOR:
Denominator for basic earnings per share -- weighted average
number of shares of common stock outstanding.............. 56,468 41,128
Effect of dilutive securities:
Class E Preferred Stock................................... 1,310 --
Employee stock options.................................... 329 182
Warrants.................................................. 305 --
-------- -------
Dilutive potential common shares.......................... 1,944 182
-------- -------
Denominator for dilutive earnings per share................. 58,412 41,310
======== =======
Basic earnings per common share:
Operations................................................ $ 0.01 $ 0.38
Gain on disposition of properties......................... -- 0.06
-------- -------
Total............................................. $ 0.01 $ 0.44
======== =======
Diluted earnings per common share:
Operations................................................ $ 0.01 $ 0.37
Gain on disposition of properties......................... -- 0.06
-------- -------
Total............................................. $ 0.01 $ 0.43
======== =======
</TABLE>
NOTE 8 -- INDUSTRY SEGMENTS
The Company owns and operates multi-family apartment communities throughout
the United States and Puerto Rico which generated rental and other property
related income through the leasing of apartment units to a diverse base of
tenants. The Company separately evaluates the performance of each of its
apartment communities. However, because each of the apartment communities have
similar economic characteristics, facilities, services and tenants, the
apartment communities have been aggregated into a single apartment communities
segment. All segment disclosures are included in or can be derived from the
Company's consolidated financial statements.
All revenues are from external customers and no revenues are generated from
transactions with other segments. There are no tenants which contributed 10% or
more of the Company's total revenues during the three months ended March 31,
1999 and March 31, 1998.
NOTE 9 -- SUBSEQUENT EVENTS
Acquisitions
On April 20, 1999, AIMCO announced its definitive agreement to acquire
2,105 units in 8 garden-style apartment communities from First Union Real Estate
Investment Trust for an aggregate price of approxi-
12
<PAGE> 14
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
mately $86 million and additional transaction costs of approximately $0.5
million. The Company acquired seven of these apartment communities on May 12,
1999, and expects to acquire the remaining apartment community in May 1999.
Conversion of Preferred Stock
On May 12, 1999, the Company notified the holders of the Class J Preferred
Stock that the internal rate of return threshold had been met, and the Company
exercised its right to convert all of the Class J Preferred Stock into 2.5
million shares of Class A Common Stock.
13
<PAGE> 15
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
As of March 31, 1999, the Company owned or managed 373,409 apartment units,
comprised of 63,069 units in 240 apartment communities owned or controlled by
the Company (the "Owned Properties"), 168,817 units in 891 apartment communities
in which the Company has an equity interest (the "Equity Properties") and
141,523 units in 940 apartment communities which the Company manages for third
parties and affiliates (the "Managed Properties" and together with the Owned
Properties and the Equity Properties, the "AIMCO Properties"). The apartment
communities are located in 49 states, the District of Columbia and Puerto Rico.
The following discussion contains forward-looking statements that are
subject to significant risks and uncertainties. There are several important
factors that could cause actual results to differ materially from the results
anticipated by the forward-looking statements contained in the following
discussion. Such factors and risks include, but are not limited to: financing
risks, including the risk that the Company's cash flow from operations may be
insufficient to meet required payments of principal and interest on its debt;
real estate risks, including variations of real estate values and the general
economic climate in local markets and competition for tenants in such markets;
acquisition and development risks, including the failure of acquisitions to
perform in accordance with projections; and possible environmental liabilities,
including costs which may be incurred due to necessary remediation of
contamination of properties presently owned or previously owned by the Company.
In addition, the Company's continued qualification as a REIT involves the
application of highly technical and complex provisions of the Internal Revenue
Code. Readers should carefully review the financial statements and the notes
thereto, as well as the risk factors described in documents the Company files
from time to time with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 1999 to the Three Months Ended
March 31, 1998
Net Income
The Company recognized net income of $14.0 million for the three months
ended March 31, 1999, compared to $21.6 million for the three months ended March
31, 1998. The decrease in net income of $7.6 million, or 35%, was primarily the
result of a significant increase in the non-cash expenses (i.e., depreciation of
real property and amortization of management contracts) and general and
administrative expenses associated with the acquisition of Insignia Financial
Group, Inc. ("Insignia"), Ambassador Apartments, Inc. ("Ambassador") and the
purchase of thirty properties (the "1998 Acquisitions") during 1998. The
decrease in net income was also attributable to the increased interest expense
associated with indebtedness which was assumed or incurred in connection with
the acquisitions described above, a decrease in income from the service company
business, the sale of five properties in 1998 (the "1998 Sold Properties") and
one property in 1999 (the "1999 Sold Property"). These factors are discussed in
more detail in the following paragraphs.
14
<PAGE> 16
CONSOLIDATED RENTAL PROPERTY OPERATIONS
Rental and other property revenues from the consolidated Owned Properties
totaled $112.6 million for the three months ended March 31, 1999, compared to
$71.3 million for the three months ended March 31, 1998, an increase of $41.3
million, or 57.9%. Rental and other property revenues for the consolidated Owned
Properties consisted of the following (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
"Same store" properties..................................... $ 67,928 $67,472
1998 Acquisitions........................................... 41,958 326
1999 Acquisitions........................................... 604 --
1998 Sold Properties........................................ -- 99
1999 Sold Properties........................................ 25 24
Properties in lease-up after the completion of an expansion
or renovation............................................. 2,071 3,415
-------- -------
Total............................................. $112,586 $71,336
======== =======
</TABLE>
Property operating expenses, consisting of on-site payroll costs, utilities
(net of reimbursements received from tenants), contract services, turnover
costs, repairs and maintenance, advertising and marketing, property taxes and
insurance, from the consolidated Owned Properties totaled $43.2 million for the
three months ended March 31, 1999, compared to $26.3 million for the three
months ended March 31, 1998, an increase of $16.9 million or 64.3%. Operating
expenses for the consolidated Owned Properties consisted of the following
(dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
"Same store" properties..................................... $26,508 $25,043
1998 Acquisitions........................................... 16,023 164
1999 Acquisitions........................................... 241 --
1998 Sold Properties........................................ -- 111
1999 Sold Properties........................................ 9 8
Properties in lease-up after the completion of an expansion
or renovation............................................. 389 983
------- -------
Total............................................. $43,170 $26,309
======= =======
</TABLE>
SERVICE COMPANY BUSINESS
The Company's share of income (loss) from the service company business was
$(0.3) million for the three months ended March 31, 1999, compared to $2.7
million for the three months ended March 31, 1998. The decrease in service
company business income of $3.0 million was primarily due to a decrease in fees
for services provided by the Company to real estate partnerships for customary
services.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased from $2.0 million for the
three months ended March 31, 1998 to $3.7 million for the three months ended
March 31, 1999, an 85% increase. The increase is primarily due to additional
corporate costs and additional employee salaries associated with the merger with
Ambassador in May 1998 and the merger with Insignia in October 1998. In
addition, due to the growth of the Company, several new departments have been
added including legal, tax and tender coordination, as well as increased levels
of personnel in the accounting and finance departments.
INTEREST EXPENSE
Interest expense, which includes the amortization of deferred financing
costs, totaled $31.3 million for the three months ended March 31, 1999, compared
to $15.4 million for the three months ended March 31, 1998, an increase of $15.9
million, or 103.2%. The increase was primarily due to interest expense incurred
in connection with the acquisition of interests in Ambassador and Insignia and
interest expense incurred in connection with 1998 acquisitions.
15
<PAGE> 17
INTEREST INCOME
Interest income totaled $10.4 million for the three months ended March 31,
1999, compared to $6.1 million for the three months ended March 31, 1998. The
increase of $4.3 million is primarily due to interest earned on loans made by
the Company to partnerships in which the Company acts as the general partner.
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to meet its short-term liquidity requirements,
including property acquisitions, tender offers, refinancing of short-term debt
with long-term, fixed rate, fully amortizing debt, secured or unsecured
short-term indebtedness (including indebtedness under the Company's credit
facilities), the issuance of debt securities, OP Units or equity securities in
public offerings or private placements, and cash generated from operations.
In August 1998, AIMCO and the AIMCO operating partnership filed a shelf
registration statement with the Securities and Exchange Commission ("SEC") with
respect to an aggregate of $1,268 million of debt and equity securities of AIMCO
(of which $268 million was carried forward from AIMCO's 1997 shelf registration
statement) and $500 million of debt securities of AIMCO operating partnership.
The registration statement was declared effective by the SEC on December 10,
1998. As of March 31, 1999, the Company had $1,143 million available and the
AIMCO operating partnership had $500 million available from this registration
statement.
At March 31, 1999, the Company had $38.6 million in cash and cash
equivalents. In addition, the Company had $55.3 million of restricted cash
primarily consisting of reserves and impounds held by lenders for capital
expenditures, property taxes and insurance. The Company's principal demands for
liquidity include normal operating activities, payments of principal and
interest on outstanding debt, capital improvements, acquisitions of or
investments in properties, dividends paid to its stockholders and distributions
paid to minority limited partners in the AIMCO operating partnership. The
Company considers its cash provided by operating activities, and funds available
under its credit facilities, to be adequate to meet short-term liquidity
demands. The Company utilizes its revolving credit facilities for general
corporate purposes and to fund investments on an interim basis.
In February 1999, the Company terminated its $50 million secured credit
facility with Washington Mortgage Financial Group, Ltd. and repaid all
outstanding borrowings with proceeds from new long-term, fully amortizing notes
payable totaling $58.2 million secured by certain properties that previously
secured the credit facility.
In February and March 1999, the Company incurred in the aggregate $125.4
million of long-term, fixed rate, fully amortizing notes payable secured by 20
properties in separate loan transactions. The Company used $8.2 million of the
net proceeds from the financings to refinance existing notes payable, and $117.2
million of net proceeds from the financings to repay debt under the interim loan
agreement with Lehman Brothers Inc. As of March 31, 1999, the balance
outstanding under the interim loan agreement was $21 million, under the credit
facility was $58.3 million, and under the IPT credit agreement was $45 million.
The amount available under the credit facility at March 31, 1999 was $40.5
million.
From time to time, the Company has offered to acquire and, in the future,
may offer to acquire the interests held by third party investors in certain
limited partnerships for which the Company acts as general partner. Any such
acquisitions will require funds to pay the cash purchase price for such
interests. During the quarter ended March 31, 1999, the Company made separate
offers to the limited partners of 106 partnerships owning 326 properties to
acquire their limited partnership interests. The Company paid approximately
$18.2 million in cash, (including transaction costs), to acquire limited
partnership interests pursuant to the offers.
On February 18, 1999, the Company issued 5,000,000 shares of newly created
Class K Convertible Cumulative Preferred Stock, par value $.01 per share in a
public offering. The net proceeds of $120.6 million were used to repay certain
indebtedness and for working capital. For three years, holders of the Class K
Preferred Stock are entitled to receive, when, as and if declared by the Board
of Directors, annual cash
16
<PAGE> 18
dividends in an amount per share equal to the greater of (i) $2.00 per year
(equivalent to 8% of the liquidation preference), or (ii) the cash dividends
payable on the number of shares of Class A Common Stock into which a share of
Class K Preferred Stock is convertible. Beginning with the third anniversary of
the date of original issuance, holders of Class K Preferred Stock will be
entitled to receive an amount per share equal to the greater of (i) $2.50 per
year (equivalent to 10% of the liquidation preference), or (ii) the cash
dividends payable on the number of Class A Common Stock into which a share of
Class K Preferred is convertible. The Class K Preferred Stock is senior to the
Class A Common Stock as to dividends and liquidation. Upon any liquidation,
dissolution or winding up of AIMCO, before payment or distributions by AIMCO may
be made to any holders of Class A Common Stock, the holders of the Class K
Preferred Stock are entitled to receive a liquidation preference of $25 per
share, plus accumulated, accrued and unpaid dividends.
CAPITAL EXPENDITURES
For the quarter ended March 31, 1999, the Company spent $8.7 million for
Capital Replacements (expenditures for routine maintenance of a property), $0.9
million for Initial Capital Expenditures or "ICE" (expenditures at a property
that have been identified, at the time the property is acquired, as expenditures
to be incurred within one year of the acquisition), and $10.0 million for
construction and capital enhancements (amenities that add a material new feature
or revenue source at a property). These expenditures were funded by borrowings
under the Company's primary credit facility, working capital reserves and net
cash provided by operating activities. During 1999, the Company will provide an
allowance for capital replacements of $300 per apartment unit. ICE and capital
enhancements will primarily be funded by cash from operating activities and
borrowings under the Company's primary credit facility.
FUNDS FROM OPERATIONS
The Company measures its economic profitability based on funds from
operations ("FFO"), less a reserve for Capital Replacements of $300 per
apartment unit. The Company's management believes that FFO, less such a reserve,
provides investors with an understanding of the Company's ability to incur and
service debt and make capital expenditures. The Board of Governors of the
National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as
net income (loss), computed in accordance with generally accepted accounting
principles ("GAAP"), excluding gains and losses from debt restructuring and
sales of property, plus real estate related depreciation and amortization
(excluding amortization of financing costs), and after adjustments for
unconsolidated partnerships and joint ventures. The Company calculates FFO based
on the NAREIT definition, as adjusted for the minority interest in the AIMCO
operating partnership, amortization of goodwill, the non-cash deferred portion
of the income tax provision for unconsolidated subsidiaries and less the payment
of dividends on preferred stock. FFO should not be considered an alternative to
net income or net cash flows from operating activities, as calculated in
accordance with GAAP, as an indication of the Company's performance or as a
measure of liquidity. FFO is not necessarily indicative of cash available to
fund future cash needs. In addition, there can be no assurance that the
Company's basis for computing FFO is comparable with that of other real estate
investment trusts.
17
<PAGE> 19
For the three months ended March 31, 1999 and 1998, the Company's FFO was
as follows (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Income before minority interest in operating partnership.... $ 15,175 $23,930
Gain on disposition of properties........................... (15) (2,526)
Real estate depreciation, net of minority interest.......... 25,700 12,779
Real estate depreciation related to unconsolidated
entities.................................................. 21,115 3,191
Amortization of goodwill.................................... 2,602 2,389
Amortization of recoverable amount of management
contracts................................................. 10,397 1,379
Deferred taxes.............................................. 2,456 309
Preferred stock dividends................................... (10,347) (2,364)
Preferred OP Unit distribution.............................. (858) --
-------- -------
Funds From Operations (FFO)................................. $ 66,225 $39,087
======== =======
Weighted average number of common shares, common share
equivalents and OP Units outstanding:
Common stock and common stock equivalents................. 58,412 41,310
Preferred stock convertible into common stock............. 2,463 2,463
OP Units.................................................. 8,308 5,296
-------- -------
69,183 49,069
======== =======
</TABLE>
For the three months ended March 31, 1999 and 1998, net cash flows were as
follows (dollars in thousands):
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Cash flow provided by operating activities.................. $ 64,422 $ 9,661
Cash flow used in investing activities...................... (62,195) (47,025)
Cash flow (used in) provided by financing activities........ (34,971) 36,224
</TABLE>
CONTINGENCIES
HUD Approvals and Enforcement
A significant number of apartment units owned or managed by AIMCO are
subject to regulation by the U.S. Department of Housing and Urban Development
("HUD"). Under its regulations, HUD reserves the right to approve the owner and
the manager of HUD-insured and HUD-assisted properties, as well as their
"principals" (e.g., general partners, stockholders with a 10% or greater
interest, officers and directors) in connection with the acquisition of a
property, participation in HUD programs or the award of a management contract.
This approval process is commonly referred to as "2530 Clearance." HUD monitors
the performance of properties with HUD-insured mortgage loans. HUD also monitors
compliance with applicable regulations, and takes performance and compliance
into account in approving the acquisition of management of HUD-assisted
properties. In the event of instances of unsatisfactory performance or
regulatory violations, the HUD office with jurisdiction over a property has the
authority to enter a "flag" into the computerized 2530 Clearance system. If one
or more flags have been entered, a decision whether to grant 2530 Clearance is
then subject to review by HUD's Multi-family Participation Review Committee in
Washington, D.C. (the "2530 Committee"). HUD also has the authority to suspend
or deny property owners and managers from participation in HUD programs with
respect to additional assistance within a geographic region through imposition
of a Limited Denial of Participation by any HUD office or nationwide for
violations of HUD regulatory requirements. As a result of certain mortgage
defaults and unsatisfactory ratings received by NHP Management Company, an
unconsolidated subsidiary of AIMCO, and NHP Incorporated (together "NHP") in
years prior to their acquisition in December 1997 by AIMCO, HUD believes that
the 2530 Committee must review any application for 2530 Clearance filed by
AIMCO. In December 1998 and thereafter, AIMCO
18
<PAGE> 20
received approval of numerous 2530 applications and had no unresolved flags in
the 2530 system as of March 31, 1999.
NHP has received subpoenas from the HUD Inspector General requesting
documents relating to any arrangement whereby NHP or any of its affiliates
provides or has provided compensation to owners of HUD multi-family projects in
exchange for or in connection with property management of a HUD project, and
related matters. AIMCO believes that other owners and managers of HUD projects
have received similar subpoenas. Documents provided by AIMCO to the HUD
Inspector General relating to certain NHP acquisitions of property management
rights for HUD projects may be responsive to the subpoena. AIMCO believes that
its operations are in compliance, in all material respects, with all laws, rules
and regulations relating to HUD-assisted or HUD-insured properties. Although no
action has been initiated against AIMCO or, to AIMCO's knowledge, any owner of a
HUD property managed by AIMCO, if any such action is taken in the future, it
could ultimately affect existing arrangements with respect to HUD projects,
affect AIMCO's ability to receive 2530 Clearances or otherwise have a material
adverse effect on AIMCO's results of operations.
AIMCO believes that the 2530 Committee will continue to apply the 2530
Clearance process to large management portfolios such as AIMCO's with discretion
and flexibility. If HUD were to disapprove AIMCO as property manager for one or
more affordable properties, AIMCO's ability to obtain property management
revenues from additional properties subject to HUD regulation would be impaired.
Environmental
Various Federal, state and local laws subject property owners or operators
to liability for the costs of removal or remediation of certain hazardous
substances present on a property. Such laws often impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
release of the hazardous substances. The presence of, or the failure to properly
remediate, hazardous substances may adversely affect occupancy at contaminated
apartment communities and our ability to sell or borrow against contaminated
properties. In addition to the costs associated with investigation and
remediation actions brought by governmental agencies, the presence of hazardous
wastes on a property could result in personal injury or similar claims by
private plaintiffs. Various laws also impose liability for the cost of removal
or remediation of hazardous substances at the disposal or treatment facility.
Anyone who arranges for the disposal or treatment of hazardous or toxic
substances is potentially liable under such laws. These laws often impose
liability whether or not the person arranging for the disposal ever owned or
operated the disposal facility. In connection with the ownership, operation and
management of our properties, we could potentially be liable for environmental
liabilities or costs associated with our properties or properties we may acquire
or manage in the future.
HIGH PERFORMANCE UNITS
In January 1998, AIMCO's operating partnership sold an aggregate of 15,000
of its Class I High Performance Partnership Units (the "High Performance Units")
to a joint venture formed by fourteen members of AIMCO's senior management, and
to three of its independent directors for $2.1 million in cash. The High
Performance Units have nominal value unless the Company's total return, defined
as dividend income plus share price appreciation, over the three year period
ending December 31, 2000, is at least 30% and exceeds the industry average, as
determined by a peer group index, by at least 15% (the "Total Return"). At the
conclusion of the three year period, if the Company's Total Return satisfies
these criteria, the holders of the High Performance Units will receive
distributions and allocations of income and loss from the AIMCO operating
partnership in the same amounts and at the same times as would holders of a
number of Common OP Units equal to the quotient obtained by dividing (i) the
product of (a) 15% of the amount by which the Company's cumulative Total Return
over the three year period exceeds the greater of 115% of a peer group index or
30% (such excess being the "Excess Return"), multiplied by (b) the weighted
average market value of the Company's outstanding Class A Common Stock and
Common OP Units, by (ii) the market value of one share of Class A Common Stock
at the end of the three year period. The three year measurement period will be
shortened in the event of a change of control of the Company. Unlike Common OP
Units, the High
19
<PAGE> 21
Performance Units are not redeemable or convertible into Class A Common Stock
unless a change of control of the Company occurs. Because there is substantial
uncertainty that the High Performance Units will have more than nominal value
due to the required Total Return over the three year term, the Company has not
recorded any value to the High Performance Units. If the measurement period
would have ended March 31, 1999, the Excess Return would have been $0 and the
value of the High Performance Units would have been $0, and such High
Performance Units would have had no dilutive effect on net income per share.
YEAR 2000 READINESS DISCLOSURE
GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF THE
YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS
The Year 2000 issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Over the past two years, the Company has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Company presently believes that with modifications or replacements of
existing software and certain hardware, the Year 2000 issue can be mitigated.
However, if such modifications and replacements are not made, or are not
completed in time, the Year 2000 issue could have a material impact on the
operations of the Company.
The Company's plan to resolve Year 2000 issues involves four phases:
assessment, remediation, testing, and implementation. To date, the Company has
fully completed its assessment of all information systems that could be
significantly affected by the Year 2000, and has begun the remediation, testing
and implementation phases on both hardware and software systems. Assessments are
continuing in regards to embedded systems. The status of each is detailed below.
STATUS OF PROGRESS IN BECOMING YEAR 2000 COMPLIANT, INCLUDING TIMETABLE FOR
COMPLETION OF EACH REMAINING PHASE
Computer Hardware
During 1997 and 1998, AIMCO identified all of the computer systems at risk
and formulated a plan to repair or replace each of the affected systems. During
1997, when AIMCO merged with NHP, the mainframe system used by NHP was Year 2000
compliant. In August 1998, the Year 2000 compliant system became fully
functional for the entire Company.
In addition to the mainframe, PC-based network servers, routers and desktop
PCs were analyzed for compliance. AIMCO has begun to replace each of the
non-compliant network connections and desktop PCs and, as of March 31, 1999, had
completed approximately 85% of this effort.
The total cost to replace the PC-based network servers, routers and desktop
PCs is expected to be approximately $1.5 million, of which $1.3 million has been
incurred to date. The remaining network connections and desktop PCs are expected
to be upgraded to Year 2000 compliant systems by June 30, 1999.
Computer Software
AIMCO utilizes a combination of off-the-shelf, commercially available
software programs as well as custom-written programs that are designed to fit
specific needs. Both of these types of programs were studied, and implementation
plans written and executed with the intent of repairing or replacing any
non-compliant software programs.
20
<PAGE> 22
In 1997, when AIMCO merged with NHP, the core financial system used by NHP
was Year 2000 compliant. During 1998, AIMCO integrated all of its core financial
systems to this compliant system for general ledger and financial reporting
purposes.
In 1997, AIMCO determined that the software used for property management
and rent collection was not Year 2000 compliant. During 1998, AIMCO implemented
a Year 2000 compliant system at each of its owned or managed properties, at a
cost of $1.4 million. During 1998, AIMCO acquired 82 properties and acquired the
Insignia multi-family business. Insignia owned or managed 1,100 properties. As
properties are acquired, AIMCO converts the existing property management and
rent collection systems to AIMCO's Year 2000 compliant systems. The estimated
additional costs to convert such systems at all recently acquired properties,
including those acquired from Insignia, is $200,000, and the implementation and
testing process is expected to be completed by June 30, 1999.
The final software area is the office software and server operating
systems. AIMCO has upgraded all non-compliant office software systems on each PC
and has upgraded 80% of the server operating systems. The remaining server
operating systems are planned to be upgraded to be Year 2000 compliant by June
30, 1999.
Operating Equipment
AIMCO has operating equipment, primarily at the property sites, which
needed to be evaluated for Year 2000 compliance. In September 1997, AIMCO began
taking a census and inventory of embedded systems (including those devices that
use time to control systems and machines at specific properties, for example,
elevators, heating, ventilating and air conditioning systems, security and alarm
systems, etc.)
The Company has chosen to focus its attention mainly upon security systems,
elevators, heating, ventilating and air conditioning systems, telephone systems
and switches, and sprinkler systems. While this area is the most difficult to
fully research adequately, management has not yet found any major non-
compliance issues that put AIMCO at risk financially or operationally. AIMCO
intends to have a third-party conduct an audit of these systems and report their
findings by June 30, 1999.
Any of the above operating equipment that has been found to be
non-compliant to date has been replaced or repaired. To date, these have
consisted only of security systems and phone systems. As of March 31, 1999,
AIMCO has evaluated approximately 86% of the operating equipment for Year 2000
compliance.
The total cost incurred as of March 31, 1999 to replace or repair the
operating equipment was approximately $70,000. AIMCO estimates the cost to
replace or repair any remaining operating equipment is approximately $325,000,
and AIMCO expects to be completed by June 30, 1999.
AIMCO continues to have "awareness campaigns" throughout the organization
designed to raise awareness and report any possible compliance issues regarding
operating equipment within the enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
AIMCO continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. AIMCO has
banking relationships with three major financial institutions, all of which have
indicated their compliance efforts will be complete before May 1999. AIMCO has
updated data transmission standards with two of the three financial
institutions. AIMCO's contingency plan in this regard is to move accounts from
any institution that cannot be certified Year 2000 compliant by June 1, 1999.
The Company does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems with the Company (external agents). To date, the Company is
not aware of any external agent with a Year 2000 compliance issue that would
materially impact the Company's results of operations, liquidity, or capital
resources. However, the Company has no means of ensuring that external agents
will be Year 2000 compliant.
Management does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of
21
<PAGE> 23
operations of the Company. However, the effect of non-compliance by external
agents is not readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project is estimated at $3.5 million and is
being funded from operating cash flows. To date, the Company has incurred
approximately $2.8 million ($0.6 million expensed and $2.2 million capitalized
for new systems and equipment) related to all phases of the Year 2000 project.
Of the total remaining project costs, approximately $0.5 million is attributable
to the purchase of new software and operating equipment, which will be
capitalized. The remaining $0.2 million relates to repair of hardware and
software and will be expensed as incurred.
Risks Associated with the Year 2000
Management believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Company has not yet
completed all necessary phases of the Year 2000 program. In the event that the
Company does not complete any additional phases, certain worst case scenarios
could occur. The worst case scenarios include elevators, security and heating,
ventilating and air conditioning systems that read incorrect dates and operate
with incorrect schedules (e.g., elevators will operate on Monday as if it were
Sunday). Although such a change would be annoying to residents, it is not
business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Company. The Company could be subject to
litigation for, among other things, computer system failures, equipment
shutdowns or a failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Company has contingency plans for certain critical applications and is
working on such plans for others. These contingency plans involve, among other
actions, manual workarounds and selecting new relationships for such activities
as banking relationships and elevator operating systems.
INFLATION
Substantially all of the leases at the Company's apartment properties are
for a period of six months or less, allowing, at the time of renewal, for
adjustments in the rental rate and the opportunity to re-lease the apartment
unit at the prevailing market rate. The short-term nature of these leases
generally serves to minimize the risk to the Company of the adverse effect of
inflation and the Company does not believe that inflation has had a material
adverse impact on its revenues.
LITIGATION
In connection with the Company's offers to purchase interests in limited
partnerships that own properties, the Company and its affiliates are sometimes
subject to legal actions, including allegations that such activities may involve
breaches of fiduciary duties to the limited partners of such partnerships or
violations of the relevant partnership agreements. The Company believes it
complies with its fiduciary obligations and relevant partnership agreements, and
does not expect such legal actions to have a material adverse effect on the
consolidated financial condition or results of operations of the Company and its
subsidiaries taken as a whole. The Company may incur costs in connection with
the defense or settlement of such litigation, which could adversely affect the
Company's desire or ability to complete certain transactions and thereby have a
material adverse effect on the Company and its subsidiaries.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure relates to changes in interest
rates. The Company is not subject to any foreign currency exchange rate risk or
commodity price risk, or any other material market rate
22
<PAGE> 24
or price risks. The Company uses predominantly long-term, fixed-rate and
self-amortizing non-recourse debt in order to avoid the refunding or repricing
risks of short-term borrowings. The Company uses short-term debt financing and
working capital primarily to fund acquisitions and generally expects to
refinance such borrowings with proceeds from equity offerings or long term debt
financings.
The Company had $209.6 million of variable rate debt outstanding at March
31, 1999, which represents 13.0% of the Company's total outstanding debt. Based
on this level of debt, an increase in interest rates of 1% would result in the
Company's income and cash flows being reduced by $2.1 million on an annual
basis.
From time to time, the Company enters into interest rate lock agreements to
obtain what the Company considers advantageous pricing for future anticipated
debt issuances.
The estimated aggregate fair value of the Company's cash and cash
equivalents, receivables, payables and short-term secured and unsecured debt as
of March 31, 1999 is assumed to approximate their carrying value due to their
relatively short terms. Management further believes that, after consideration of
interest rate agreements, the fair market value of the Company's secured
tax-exempt bond debt and secured long-term debt approximates their carrying
value, based on market comparisons to similar types of debt instruments having
similar maturities.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February 18, 1999, AIMCO issued 5,000,000 shares of newly created Class
K Convertible Cumulative Preferred Stock, par value $.01 per share ("Class K
Preferred Stock") in a public offering. The net proceeds of $120.6 million were
used to repay certain indebtedness and for working capital. For three years,
holders of the Class K Preferred Stock are entitled to receive, when, as and if
declared by the Board of Directors, annual cash dividends in an amount per share
equal to the greater of (i) $2.00 per year (equivalent to 8% of the liquidation
preference), or (ii) the cash dividends payable on the number of shares of Class
A Common Stock into which a share of Class K Preferred Stock is convertible.
Beginning with the third anniversary of the date of original issuance, holders
of Class K Preferred Stock will be entitled to receive an amount per share equal
to the greater of (i) $2.50 per year (equivalent to 10% of the liquidation
preference), or (ii) the cash dividends payable on the number of Class A Common
Stock into which a share of Class K Preferred is convertible. The Class K
Preferred Stock is senior to the Class A Common Stock as to dividends and
liquidation. Upon any liquidation, dissolution or winding up of AIMCO, before
payment or distributions by AIMCO shall be made to any holders of Class A Common
Stock, the holders of the Class K Preferred Stock shall be entitled to receive a
liquidation preference of $25 per share, plus accumulated, accrued and unpaid
dividends.
From time to time during the quarter, AIMCO issued shares of Class A Common
Stock in exchange for Common OP Units tendered to the AIMCO operating
partnership for redemption in accordance with the terms and provisions of the
agreement of limited partnership of the AIMCO operating partnership. Such shares
are issued based on an exchange ratio of one share for each Common OP Unit. The
shares are issued in exchange for Common OP Units in private transactions exempt
from registration under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to Section 4(2) thereof. During the three months ended March 31,
1999, 322,801 shares of Class A Common Stock were issued in exchange for Common
OP Units.
23
<PAGE> 25
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are filed with this report (1):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Second Amended and Restated Agreement and Plan of Merger,
dated as of January 22, 1999, by and between Apartment
Investment and Management Company and Insignia Properties
Trust (Exhibit 2.2 to the Current Report on Form 8-K of
Insignia Properties Trust, dated February 11, 1999, is
incorporated herein by this reference)
3.1 -- Charter (Exhibit 3.1 to AIMCO's Annual Report on Form
10-K for the fiscal year 1998, is incorporated herein by
this reference)
3.2 -- Bylaws
10.1 -- Third Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of February 18, 1999 (Exhibit 10.12 to
AIMCO's Annual Report on Form 10-K for the fiscal year
1998, is incorporated herein by this reference)
10.2 -- Fourth Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of March 25, 1999
10.3 -- Fifth Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of March 26, 1999
27.1 -- Financial Data Schedule
99.1 -- Agreement re: disclosure of long-term debt instruments
</TABLE>
- ---------------
(1) Schedules and supplemental materials to the exhibits have been omitted but
will be provided to the Securities Exchange Commission upon request.
(b) Reports on Form 8-K
During the quarter for which this report is filed, the Company filed its
Current Report on Form 8-K, dated January 21, 1999, relating to an increase in
Apartment Investment and Management Company's measure of economic profitability
and other financial indicators in the year ended 1998; its Current Report on
Form 8-K, dated January 22, 1999, relating to Apartment Investment and
Management Company's filing of a registration statement in connection with the
proposed merger of Insignia Properties Trust with and into Apartment Investment
and Management Company; its Current Report on Form 8-K, dated February 5, 1999,
relating to certain financial statements of an acquired business and pro forma
financial information; Amendment No. 1 on February 11, 1999 to its Current
Report on Form 8-K, dated December 21, 1998, relating to the Company's acquiring
certain real estate interests from Calhoun Beach Associates II Limited
Partnership; Amendment No. 4 on February 11, 1999 to its Current Report on Form
8-K, dated November 2, 1998 relating to the Company's acquisition of certain
multifamily residential properties and related interests; its Current Report on
Form 8-K, dated February 18, 1999, relating to the sale of 5,000,000 shares of
Class K Convertible Cumulative Preferred Stock of Apartment Investment and
Management Company; and its Current Report on Form 8-K, dated February 26, 1999,
relating to the merger of Insignia Properties Trust with and into Apartment
Investment and Management Company.
24
<PAGE> 26
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ TROY D. BUTTS
----------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
(duly authorized officer and
principal financial officer)
Date: May 14, 1999
25
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Second Amended and Restated Agreement and Plan of Merger,
dated as of January 22, 1999, by and between Apartment
Investment and Management Company and Insignia Properties
Trust (Exhibit 2.2 to the Current Report on Form 8-K of
Insignia Properties Trust, dated February 11, 1999, is
incorporated herein by this reference)
3.1 -- Charter (Exhibit 3.1 to AIMCO's Annual Report on Form
10-K for the fiscal year 1998, is incorporated herein by
this reference)
3.2 -- Bylaws
10.1 -- Third Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of February 18, 1999 (Exhibit 10.12 to
AIMCO's Annual Report on Form 10-K for the fiscal year
1998, is incorporated herein by this reference)
10.2 -- Fourth Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of March 25, 1999
10.3 -- Fifth Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of March 26, 1999
27.1 -- Financial Data Schedule
99.1 -- Agreement re: disclosure of long-term debt instruments
</TABLE>
- ---------------
(1) Schedules and supplemental materials to the exhibits have been omitted but
will be provided to the Securities Exchange Commission upon request.
<PAGE> 1
EXHIBIT 3.2
================================================================================
AMENDED AND RESTATED BY-LAWS
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
================================================================================
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. STOCKHOLDERS 1
SECTION 1.01. ANNUAL MEETING 1
SECTION 1.02. SPECIAL MEETING 1
SECTION 1.03. PLACE OF MEETINGS 1
SECTION 1.04. NOTICE OF MEETINGS; WAIVER OF NOTICE 1
SECTION 1.05. QUORUM; VOTING 2
SECTION 1.06. ADJOURNMENTS 2
SECTION 1.07. GENERAL RIGHT TO VOTE; PROXIES 2
SECTION 1.08. LIST OF STOCKHOLDERS 2
SECTION 1.09. CONDUCT OF BUSINESS 3
SECTION 1.10. CONDUCT OF VOTING 3
SECTION 1.11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS 4
SECTION 1.12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE TRANSACTED AT
ANNUAL MEETING 5
SECTION 1.13. MEETING BY CONFERENCE TELEPHONE 6
ARTICLE II. BOARD OF DIRECTORS 6
SECTION 2.01. FUNCTION OF DIRECTORS 6
SECTION 2.02. QUALIFICATION AND NUMBER OF DIRECTORS 6
SECTION 2.03. ELECTION AND TENURE OF DIRECTORS 6
SECTION 2.04. REMOVAL OF DIRECTOR 7
SECTION 2.05. VACANCY ON BOARD OF DIRECTORS 7
SECTION 2.06. REGULAR MEETINGS 7
SECTION 2.07. SPECIAL MEETINGS 7
SECTION 2.08. NOTICE OF MEETING 7
SECTION 2.09. QUORUM; ACTION BY DIRECTORS 8
SECTION 2.10. MEETING BY CONFERENCE TELEPHONE 8
SECTION 2.11. COMPENSATION 8
SECTION 2.12. RESIGNATION 8
SECTION 2.13. PRESUMPTION OF ASSENT 9
ARTICLE III. COMMITTEES 9
SECTION 3.01. COMMITTEES 9
SECTION 3.02. COMMITTEE PROCEDURE 9
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3.03. EMERGENCY 10
ARTICLE IV. OFFICERS 10
SECTION 4.01. EXECUTIVE AND OTHER OFFICERS 10
SECTION 4.02. CHAIRMAN OF THE BOARD 10
SECTION 4.03. VICE CHAIRMAN OF THE BOARD 11
SECTION 4.04. PRESIDENT 11
SECTION 4.05. VICE-PRESIDENTS 11
SECTION 4.06. SECRETARY 11
SECTION 4.07. TREASURER 12
SECTION 4.08. ASSISTANT AND SUBORDINATE OFFICERS 12
SECTION 4.09. ELECTION, TENURE AND REMOVAL OF OFFICERS 12
SECTION 4.10. COMPENSATION 12
ARTICLE V. DIVISIONAL TITLES 12
SECTION 5.01. CONFERRING DIVISIONAL TITLES 13
SECTION 5.02. EFFECT OF DIVISIONAL TITLES 13
ARTICLE VI. STOCK 13
SECTION 6.01. CERTIFICATES FOR STOCK 13
SECTION 6.02. TRANSFERS 14
SECTION 6.03. RECORD DATES OR CLOSING OF TRANSFER BOOKS 14
SECTION 6.04. STOCK LEDGER 14
SECTION 6.05. CERTIFICATION OF BENEFICIAL OWNERS 14
SECTION 6.06. LOST STOCK CERTIFICATES 15
SECTION 6.07. FRACTIONAL SHARE INTERESTS OR SCRIP 15
ARTICLE VII. FINANCE 15
SECTION 7.01. CHECKS, DRAFTS, ETC 15
SECTION 7.02. ANNUAL STATEMENT OF AFFAIRS 15
SECTION 7.03. FISCAL YEAR 16
SECTION 7.04. DIVIDENDS 16
SECTION 7.05. LOANS 16
SECTION 7.06. DEPOSITS 16
ARTICLE VIII. INDEMNIFICATION 16
SECTION 8.01. PROCEDURE 16
SECTION 8.02. EXCLUSIVITY, ETC 17
SECTION 8.03. SEVERABILITY; DEFINITIONS 17
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE IX. SUNDRY PROVISIONS 17
SECTION 9.01. BOOKS AND RECORDS 17
SECTION 9.02. CORPORATE SEAL 17
SECTION 9.03. BONDS 18
SECTION 9.04. VOTING STOCK IN OTHER CORPORATIONS 18
SECTION 9.05. MAIL 18
SECTION 9.06. EXECUTION OF DOCUMENTS 18
SECTION 9.07. RESIDENT AGENT; PRINCIPAL OFFICE 18
SECTION 9.08. AMENDMENTS 18
</TABLE>
- 4 -
<PAGE> 5
AMENDED AND RESTATED BY-LAWS
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLE I.
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETING. The Corporation shall hold an annual
meeting of its stockholders to elect directors and transact any other business
within its powers, either at 9:00 a.m. on the second Tuesday of May in each year
if not a legal holiday, or at such other time on such other day falling on or
before the 30th day thereafter as shall be set by the Board of Directors. Except
as the Charter or statute provides otherwise, any business may be considered at
an annual meeting without the purpose of the meeting having been specified in
the notice. Failure to hold an annual meeting does not invalidate the
Corporation's existence or affect any otherwise valid corporate acts.
SECTION 1.02. SPECIAL MEETING. At any time in the interval between
annual meetings, a special meeting of the stockholders may be called by the
Chairman of the Board, the Vice Chairman of the Board or the President or by a
majority of the Board of Directors by vote at a meeting or in writing (addressed
to the Secretary of the Corporation) with or without a meeting. Special meetings
of the stockholders shall be called by the Secretary at the request of
stockholders only on the written request of stockholders entitled to cast at
least a majority of all the votes entitled to be cast at the meeting. A request
for a special meeting shall state the purpose of the meeting and the matters
proposed to be acted on at it. The Secretary shall inform the stockholders who
make the request of the reasonably estimated costs of preparing and mailing a
notice of the meeting and, on payment of these costs to the Corporation, notify
each stockholder entitled to notice of the meeting.
SECTION 1.03. PLACE OF MEETINGS. Meetings of stockholders shall be held
at such place in the United States as is set from time to time by the Board of
Directors.
SECTION 1.04. NOTICE OF MEETINGS; WAIVER OF NOTICE. Not less than ten
nor more than 90 days before each stockholders' meeting, the Secretary shall
give written notice of the meeting to each stockholder entitled to vote at the
meeting and each other stockholder entitled to notice of the meeting. The notice
shall state the time and place of the meeting and, if the meeting is a special
meeting or notice of the purpose is required by statute, the purpose of the
meeting. Notice is given to a stockholder when it is personally delivered to him
or her, left at his or her residence or usual place of business, or mailed to
him or her at his or her address as it appears on the records of the
Corporation. Notwithstanding the foregoing provisions, each person who is
entitled to notice waives notice if he or she before or after the meeting signs
a waiver of the notice which is filed with the records of stockholders'
meetings, or is present at the meeting in person or by proxy.
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<PAGE> 6
SECTION 1.05. QUORUM; VOTING. Unless any statute or the Charter
provides otherwise, at a meeting of stockholders the presence in person or by
proxy of stockholders entitled to cast a majority of all the votes entitled to
be cast at the meeting constitutes a quorum, and a majority of all the votes
cast at a meeting at which a quorum is present is sufficient to approve any
matter which properly comes before the meeting, except that a plurality of all
the votes cast at a meeting at which a quorum is present is sufficient to elect
a director.
SECTION 1.06. ADJOURNMENTS. Whether or not a quorum is present, a
meeting of stockholders convened on the date for which it was called may be
adjourned from time to time without further notice by a majority vote of the
stockholders present in person or by proxy to a date not more than 120 days
after the original record date. Any business which might have been transacted at
the meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
SECTION 1.07. GENERAL RIGHT TO VOTE; PROXIES. Unless the Charter
provides for a greater or lesser number of votes per share or limits or denies
voting rights, each outstanding share of stock, regardless of class, is entitled
to one vote on each matter submitted to a vote at a meeting of stockholders. In
all elections for directors, each share of stock may be voted for as many
individuals as there are directors to be elected and for whose election the
share is entitled to be voted. A stockholder may vote the stock the stockholder
owns of record either in person or by proxy. A stockholder may sign a writing
authorizing another person to act as proxy. Signing may be accomplished by the
stockholder or the stockholder's authorized agent signing the writing or causing
the stockholder's signature to be affixed to the writing by any reasonable
means, including facsimile signature. A stockholder may authorize another person
to act as proxy by transmitting, or authorizing the transmission of, a telegram,
cablegram, datagram, or other means of electronic transmission to the person
authorized to act as proxy or to a proxy solicitation firm, proxy support
service organization, or other person authorized by the person who will act as
proxy to receive the transmission. Unless a proxy provides otherwise, it is not
valid more than 11 months after its date. A proxy is revocable by a stockholder
at any time without condition or qualification unless the proxy states that it
is irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the proxy or another general interest in the Corporation or its assets or
liabilities.
SECTION 1.08. LIST OF STOCKHOLDERS. At each meeting of stockholders, a
full, true and complete list of all stockholders entitled to vote at such
meeting, showing the number and class of shares held by each and certified by
the transfer agent for such class or by the Secretary, shall be furnished by the
Secretary.
SECTION 1.09. CONDUCT OF BUSINESS. Nominations of persons for election
to the Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting.
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<PAGE> 7
(b) by or at the direction of the Board of Directors or (c) by any stockholder
of the Corporation (i) who was a stockholder of record at the time of giving
notice(s) provided for in Section 1.11 and Section 1.12, (ii) who is entitled to
vote at the meeting and (iii) who complied with the notice(s) procedures set
forth in Section 1.11 and Section 1.12. Nominations of persons for election to
the Board of Directors and the proposal of business to be considered by the
stockholders may be made at a special meeting of stockholders (a) only pursuant
to the Corporation's notice of meeting and (b), in the case of nominations of
persons for election to the Board of Directors, (i) by or at the direction of
the Board of Directors or (ii) by any stockholder of the Corporation (A) who was
a stockholder of record at the time of giving notice provided for in Section
1.11, (B) who is entitled to vote at the meeting and (C) who complied with the
notice procedures set forth in Section 1.11. The chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
procedures set forth in Section 1.11, Section 1.12 and this Section and, if any
proposed nomination or business is not in compliance with Section 1.11, Section
1.12 and this Section, to declare that such defective nomination or proposal be
disregarded.
SECTION 1.10. CONDUCT OF VOTING. At all meetings of stockholders,
unless the voting is conducted by inspectors, the proxies and ballots shall be
received, and all questions touching the qualification of voters and the
validity of proxies, the acceptance or rejection of votes and procedures for the
conduct of business not otherwise specified by these By-Laws, the Charter or
law, shall be decided or determined by the chairman of the meeting. If demanded
by stockholders, present in person or by proxy, entitled to cast 10% in number
of votes entitled to be cast, or if ordered by the chairman, the vote upon any
election or question shall be taken by ballot. Before any meeting of the
stockholders, the Board of Directors may appoint persons to act as inspectors of
election at the meeting and any adjournment thereof. If no inspectors of
election are so appointed, the chairman of the meeting may, and on the request
of stockholders, present in person or by proxy, entitled to cast 10% in number
of votes entitled to be cast, shall, appoint inspectors of election at the
meeting. The number of inspectors shall be either one or three. If inspectors
are appointed at a meeting on the request of stockholders, the holders of a
majority of shares present in person or by proxy shall determine whether one or
three inspectors are to be appointed. No candidate for election as a director at
a meeting shall serve as an inspector thereat. If any person appointed as
inspector fails to appear or fails or refuses to act, the chairman of the
meeting may, and upon the request of any stockholder shall, appoint a person to
fill that vacancy. The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the authenticity, validity and effect of proxies;
receive votes, ballots or consents; hear and determine all challenges and
questions in any way arising in connection with the right to vote; count and
tabulate all votes or consents; determine when polls shall close; determine the
result; and do any other acts that may be proper to conduct the election or vote
with fairness to all stockholders. Unless so demanded or ordered, no vote need
be by ballot and voting need not be conducted by inspectors.
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<PAGE> 8
SECTION 1.11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS. Only
persons who are nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation. Nominations of persons
for election to the Board of Directors may be made at any annual meeting of
stockholders, or at any special meeting of stockholders called for the purpose
of electing directors, (a) by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (b) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of the
notice provided for in this Section and on the record date for the determination
of stockholders entitled to vote at such meeting and (ii) who complies with the
notice procedures set forth in this Section. A stockholder's notice must be
delivered to or mailed and received by the Secretary at the principal executive
offices of the Corporation (a) in the case of an annual meeting, not less than
60 days nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that the date of the
annual meeting is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date, notice by the stockholder must be so delivered not
earlier than the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made; and (b) in the case of a special meeting of stockholders
called for the purpose of electing directors, not later than the close of
business on the 10th day following the day on which notice of the date of the
special meeting was mailed or public disclosure of the date of the special
meeting was made, whichever first occurs. A stockholder's notice to the
Secretary must be in writing and set forth (a) as to each person whom the
stockholder proposes to nominate for election as a director, all information
relating to such person that is required to be disclosed in connection with
solicitations of proxies for election of directors pursuant to Regulation 14A of
the Exchange Act, and the rules and regulations promulgated thereunder; and (b)
as to the stockholder giving the notice (i) the name and address of such
stockholder as they appear on the Corporation's books and of the beneficial
owner, if any, on whose behalf the nomination is made, (ii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder and such beneficial owner, (iii) a
description of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Regulation 14A of
the Exchange Act and the rules and regulations promulgated thereunder. Such
notice must be accompanied by a written consent of each proposed nominee to be
named as a nominee and to serve as a director if elected. No person shall be
eligible for election as a director of the Corporation unless nominated in
accordance with the procedures set forth in this Section. If the chairman of the
meeting determines that a nomination was not made in accordance with the
foregoing procedures, the chairman shall declare to the meeting that the
nomination was defective and such defective nomination shall be disregarded. No
adjournment or postponement of a meeting of stockholders shall commence a new
period for the giving of notice of a stockholder proposal hereunder.
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SECTION 1.12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE TRANSACTED
AT ANNUAL MEETING. No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (b) otherwise properly
brought before the annual meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (c) otherwise properly
brought before the annual meeting by any stockholder of the Corporation (i) who
is stockholder of record on the date of the giving of the notice provided for in
this Section and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section. A stockholder's notice must be delivered
to or mailed and received by the Secretary at the principal executive offices of
the Corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder must be so delivered not earlier than the 90th day prior to such
annual meeting and not later than the close of business on the later of the 60th
day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made. A stockholder's
notice to the Secretary must in writing and set forth as to each matter such
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address of
such stockholder as they appear on the Corporation's books and of the beneficial
owner, if any, on whose behalf the proposal is made, (iii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder and such beneficial owner, (iv) a
description of all arrangements or understandings between such stockholder and
any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of such
stockholder in such business and (v) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting. No business shall be conducted at the annual
meeting of stockholders except business brought before the annual meeting in
accordance with the procedures set forth in Section 1.11 or in this Section,
provided, however, that once business has been properly brought before the
annual meeting in accordance with such procedures, nothing in Section 1.11 nor
in this Section shall be deemed to preclude discussion by any stockholder of any
such business. If the chairman of an annual meeting determines that business was
not properly brought before the annual meeting in accordance with the foregoing
procedures, the chairman shall declare to the meeting that the business was not
properly brought before the meeting and such business shall not be transacted.
No adjournment or postponement of a meeting of stockholders shall commence a new
period for the giving of notice of a stockholder proposal hereunder.
SECTION 1.13. MEETING BY CONFERENCE TELEPHONE. Stockholders may
participate in a meeting by means of a conference telephone or similar
communications equipment if all
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persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means constitutes presence in person at a
meeting.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. FUNCTION OF DIRECTORS. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors. All
powers of the Corporation may be exercised by or under authority of the Board of
Directors, except as conferred on or reserved to the stockholders by statute or
by the Charter or By-Laws.
SECTION 2.02. QUALIFICATION AND NUMBER OF DIRECTORS. Each director
shall be a natural person at least 18 years of age. The Corporation shall have
at least three directors. The Corporation shall have the number of directors
provided in the Charter until changed as herein provided. A majority of the
entire Board of Directors may alter the number of directors set by the Charter
to not exceeding 9 (plus such additional number as may needed to satisfy the
right of the holders of any class of stock of the Corporation to demand
nomination of a director) nor less than the minimum number then permitted
herein, but the action may not affect the tenure of office of any director.
SECTION 2.03. ELECTION AND TENURE OF DIRECTORS. Subject to the rights
of the holders of any class of stock separately entitled to elect one or more
directors, at each annual meeting, the stockholders shall elect directors to
hold office until the next annual meeting and until their successors are elected
and qualify.
SECTION 2.04. REMOVAL OF DIRECTOR. Any or all of the directors may be
removed, with or without cause by the affirmative vote of a majority of all the
votes entitled to be case for the election of directors.(1)
SECTION 2.05. VACANCY ON BOARD OF DIRECTORS. Subject to the rights of
the holders of any class of stock separately entitled to elect one or more
directors, the stockholders may elect a successor to fill a vacancy on the Board
of Directors which results from the removal of a director. A director elected by
the stockholders to fill a vacancy which results from the removal of a director
serves for the balance of the term of the removed director. Subject to the
rights of the holders of any class of stock separately entitled to elect one or
more directors, a majority of the remaining directors, whether or not sufficient
to constitute a quorum, may fill a vacancy on the Board of Directors which
results from any cause except an increase in the number of directors, and a
majority of the entire Board of Directors may fill a vacancy which results from
an increase in the number of directors. A director elected by the Board of
Directors to fill a vacancy serves until the next annual meeting of stockholders
and until his or her successor is elected and qualifies.
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(1) Under Article VI, Section 6 of the Charter, this section of the By-Laws may
not be amended without the approval of 2/3 of the stockholders.
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SECTION 2.06. REGULAR MEETINGS. After each meeting of stockholders at
which directors shall have been elected, the Board of Directors shall meet as
soon as practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board of Directors, the President or the Chairman, with notice in
accordance with Section 2.08, the Board of Directors shall meet immediately
following the close of, and at the place of, such stockholders' meeting. Any
other regular meeting of the Board of Directors shall be held on such date and
at any place as may be designated from time to time by the Board of Directors.
SECTION 2.07. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board or the
President or by a majority of the Board of Directors by vote at a meeting, or in
writing with or without a meeting. A special meeting of the Board of Directors
shall be held on such date and at any place as may be designated from time to
time by the Board of Directors. In the absence of designation such meeting shall
be held at such place as may be designated in the call.
SECTION 2.08. NOTICE OF MEETING. Except as provided in Section 2.06,
the Secretary shall give notice to each director of each regular and special
meeting of the Board of Directors. The notice shall state the time and place of
the meeting. Notice is given to a director when it is delivered personally to
him or her, left at his or her residence or usual place of business, or sent by
telegraph, facsimile transmission or telephone, at least 24 hours before the
time of the meeting or, in the alternative by mail to his or her address as it
shall appear on the records of the Corporation, at least 72 hours before the
time of the meeting. Unless these By-Laws or a resolution of the Board of
Directors provides otherwise, the notice need not state the business to be
transacted at or the purposes of any regular or special meeting of the Board of
Directors. No notice of any meeting of the Board of Directors need be given to
any director who attends except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened, or to any director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Any meeting of the Board of Directors,
regular or special, may adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any such adjourned meeting
other than by announcement.
SECTION 2.09. QUORUM; ACTION BY DIRECTORS. A majority of the entire
Board of Directors shall constitute a quorum for the transaction of business. In
the absence of a quorum, the directors present by majority vote and without
notice other than by announcement may adjourn the meeting from time to time
until a quorum shall attend. At any such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified. Unless statute or the Charter
or By-Laws requires a greater proportion, the action of a majority of the
directors present at a meeting at which a quorum is present is action of the
Board of Directors. Any action required or permitted to be taken at a meeting of
the Board of Directors may be taken without a meeting, if a unanimous written
consent which sets forth the action is signed by each member of the Board of
Directors and filed with the minutes of proceedings of the Board of Directors.
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<PAGE> 12
SECTION 2.10. MEETING BY CONFERENCE TELEPHONE. Members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
SECTION 2.11. COMPENSATION. By resolution of the Board of Directors a
fixed sum and expenses, if any, for attendance at each regular or special
meeting of the Board of Directors or of committees thereof, and other
compensation for their services as such or on committees of the Board of
Directors, may be paid to directors. Directors who are full-time employees of
the Corporation need not be paid for attendance at meetings of the Board of
Directors or committees thereof for which fees are paid to other directors. A
director who serves the Corporation in any other capacity also may receive
compensation for such other services, pursuant to a resolution of the directors.
SECTION 2.12. RESIGNATION. Any director may resign at any time by
sending a written notice of such resignation to the home office of the
Corporation addressed to the Chairman of the Board or the President. Unless
otherwise specified therein such resignation shall take effect upon receipt
thereof by the Chairman of the Board or the President.
SECTION 2.13. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his or her dissent or abstention shall be entered in the minutes of the
meeting or unless he or she shall file his or her written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who votes in favor of such action.
ARTICLE III.
COMMITTEES
SECTION 3.01. COMMITTEES. The Board of Directors may appoint from among
its members an Executive Committee and other committees composed of one or more
directors and delegate to these committees any of the powers of the Board of
Directors, except the power to authorize dividends on stock, elect directors,
issue stock other than as provided in the next sentence, recommend to the
stockholders any action which requires stockholder approval, amend these
By-Laws, or approve any merger or share exchange which does not require
stockholder approval. If the Board of Directors has given general authorization
for the issuance of stock providing for or establishing a method or procedure
for determining the maximum number of shares to be issued, a committee of the
Board of Directors, in accordance with that general authorization or any stock
option or other plan or program adopted by the Board of Directors, may authorize
or fix the terms of stock subject to classification or reclassification and the
terms on which any stock may be issued, including all terms and conditions
required or permitted to be established or authorized by the Board of Directors.
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<PAGE> 13
SECTION 3.02. COMMITTEE PROCEDURE. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of the
committee. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the committee and filed with
the minutes of the committee. The members of a committee may conduct any meeting
thereof by conference telephone in accordance with the provisions of Section
2.10.
SECTION 3.03. EMERGENCY. In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Corporation by its directors and officers as contemplated by the
Charter and these By-Laws, any two or more available members of the then
incumbent Executive Committee shall constitute a quorum of that Committee for
the full conduct and management of the affairs and business of the Corporation
in accordance with the provisions of Section 3.01. In the event of the
unavailability, at such time, of a minimum of two members of the then incumbent
Executive Committee, the available directors shall elect an Executive Committee
consisting of any two members of the Board of Directors, whether or not they be
officers of the Corporation, which two members shall constitute the Executive
Committee for the full conduct and management of the affairs of the Corporation
in accordance with the foregoing provisions of this Section. This Section shall
be subject to implementation by resolution of the Board of Directors passed from
time to time for that purpose, and any provisions of these By-Laws (other than
this Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary resolutions shall be
suspended until it shall be determined by any interim Executive Committee acting
under this Section that it shall be to the advantage of the Corporation to
resume the conduct and management of its affairs and business under all the
other provisions of these By-Laws.
ARTICLE IV.
OFFICERS
SECTION 4.01. EXECUTIVE AND OTHER OFFICERS. The Corporation shall have
a President, a Secretary, and a Treasurer. It may also have a Chairman of the
Board and a Vice Chairman of the Board. The Board of Directors shall designate
who shall serve as chief executive officer, who shall have general supervision
of the business and affairs of the Corporation, and may designate a chief
operating officer, who shall have supervision of the operations of the
Corporation. In the absence of any designation the Chairman of the Board, if
there be one, shall serve as chief executive officer, and the President shall
serve as chief operating officer. In the absence of the Chairman of the Board,
or if there be none, the President shall be the chief executive officer. The
same person may hold both offices. The Corporation
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<PAGE> 14
may also have one or more Vice-Presidents, assistant officers, and subordinate
officers as may be established by the Board of Directors. A person may hold more
than one office in the Corporation except that no person may serve concurrently
as both President and Vice-President of the Corporation. The Chairman of the
Board and the Vice Chairman of the Board shall be directors, and the other
officers may be directors.
SECTION 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one
be elected, shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present. Unless otherwise specified by
the Board of Directors, he or she shall be the chief executive officer of the
Corporation. In general, he or she shall perform such duties as are customarily
performed by the chief executive officer of a corporation, may perform any
duties of the President and shall perform such other duties and have such other
powers as are from time to time assigned to him or her by the Board of
Directors.
SECTION 4.03. VICE CHAIRMAN OF THE BOARD. Unless otherwise provided by
resolution of the Board of Directors, the Vice Chairman of the Board, in the
absence of the Chairman of the Board, shall preside at all meetings of the Board
of Directors and of the stockholders at which he or she shall be present, and
shall perform such other duties and have such other powers as are from time to
time assigned to him or her by the Board of Directors.
SECTION 4.04. PRESIDENT. Unless otherwise specified by the Board of
Directors, the President shall be the chief operating officer of the Corporation
and perform the duties customarily performed by chief operating officers. He or
she may execute, in the name of the Corporation, all authorized deeds,
mortgages, bonds, contracts or other instruments, except in cases in which the
signing and execution thereof shall have been expressly delegated to some other
officer or agent of the Corporation. In general, he or she shall perform such
other duties customarily performed by a president of a corporation and shall
perform such other duties and have such other powers as are from time to time
assigned to him or her by the Board of Directors or the chief executive officer
of the Corporation.
SECTION 4.05. VICE-PRESIDENTS. The Vice-President or Vice-Presidents,
at the request of the chief executive officer or the President, or in the
President's absence or during his or her inability to act, shall perform the
duties and exercise the functions of the President, and when so acting shall
have the powers of the President. If there be more than one Vice-President, the
Board of Directors may determine which one or more of the Vice-Presidents shall
perform any of such duties or exercise any of such functions, or if such
determination is not made by the Board of Directors, the chief executive
officer, or the President may make such determination; otherwise any of the
Vice-Presidents may perform any of such duties or exercise any of such
functions. Each Vice-President shall perform such other duties and have such
other powers, and have such additional descriptive designations in their titles
(if any), as are from time to time assigned to them by the Board of Directors,
the chief executive officer, or the President.
SECTION 4.06. SECRETARY. The Secretary shall keep the minutes of the
meetings of the stockholders, of the Board of Directors and of any committees,
in books provided for the
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purpose; he or she shall see that all notices are duly given in accordance with
the provisions of these By-Laws or as required by law; he or she shall be
custodian of the records of the Corporation; he or she may witness any document
on behalf of the Corporation, the execution of which is duly authorized, see
that the corporate seal is affixed where such document is required or desired to
be under its seal, and, when so affixed, may attest the same. In general, he or
she shall perform such other duties customarily performed by a secretary of a
corporation, and shall perform such other duties and have such other powers as
are from time to time assigned to him or her by the Board of Directors, the
chief executive officer, or the President.
SECTION 4.07. TREASURER. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by the Board of
Directors; he or she shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation. In general, he or she shall perform such other duties customarily
performed by a treasurer of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
SECTION 4.08. ASSISTANT AND SUBORDINATE OFFICERS. The assistant and
subordinate officers of the Corporation are all officers below the office of
Vice-President, Secretary, or Treasurer. The assistant or subordinate officers
shall have such duties as are from time to time assigned to them by the Board of
Directors, the chief executive officer, or the President.
SECTION 4.09. ELECTION, TENURE AND REMOVAL OF OFFICERS. The Board of
Directors shall elect the officers of the Corporation. The Board of Directors
may from time to time authorize any committee or officer to appoint assistant
and subordinate officers. Election or appointment of an officer, employee or
agent shall not of itself create contract rights. All officers shall be
appointed to hold their offices, respectively, during the pleasure of the Board
of Directors. The Board of Directors (or, as to any assistant or subordinate
officer, any committee or officer authorized by the Board of Directors) may
remove an officer at any time. The removal of an officer does not prejudice any
of his or her contract rights. The Board of Directors (or, as to any assistant
or subordinate officer, any committee or officer authorized by the Board of
Directors) may fill a vacancy which occurs in any office for the unexpired
portion of the term.
SECTION 4.10. COMPENSATION. The Board of Directors shall have power to
fix the salaries and other compensation and remuneration, of whatever kind, of
all officers of the Corporation. No officer shall be prevented from receiving
such salary by reason of the fact that he or she is also a director of the
Corporation. The Board of Directors may authorize any committee or officer, upon
whom the power of appointing assistant and subordinate officers may have been
conferred, to fix the salaries, compensation and remuneration of such assistant
and subordinate officers.
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ARTICLE V.
DIVISIONAL TITLES
SECTION 5.01. CONFERRING DIVISIONAL TITLES. The Board of Directors may
from time to time confer upon any employee of a division of the Corporation the
title of President, Vice President, Treasurer or Controller of such division or
any other title or titles deemed appropriate, or may authorize the Chairman of
the Board or the President to do so. Any such titles so conferred may be
discontinued and withdrawn at any time by the Board of Directors, or by the
Chairman of the Board or the President if so authorized by the Board of
Directors. Any employee of a division designated by such a divisional title
shall have the powers and duties with respect to such division as shall be
prescribed by the Board of Directors, the Chairman of the Board or the
President.
SECTION 5.02. EFFECT OF DIVISIONAL TITLES. The conferring of divisional
titles shall not create an office of the Corporation under Article IV unless
specifically designated as such by the Board of Directors; but any person who is
an officer of the Corporation may also have a divisional title.
ARTICLE VI.
STOCK
SECTION 6.01. CERTIFICATES FOR STOCK. Each stockholder is entitled to
certificates which represent and certify the shares of stock he or she holds in
the Corporation. Each stock certificate shall include on its face the name of
the Corporation, the name of the stockholder or other person to whom it is
issued, and the class of stock and number of shares it represents. It shall also
include on its face or back (a) a statement of any restrictions on
transferability and (b) a statement which provides in substance that the
Corporation will furnish to any stockholder on request and without charge a full
statement of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue, of the differences in the relative rights
and preferences between the shares of each series of a preferred or special
class in series which the Corporation is authorized to issue, to the extent they
have been set, and of the authority of the Board of Directors to set the
relative rights and preferences of subsequent series of a preferred or special
class of stock and any restrictions on transferability. Such request may be made
to the Secretary or to its transfer agent. It shall be in such form, not
inconsistent with law or with the Charter, as shall be approved by the Board of
Directors or any officer or officers designated for such purpose by resolution
of the Board of Directors. Each stock certificate shall be signed by the
Chairman of the Board, the President, or a Vice-President, and countersigned by
the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Each certificate may be sealed with the actual corporate seal or a facsimile of
it or in any other form and the signatures may be either manual or facsimile
signatures. A certificate is valid and may be issued whether or not an officer
who signed it is still an officer when it is issued. A certificate may not be
issued until the stock represented by it is fully paid.
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SECTION 6.02. TRANSFERS. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates of stock; and may appoint
transfer agents and registrars thereof. The duties of transfer agent and
registrar may be combined.
SECTION 6.03. RECORD DATES OR CLOSING OF TRANSFER BOOKS. The Board of
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper determination
with respect to stockholders, including which stockholders are entitled to
notice of a meeting, vote at a meeting, receive a dividend, or be allotted other
rights. The record date may not be prior to the close of business on the day the
record date is fixed nor, subject to Section 1.06, more than 90 days before the
date on which the action requiring the determination will be taken; the transfer
books may not be closed for a period longer than 20 days; and, in the case of a
meeting of stockholders, the record date or the closing of the transfer books
shall be at least ten days before the date of the meeting.
SECTION 6.04. STOCK LEDGER. The Corporation shall maintain a stock
ledger which contains the name and address of each stockholder and the number of
shares of stock of each class which the stockholder holds. The stock ledger may
be in written form or in any other form which can be converted within a
reasonable time into written form for visual inspection. The original or a
duplicate of the stock ledger shall be kept at the offices of a transfer agent
for the particular class of stock, or, if none, at the principal office in the
State of Maryland or the principal executive offices of the Corporation.
SECTION 6.05. CERTIFICATION OF BENEFICIAL OWNERS. The Board of
Directors may adopt by resolution a procedure by which a stockholder of the
Corporation may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may certify; the purpose for which the certification
may be made; the form of certification and the information to be contained in
it; if the certification is with respect to a record date or closing of the
stock transfer books, the time after the record date or closing of the stock
transfer books within which the certification must be received by the
Corporation; and any other provisions with respect to the procedure which the
Board of Directors considers necessary or desirable. On receipt of a
certification which complies with the procedure adopted by the Board of
Directors in accordance with this Section, the person specified in the
certification is, for the purpose set forth in the certification, the holder of
record of the specified stock in place of the stockholder who makes the
certification.
SECTION 6.06. LOST STOCK CERTIFICATES. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen, or destroyed, or the
Board of Directors may delegate such power to any officer or officers of the
Corporation. In their discretion, the Board of Directors or such officer or
officers may require the owner of the certificate to give bond, with sufficient
surety, to indemnify the Corporation against any loss or claim arising as a
result of the issuance of a new certificate. In their discretion, the Board of
Directors or such officer or officers may refuse to issue such new certificate
save upon the order of some court having jurisdiction in the premises.
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SECTION 6.07. FRACTIONAL SHARE INTERESTS OR SCRIP. The Corporation may,
but shall not be obliged to, issue fractional shares of stock, eliminate a
fractional interest by rounding off to a full share of stock, arrange for the
disposition of a fractional interest by the person entitled to it, pay cash for
the fair value of a fractional share of stock determined as of the time when the
person entitled to receive it is determined, or issue scrip or other evidence of
ownership aggregating a full share for a certificate which represents the share;
but such scrip or other evidence of ownership shall not, unless otherwise
provided, entitle the holder to exercise any voting rights, to receive dividends
thereon or to participate in any of the assets of the Corporation in the event
of liquidation. The Board of Directors may impose any reasonable condition on
the issuance of scrip or other evidence of ownership, and may cause such scrip
or other evidence of ownership to be issued subject to the condition that it
shall become void if not exchanged for a certificate representing a full share
of stock before a specified date or subject to the condition that the shares for
which such scrip or other evidence of indebtedness is exchangeable may be sold
by the Corporation and the proceeds thereof distributed to the holders of such
scrip or other evidence of indebtedness, or subject to a provision of forfeiture
of such proceeds to the Corporation if not claimed within a period of not less
than three years from the date the scrip or other evidence of ownership was
originally issued.
ARTICLE VII.
FINANCE
SECTION 7.01. CHECKS, DRAFTS, ETC. All checks, drafts and orders for
the payment of money, notes and other evidences of indebtedness, issued in the
name of the Corporation, shall, unless otherwise provided by resolution of the
Board of Directors, be signed by the Chairman of the Board, the President, a
Vice-President, an Assistant Vice-President, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary.
SECTION 7.02. ANNUAL STATEMENT OF AFFAIRS. The President, chief
accounting officer or such other executive officer designated by the Board of
Directors by resolution shall prepare annually a full and correct statement of
the affairs of the Corporation, to include a balance sheet and a financial
statement of operations for the preceding fiscal year. The statement of affairs
shall be submitted at the annual meeting of the stockholders and, within 20 days
after the meeting, placed on file at the Corporation's principal office.
SECTION 7.03. FISCAL YEAR. The fiscal year of the Corporation shall be
the 12 calendar months period ending December 31 in each year, unless otherwise
provided by the Board of Directors.
SECTION 7.04. DIVIDENDS. If declared by the Board of Directors at any
meeting thereof, the Corporation may pay dividends on its shares in cash,
property, or in shares of the capital stock of the Corporation, unless such
dividend is contrary to law or to a restriction contained in the Charter.
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<PAGE> 19
SECTION 7.05. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by the Board of Directors. Such authority may be general or confined
to specific instances.
SECTION 7.06. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in any of its duly authorized depositories as the Board of Directors may select.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.01. PROCEDURE. Any indemnification, or payment of expenses in
advance of the final disposition of any proceeding, shall be made promptly, and
in any event within 60 days, upon the written request of the director or officer
entitled to seek indemnification (the "Indemnified Party"). The right to
indemnification and advances hereunder shall be enforceable by the Indemnified
Party in any court of competent jurisdiction, if (i) the Corporation denies such
request, in whole or in part, or (ii) no disposition thereof is made within 60
days. The Indemnified Party's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be reimbursed by the Corporation. It shall
be a defense to any action for advance for expenses that (a) a determination has
been made that the facts then known to those making the determination would
preclude indemnification or (b) the Corporation has not received both (i) an
undertaking as required by law to repay such advances in the event it shall
ultimately be determined that the standard of conduct has not been met and (ii)
a written affirmation by the Indemnified Party of such Indemnified Party's good
faith belief that the standard of conduct necessary for indemnification by the
Corporation has been met.
SECTION 8.02. EXCLUSIVITY, ETC. The indemnification and advance of
expenses provided by the Charter and these By-Laws shall not be deemed exclusive
of any other rights to which a person seeking indemnification or advance of
expenses may be entitled under any law (common or statutory), or any agreement,
vote of stockholders or disinterested directors or other provision that is
consistent with law, both as to action in his or her official capacity and as to
action in another capacity while holding office or while employed by or acting
as agent for the Corporation, shall continue in respect of all events occurring
while a person was a director or officer after such person has ceased to be a
director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of such person. The Corporation shall not be liable
for any payment under this By-Law in connection with a claim made by a director
or officer to the extent such director or officer has otherwise actually
received payment under insurance policy, agreement, vote or otherwise, of the
amounts otherwise indemnifiable hereunder. All rights to indemnification and
advance of expenses under the Charter of the Corporation and hereunder shall be
deemed to be a contract between the Corporation and each director or officer of
the Corporation who serves or served in such capacity at any time while this
By-Law is in effect. Nothing herein shall prevent the amendment of this By-Law,
provided that no such amendment shall diminish the rights of any person
hereunder with respect to events occurring or claims made before its adoption or
as to claims made after its adoption in respect of events occurring before
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<PAGE> 20
its adoption. Any repeal or modification of this By-Law shall not in any way
diminish any rights to indemnification or advance of expenses of such director
or officer or the obligations of the Corporation arising hereunder with respect
to events occurring, or claims made, while this By-Law or any provision hereof
is in force.
SECTION 8.03. SEVERABILITY; DEFINITIONS. The invalidity or
unenforceability of any provision of this Article VIII shall not affect the
validity or enforceability of any other provision hereof. The phrase "this
By-Law" in this Article VIII means this Article VIII in its entirety.
ARTICLE IX.
SUNDRY PROVISIONS
SECTION 9.01. BOOKS AND RECORDS. The Corporation shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors. The
books and records of the Corporation may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection. Minutes shall be recorded in written form but may be maintained in
the form of a reproduction. The original or a certified copy of these By-Laws
shall be kept at the principal office of the Corporation.
SECTION 9.02. CORPORATE SEAL. The Board of Directors shall provide a
suitable seal, bearing the name of the Corporation, which shall be in the charge
of the Secretary. The Board of Directors may authorize one or more duplicate
seals and provide for the custody thereof. If the Corporation is required to
place its corporate seal to a document, it is sufficient to meet the requirement
of any law, rule, or regulation relating to a corporate seal to place the word
"(seal)" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
SECTION 9.03. BONDS. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his or her duties, with one or more
sureties and in such amount as may be satisfactory to the Board of Directors.
SECTION 9.04. VOTING STOCK IN OTHER CORPORATIONS. Stock of other
corporations or associations, registered in the name of the Corporation, may be
voted by the President, a Vice-President, or a proxy appointed by either of
them. The Board of Directors, however, may by resolution appoint some other
person to vote such shares, in which case such person shall be entitled to vote
such shares upon the production of a certified copy of such resolution.
SECTION 9.05. MAIL. Any notice or other document which is required by
these By-Laws to be mailed shall be deposited in the United States mails,
postage prepaid.
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<PAGE> 21
SECTION 9.06. EXECUTION OF DOCUMENTS. A person who holds more than one
office in the Corporation may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer.
SECTION 9.07. RESIDENT AGENT; PRINCIPAL OFFICE. The initial name and
address of the resident agent of the Corporation and the initial address of the
principal office of the Corporation in the State of Maryland shall be as set
forth in the Charter. The Corporation may change its resident agent or principal
office from time to time by filing with the Maryland State Department of
Assessments and Taxation (the "Department") a resolution of the Board of
Directors authorizing the change, and the Corporation may change from time to
time the address of its resident agent by filing with the Department a statement
of the change executed by the President or any Vice-President.
SECTION 9.08. AMENDMENTS. These By-Laws may be altered, amended or
repealed or new By-Laws may be adopted by the stockholders or by the Board of
Directors, when such power is conferred upon the Board of Directors by the
Charter, at any regular meeting of the stockholders or of the Board of Directors
or at any special meeting of the stockholders or of the Board of Directors if
notice of such alteration, amendment, repeal or adoption of new By-Laws be
contained in the notice of such special meeting. If the power to adopt, amend or
repeal By-Laws is conferred upon the Board of Directors by the Charter it shall
not divest or limit the power of the stockholders to adopt, amend or repeal
By-Laws.(2)
- ---------
(2) Under Article VI, Section 6 of the Charter, this section of the By-Laws may
not be amended without the approval of 2/3 of the stockholders.
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<PAGE> 1
EXHIBIT 10.2
FOURTH AMENDMENT TO THE THIRD
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.
This FOURTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of March 25, 1999 (this
"Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the
"General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware
limited partnership (the "Partnership"), pursuant to the authority conferred on
the General Partner by Section 7.3.C(7) of the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29,
1994, as amended and/or supplemented from time to time (the "Agreement").
Capitalized terms used, but not otherwise defined herein, shall have the
respective meanings ascribed thereto in the Agreement.
WHEREAS, pursuant to Section 4.2.A of the Agreement, the General
Partner is authorized to determine the designations, preferences and relative,
participating, optional or other special rights, powers and duties of
Partnership Preferred Units.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
(1) The Agreement is hereby amended by the addition of a new exhibit,
entitled "Exhibit Q," in the form attached hereto, which shall be attached to
and made a part of the Agreement.
(2) Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and effect and, except as amended hereby, all of the terms,
covenants, provisions and conditions of the Agreement are hereby ratified and
confirmed in all respects.
IN WITNESS WHEREOF, this Amendment has been executed as of the date
first written above.
GENERAL PARTNER:
AIMCO-GP, INC.
By: /s/ PETER KOMPANIEZ
----------------------------------
Name: Peter Kompaniez
Title: President and Vice Chairman
<PAGE> 2
EXHIBIT Q
PARTNERSHIP UNIT DESIGNATION
OF THE
CLASS I PARTNERSHIP PREFERRED UNITS
OF
AIMCO PROPERTIES, L.P.
1. NUMBER OF UNITS AND DESIGNATION.
A class of Partnership Preferred Units is hereby designated as "Class I
Partnership Preferred Units," and the number of Partnership Preferred Units
constituting such class shall be Ten Million (10,000,000).
2. DEFINITIONS.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the Third Amended and Restated Agreement of Limited
Partnership of AIMCO Properties, L.P. as amended, supplemented or restated from
time to time (the "Agreement"), as modified by this Partnership Unit Designation
and the defined terms used herein. For purposes of this Partnership Unit
Designation, the following terms shall have the respective meanings ascribed
below:
"Assignee" shall mean a Person to whom one or more Preferred Units have
been Transferred in a manner permitted under the Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5 of the Agreement.
"Cash Amount" shall mean, with respect to any Tendered Units, cash in
an amount equal to the product of (i) the number of Tendered Units, multiplied
by (ii) the Liquidation Preference for a Preferred Unit.
"Class I Partnership Preferred Unit" or "Preferred Unit" shall mean a
Partnership Preferred Unit with the designations, preferences and relative,
participating, optional or other special rights, powers and duties as are set
forth in this Partnership Unit Designation.
"Common Shares" shall mean the shares of Class A Common Stock of the
Previous General Partner.
"Common Shares Amount" shall mean, with respect to any Tendered Units,
a number of Common Shares equal to the quotient obtained by dividing (i) the
Cash Amount for such Tendered Units, by (ii) the Market Value of a Common Share
calculated as of the date of receipt by the General Partner of a Notice of
Redemption for such Tendered Units.
"Cut-Off Date" shall mean the fifth (5th) Business Day after the
General Partner's receipt of a Notice of Redemption.
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<PAGE> 3
"Declination" shall have the meaning set forth in Section 6(f) of this
Partnership Unit Designation.
"Distribution Payment Date" shall have the meaning set forth in Section
4(a) of this Partnership Unit Designation.
"Junior Partnership Units" shall have the meaning set forth in Section
3(c) of this Partnership Unit Designation.
"Liquidation Preference" shall have the meaning set forth in Section
5(a) of this Partnership Unit Designation.
"Majority in Interest of the Limited Partners" means Limited Partners
(other than (i) the Special Limited Partner and (ii) any Limited Partner fifty
percent (50%) or more of whose equity is owned, directly or indirectly, by the
(a) General Partner or (b) any REIT as to which the General Partner is a
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)))
holding more than fifty percent (50%) of the outstanding Partnership Common
Units, Class I High Performance Partnership Units, Class I Partnership Preferred
Units, Class One Partnership Preferred Units and Class Two Partnership Preferred
Units held by all Limited Partners (other than (i) the Special Limited Partner
and (ii) any Limited Partner fifty percent (50%) or more of whose equity is
owned, directly or indirectly, by (a) the General Partner or (b) any REIT as to
which the General Partner is a "qualified REIT subsidiary" (within the meaning
of Code Section 856(i)(2))).
"Market Value" shall mean, as of any calculation date and with respect
to any share of stock, the average of the daily market prices for ten (10)
consecutive trading days immediately preceding the calculation date. The market
price for any such trading day shall be:
(i) if the shares are listed or admitted to trading on any
securities exchange or The Nasdaq Stock Market's National Market
System, the closing price, regular way, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked
prices on such day, in either case as reported in the principal
consolidated transaction reporting system,
(ii) if the shares are not listed or admitted to trading on
any securities exchange or The Nasdaq Stock Market's National Market
System, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on
such day, as reported by a reliable quotation source designated by the
General Partner, or
(iii) if the shares are not listed or admitted to trading on
any securities exchange or The Nasdaq Stock Market's National Market
System and no such last reported sale price or closing bid and asked
prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than ten (10)
days prior to the date in question) for which prices have been so
reported;
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<PAGE> 4
provided, however, that, if there are no bid and asked prices reported during
the ten (10) days prior to the date in question, the Market Value of the shares
shall be determined by the General Partner acting in good faith on the basis of
such quotations and other information as it considers, in its reasonable
judgment, appropriate; provided, further, that the General Partner is authorized
to adjust the market price for any trading day as may be necessary, in its
judgment, to reflect an event that occurs at any time after the commencement of
such ten day period that would unfairly distort the Market Value, including,
without limitation, a stock dividend, split, subdivision, reverse stock split,
or share combination.
"Notice of Redemption" shall mean a Notice of Redemption in the form of
Annex I to this Partnership Unit Designation.
"Parity Partnership Units" shall have the meaning set forth in Section
3(b) of this Partnership Unit Designation.
"Partnership" shall mean AIMCO Properties, L.P., a Delaware limited
partnership.
"Preferred Shares" shall mean shares of the Class I Cumulative
Preferred Stock of the Previous General Partner.
"Primary Offering Notice" shall have the meaning set forth in Section
6(h)(4) of this Partnership Unit Designation.
"Public Offering Funding" shall have the meaning set forth in Section
6(f)(2) of this Partnership Unit Designation.
"Redemption" shall have the meaning set forth in Section 6(b) of this
Partnership Unit Designation.
"Registrable Shares" shall have the meaning set forth in Section
6(f)(2) of this Partnership Unit Designation.
"Senior Partnership Units" shall have the meaning set forth in Section
3(a) of this Partnership Unit Designation.
"Single Funding Notice" shall have the meaning set forth in Section
6(f)(3) of this Partnership Unit Designation.
"Specified Redemption Date" shall mean, with respect to any Redemption,
the later of (a) the tenth (10th) Business Day after the receipt by the General
Partner of a Notice of Redemption or (b) in the case of a Declination followed
by a Public Offering Funding, the Business Day next following the date of the
closing of the Public Offering Funding; provided, however, that the Specified
Redemption Date, as well as the closing of a Redemption, or an acquisition of
Tendered Units by the Previous General Partner pursuant to Section 5 hereof, on
any Specified Redemption Date, may be deferred, in the General Partner's sole
and absolute discretion, for such time (but in any event not more than one
hundred fifty (150) days in the aggregate) as may reasonably be
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<PAGE> 5
required to effect, as applicable, (i) a Public Offering Funding or other
necessary funding arrangements, (ii) compliance with the Securities Act or other
law (including, but not limited to, (a) state "blue sky" or other securities
laws and (b) the expiration or termination of the applicable waiting period, if
any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended)
and (iii) satisfaction or waiver of other commercially reasonable and customary
closing conditions and requirements for a transaction of such nature.
"Tendering Party" shall have the meaning set forth in Section 6(b)
hereof.
"Tendered Units" shall have the meaning set forth in Section 6(b)
hereof.
3. RANKING.
Any class or series of Partnership Units of the Partnership shall be
deemed to rank:
(a) prior or senior to the Class I Partnership Preferred
Units, as to the payment of distributions and as to the distribution of assets
upon liquidation, dissolution or winding up, if (i) such class or series of
Partnership Units shall be Class One Partnership Preferred Units or (ii) the
holders of such class or series shall be entitled to the receipt of
distributions and of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the holders of
Class I Partnership Preferred Units (the Partnership Units referred to in
clauses (i) and (ii) of this paragraph being hereinafter referred to,
collectively, as "Senior Partnership Units");
(b) on a parity with the Class I Partnership Preferred Units,
as to the payment of distributions and as to the distribution of assets upon
liquidation, dissolution or winding up, whether or not the distribution rates,
distribution payment dates or redemption or liquidation prices per unit or other
denomination thereof be different from those of the Class I Partnership
Preferred Units if (i) such class or series of Partnership Units shall be Class
B Partnership Preferred Units, Class C Partnership Preferred Units, Class D
Partnership Preferred Units, Class G Partnership Preferred Units, Class H
Partnership Preferred Units, Class J Partnership Preferred Units, Class K
Partnership Preferred Units, Class One Partnership Preferred Units, Class Two
Partnership Preferred Units or (ii) the holders of such class or series of
Partnership Units and the Class I Partnership Preferred Units shall be entitled
to the receipt of distributions and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of accrued
and unpaid distributions per unit or other denomination or liquidation
preferences, without preference or priority one over the other (the Partnership
Units referred to in clauses (i) and (ii) of this paragraph being hereinafter
referred to, collectively, as "Parity Partnership Units"); and
(c) junior to the Class I Partnership Preferred Units, as to
the payment of distributions and as to the distribution of assets upon
liquidation, dissolution or winding up, if (i) such class or series of
Partnership Units shall be Partnership Common Units or Class I High Performance
Partnership Units or (ii) the holders of Class I Partnership Preferred Units
shall be entitled to receipt of distributions or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of such class or series of
Q-4
<PAGE> 6
Partnership Units (the Partnership Units referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior
Partnership Units").
4. QUARTERLY CASH DISTRIBUTIONS.
(a) Holders of Preferred Units will be entitled to receive,
when and as declared by the General Partner, quarterly cash distributions at the
rate of $0.50 per Preferred Unit; provided, however, that at any time and from
time to time on or after March 1, 2005, the Partnership may adjust the quarterly
cash distribution rate on the Preferred Units to equal 25% of the lower of (i)
two percent (2%) plus the annual interest rate then applicable to U.S. Treasury
notes with a maturity of five years and (ii) the annual dividend rate on the
class or series of preferred stock most recently issued by the Previous General
Partner that (x) is not convertible into another security of the Previous
General Partner at the option of the holder and (y) ranks on a parity with its
Class H Cumulative Preferred Stock. Such adjustment shall become effective upon
the date the Partnership issues a notice to such effect to the holders of the
Preferred Units. Any such distributions will be cumulative from the date of
original issue, whether or not in any distribution period or periods such
distributions have been declared, and shall be payable quarterly on February 15,
May 15, August 15 and November 15 of each year (or, if not a Business Day, the
next succeeding Business Day) (each a "Distribution Payment Date"), commencing
on the first such date occurring after the date of original issue. If the
Preferred Units are issued on any day other than a Distribution Payment Date,
the first distribution payable on such Preferred Units will be prorated for the
portion of the quarterly period that such Preferred Units are outstanding on the
basis of twelve 30-day months and a 360-day year. Distributions will be payable
in arrears to holders of record as they appear on the records of the Partnership
at the close of business on the February 1, May 1, August 1 or November 1, as
the case may be, immediately preceding each Distribution Payment Date. Holders
of Preferred Units will not be entitled to receive any distributions in excess
of cumulative distributions on the Preferred Units. No interest, or sum of money
in lieu of interest, shall be payable in respect of any distribution payment or
payments on the Preferred Units that may be in arrears. Holders of any Preferred
Units that are issued after the date of original issuance will be entitled to
receive the same distributions as holders of any Preferred Units issued on the
date of original issuance.
(b) When distributions are not paid in full upon the Preferred
Units or any Parity Partnership Units, or a sum sufficient for such payment is
not set apart, all distributions declared upon the Preferred Units and any
Parity Partnership Units shall be declared ratably in proportion to the
respective amounts of distributions accumulated and unpaid on the Preferred
Units and accumulated and unpaid on such Parity Partnership Units. Except as set
forth in the preceding sentence, unless distributions on the Preferred Units
equal to the full amount of accumulated and unpaid distributions have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof has been or contemporaneously is set apart for such payment,
for all past distribution periods, no distributions shall be declared or paid or
set apart for payment by the Partnership with respect to any Parity Partnership
Units.
(c) Unless full cumulative distributions (including all
accumulated, accrued and unpaid distributions) on the Preferred Units have been
declared and paid, or declared and set apart for payment, for all past
distribution periods, no distributions (other than distributions paid in Junior
Partnership Units or options, warrants or rights to subscribe for or purchase
Junior Partnership
Q-5
<PAGE> 7
Units) may be declared or paid or set apart for payment by the Partnership and
no other distribution of cash or other property may be declared or made,
directly or indirectly, by the Partnership with respect to any Junior
Partnership Units, nor shall any Junior Partnership Units be redeemed, purchased
or otherwise acquired (except for a redemption, purchase or other acquisition of
Partnership Common Units made for purposes of an employee incentive or benefit
plan of the Partnership or any affiliate thereof, including, without limitation,
the Previous General Partner and its affiliates) for any consideration (or any
monies be paid to or made available for a sinking fund for the redemption of any
such Junior Partnership Units), directly or indirectly, by the Partnership
(except by conversion into or exchange for Junior Partnership Units, or options,
warrants or rights to subscribe for or purchase Junior Partnership Units), nor
shall any other cash or other property be paid or distributed to or for the
benefit of holders of Junior Partnership Units.
(d) Notwithstanding the foregoing provisions of this Section
4, the Partnership shall not be prohibited from (i) declaring or paying or
setting apart for payment any distribution on any Parity Partnership Units or
(ii) redeeming, purchasing or otherwise acquiring any Parity Partnership Units,
in each case, if such declaration, payment, redemption, purchase or other
acquisition is necessary to maintain the Previous General Partner's
qualification as a REIT.
5. LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Partnership, before any allocation of income or gain by the
Partnership shall be made to or set apart for the holders of any Junior
Partnership Units, to the extent possible, the holders of Preferred Units shall
be entitled to be allocated income and gain to effectively enable them to
receive a liquidation preference (the "Liquidation Preference") of (i) $25 per
Preferred Unit, plus (ii) accumulated, accrued and unpaid distributions (whether
or not earned or declared) to the date of final distribution to such holders;
but such holders shall not be entitled to any further payment or allocation.
Until all holders of the Preferred Units have been paid the Liquidation
Preference in full, no allocation of income or gain will be made to any holder
of Junior Units upon the liquidation, dissolution or winding up of the
Partnership.
(b) If, upon any liquidation, dissolution or winding up of the
Partnership, the assets of the Partnership, or proceeds thereof, distributable
among the holders of Preferred Partnership Units shall be insufficient to pay in
full the Liquidation Preference and liquidating payments on any Parity
Partnership Units, then following certain allocations made by the Partnership,
such assets, or the proceeds thereof, shall be distributed among the holders of
Preferred Units and any such Parity Partnership Units ratably in the same
proportion as the respective amounts that would be payable on such Preferred
Units and any such Parity Partnership Units if all amounts payable thereon were
paid in full.
(c) A voluntary or involuntary liquidation, dissolution or
winding up of the Partnership will not include a consolidation or merger of the
Partnership with one or more partner ships, corporations or other entities, or a
sale or transfer of all or substantially all of the Partnership's assets.
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<PAGE> 8
(d) Upon any liquidation, dissolution or winding up of the
Partnership, after all allocations shall have been made in full to the holders
of Preferred Units and any Parity Partnership Units to enable them to receive
their respective liquidation preferences, any Junior Partnership Units shall be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Preferred Units and any Parity Partnership Units shall not be
entitled to share therein.
6. REDEMPTION.
(a) Except as set forth in Section 6(l) hereof, the Preferred
Units may not be redeemed at the option of the Partnership, and will not be
required to be redeemed or repurchased by the Partnership or the Previous
General Partner except if a holder of a Preferred Unit effects a Redemption, as
provided for in Section 6(b) hereof. The Partnership or the Previous General
Partner may purchase Preferred Units from time to time in the open market, by
tender or exchange offer, in privately negotiated purchases or otherwise.
(b) On or after the first (1st) anniversary of becoming a
holder of Preferred Units, a Qualifying Party shall have the right (subject to
the terms and conditions set forth herein) to require the Partnership to redeem
all or a portion of the Preferred Units held by such Qualifying Party (any
Preferred Units tendered for Redemption being hereafter "Tendered Units") in
exchange (a "Redemption") for Common Shares of Preferred Shares issuable on, or
the Cash Amount payable on, the Specified Redemption Date, as determined by the
Partnership in its sole discretion. Any Redemption shall be exercised pursuant
to a Notice of Redemption delivered to the General Partner by the Qualifying
Party when exercising the Redemption right (the "Tendering Party").
(c) If the Partnership elects to redeem Tendered Units for
Common Shares or Preferred Shares rather than cash, then the Partnership shall
direct the Previous General Partner to issue and deliver such Common Shares or
Preferred Shares to the Tendering Party pursuant to the terms set forth in this
Section 6, in which case, (i) the Previous General Partner, acting as a distinct
legal entity, shall assume directly the obligation with respect thereto and
shall satisfy the Tendering Party's exercise of its Redemption right, and (ii)
such transaction shall be treated, for federal income tax purposes, as a
transfer by the Tendering Party of such Tendered Units to the Previous General
Partner in exchange for Common Shares or Preferred Shares. In making such
election to cause the Previous General Partner to acquire Tendered Units, the
Partnership shall act in a fair, equitable and reasonable manner that neither
prefers one group or class of Tendering Parties over another nor discriminates
against a group or class of Tendering Parties. If the Partnership elects to
redeem any number of Tendered Units for Common Shares or Preferred Shares,
rather than cash, on the Specified Redemption Date, the Tendering Party shall
sell such number of the Tendered Units to the Previous General Partner in
exchange for (i) a number of Common Shares equal to the Common Shares Amount for
such number of Tendered Units, (ii) if the Preferred Shares are then listed on
the New York Stock Exchange or another national securities exchange, a number of
Preferred Shares equal to such number of Tendered Units, or (iii) any
combination of (i) and (ii). The Tendering Party shall submit (i) such
information, certification or affidavit as the Previous General Partner may
reasonably require in connection with the application of the Ownership Limit and
other restrictions and limitations of the Charter to any such acquisition and
(ii) such written representations, investment letters, legal opinions or other
instruments necessary, in the Previous
Q-7
<PAGE> 9
General Partner's view, to effect compliance with the Securities Act. The Common
Shares or Preferred Shares shall be delivered by the Previous General Partner as
duly authorized, validly issued, fully paid and non-assessable shares, free of
any pledge, lien, encumbrance or restriction other than the Ownership Limit and
other restrictions provided in the Charter, the Bylaws of the Previous General
Partner, the Securities Act and relevant state securities or "blue sky" laws.
Neither any Tendering Party whose Tendered Units are acquired by the Previous
General Partner pursuant to this Section 6, any Partner, any Assignee nor any
other interested Person shall have any right to require or cause the Previous
General Partner or the General Partner to register, qualify or list any REIT
Shares owned or held by such Person, whether or not such Common Shares or
Preferred Shares are issued pursuant to this Section 6, with the SEC, with any
state securities commissioner, department or agency, under the Securities Act or
the Exchange Act or with any stock exchange; provided, however, that this
limitation shall not be in derogation of any registration or similar rights
granted pursuant to any other written agreement between the Previous General
Partner and any such Person. Notwithstanding any delay in such delivery, the
Tendering Party shall be deemed the owner of such Common Shares or Preferred
Shares for all purposes, including, without limitation, rights to vote or
consent, receive dividends, and exercise rights, as of the Specified Redemption
Date. Common Shares or Preferred Shares issued upon an acquisition of the
Tendered Units by the Previous General Partner pursuant to this Section 6 may
contain such legends regarding restrictions under the Securities Act and
applicable state securities laws as the Previous General Partner in good faith
determines to be necessary or advisable in order to ensure compliance with such
laws.
(d) The Partnership shall have no obligation to effect any
redemption unless and until a Tendering Party has given the Partnership a Notice
of Redemption. Each Notice of Redemption shall be sent by hand delivery or by
first class mail, postage prepaid, to AIMCO Properties, L.P., c/o AIMCO-GP,
Inc., 1873 South Bellaire Street, 17th Floor, Denver, Colorado 80222, Attention:
Investor Relations, or to such other address as the Partnership shall specify in
writing by delivery to the holders of the Preferred Units in the same manner as
that set forth above for delivery of the Notice of Redemption. At any time prior
to the Specified Redemption Date for any Redemption, any holder may revoke its
Notice of Redemption.
(e) A Tendering Party shall have no right to receive
distributions with respect to any Tendered Units (other than the Cash Amount)
paid after delivery of the Notice of Redemption, whether or not the record date
for such distribution precedes or coincides with such delivery of the Notice of
Redemption. If the Partnership elects to redeem any number of Tendered Units for
cash, the Cash Amount for such number of Tendered Units shall be delivered as a
certified check payable to the Tendering Party or, in the General Partner's sole
and absolute discretion, in immediately available funds.
(f) In the event that the Partnership declines to cause the
Previous General Partner to acquire all of the Tendered Units from the Tendering
Party in exchange for Common Shares or Preferred Shares pursuant to this Section
6 following receipt of a Notice of Redemption (a "Declination"):
Q-8
<PAGE> 10
(1) The Previous General Partner or the General
Partner shall give notice of such Declination to the Tendering
Party on or before the close of business on the Cut-Off Date.
(2) The Partnership may elect to raise funds for the
payment of the Cash Amount either (a) by requiring that the
Previous General Partner contribute such funds from the
proceeds of a registered public offering (a "Public Offering
Funding") by the Previous General Partner of a number of
Common Shares or Preferred Shares ("Registrable Shares") equal
to the Common Shares or Preferred Shares Amount with respect
to the Tendered Units or (b) from any other sources
(including, but not limited to, the sale of any Property and
the incurrence of additional Debt) available to the
Partnership.
(3) Promptly upon the General Partner's receipt of
the Notice of Redemption and the Previous General Partner or
the General Partner giving notice of the Partnership's
Declination, the General Partner shall give notice (a "Single
Funding Notice") to all Qualifying Parties then holding
Preferred Units and having Redemption rights pursuant to this
Section 6 and require that all such Qualifying Parties elect
whether or not to effect a Redemption of their Preferred Units
to be funded through such Public Offering Funding. In the
event that any such Qualifying Party elects to effect such a
Redemption, it shall give notice thereof and of the number of
Preferred Units to be made subject thereon in writing to the
General Partner within ten (10) Business Days after receipt of
the Single Funding Notice, and such Qualifying Party shall be
treated as a Tendering Party for all purposes of this Section
6. In the event that a Qualifying Party does not so elect, it
shall be deemed to have waived its right to effect a
Redemption for the next twelve months; provided, however, that
the Previous General Partner shall not be required to acquire
Preferred Units pursuant to this Section 6(f) more than twice
within any twelve-month period.
Any proceeds from a Public Offering Funding that are in excess of the Cash
Amount shall be for the sole benefit of the Previous General Partner and/or the
General Partner. The General Partner and/or the Special Limited Partner shall
make a Capital Contribution of such amounts to the Partnership for an additional
General Partner Interest and/or Limited Partner Interest. Any such contribution
shall entitle the General Partner and the Special Limited Partner, as the case
may be, to an equitable Percentage Interest adjustment.
(g) Notwithstanding the provisions of this Section 6, the
Previous General Partner shall not, under any circumstances, elect to acquire
Tendered Units in exchange for the Common Shares or Preferred Shares if such
exchange would be prohibited under the Charter.
(h) Notwithstanding anything herein to the contrary, with
respect to any Redemption pursuant to this Section 6:
(1) All Preferred Units acquired by the Previous
General Partner pursuant to this Section 6 hereof shall be
contributed by the Previous General
Q-9
<PAGE> 11
Partner to either or both of the General Partner and the
Special Limited Partner in such proportions as the Previous
General Partner, the General Partner and the Special Limited
Partner shall determine.
(2) Subject to the Ownership Limit, no Tendering
Party may effect a Redemption for less than five hundred (500)
Preferred Units or, if such Tendering Party holds (as a
Limited Partner or, economically, as an Assignee) less than
five hundred (500) Preferred Units, all of the Preferred Units
held by such Tendering Party.
(3) Each Tendering Party (a) may effect a Redemption
only once in each fiscal quarter of a Twelve-Month Period and
(b) may not effect a Redemption during the period after the
Partnership Record Date with respect to a distribution and
before the record date established by the Previous General
Partner for a distribution to its shareholders of some or all
of its portion of such Partnership distribution.
(4) Notwithstanding anything herein to the contrary,
with respect to any Redemption or acquisition of Tendered
Units by the Previous General Partner pursuant to this
Section 6, in the event that the Previous General Partner or
the General Partner gives notice to all Limited Partners (but
excluding any Assignees) then owning Partnership Interests (a
"Primary Offering Notice") that the Previous General Partner
desires to effect a primary offering of its equity securities
then, unless the Previous General Partner and the General
Partner otherwise consent, commencement of the actions
denoted in Section 6(f) hereof as to a Public Offering
Funding with respect to any Notice of Redemption thereafter
received, whether or not the Tendering Party is a Limited
Partner, may be delayed until the earlier of (a) the
completion of the primary offering or (b) ninety (90) days
following the giving of the Primary Offering Notice.
(5) Without the Consent of the Previous General
Partner, no Tendering Party may effect a Redemption within
ninety (90) days following the closing of any prior Public
Offering Funding.
(6) The consummation of such Redemption shall be
subject to the expiration or termination of the applicable
waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(7) The Tendering Party shall continue to own
(subject, in the case of an Assignee, to the provision of
Section 11.5 of the Agreement) all Preferred Units subject to
any Redemption, and be treated as a Limited Partner or an
Assignee, as applicable, with respect to such Preferred Units
for all purposes of the Agreement, until such Preferred Units
are either paid for by the Partnership pursuant to this
Section 6 or transferred to the Previous General Partner (or
directly to the General Partner or Special Limited Partner)
and paid for, by the issuance of the REIT Shares, pursuant to
this Section 6 on the Specified Redemption
Q-10
<PAGE> 12
Date. Until a Specified Redemption Date and an acquisition of
the Tendered Units by the Previous General Partner pursuant to
this Section 6, the Tendering Party shall have no rights as a
shareholder of the Previous General Partner with respect to
the REIT Shares issuable in connection with such acquisition.
For purposes of determining compliance with the restrictions set forth in this
Section 6(h), all Partnership Common Units and Partnership Preferred Units,
including Preferred Units, beneficially owned by a Related Party of a Tendering
Party shall be considered to be owned or held by such Tendering Party.
(i) In connection with an exercise of Redemption rights
pursuant to this Section 6, the Tendering Party shall submit the following to
the General Partner, in addition to the Notice of Redemption:
(1) A written affidavit, dated the same date as the
Notice of Redemption, (a) disclosing the actual and
constructive ownership, as determined for purposes of Code
Sections 856(a)(6) and 856(h), of Common Shares or Preferred
Shares and any other classes or shares of the Previous General
Partner by (i) such Tendering Party and (ii) any Related Party
and (b) representing that, after giving effect to the
Redemption, neither the Tendering Party nor any Related Party
will own Common Shares or Preferred Shares in excess of the
Ownership Limit;
(2) A written representation that neither the
Tendering Party nor any Related Party has any intention to
acquire any additional Common Shares, Preferred Shares or any
other class of shares of the Previous General Partner prior to
the closing of the Redemption on the Specified Redemption
Date; and
(3) An undertaking to certify, at and as a condition
to the closing of the Redemption on the Specified Redemption
Date, that either (a) the actual and constructive ownership of
Common Shares or Preferred Shares or any other class of shares
of the Previous General Partner by the Tendering Party and any
Related Party remain unchanged from that disclosed in the
affidavit required by Section 6(i)(a) or (b)) after giving
effect to the Redemption, neither the Tendering Party nor any
Related Party shall own Common Shares or Preferred Shares or
other shares of the Previous General Partner in violation of
the Ownership Limit.
(j) On or after the Specific Redemption Date, each holder of
Preferred Units shall surrender to the Partnership the certificate evidencing
such holder's Preferred Units, at the address to which a Notice of Redemption is
required to be sent. Upon such surrender of a certificate, the Partnership shall
thereupon pay the former holder thereof the applicable Cash Amount and/or
deliver Common Shares or Preferred Shares for the Preferred Units evidenced
thereby. From and after the Specific Redemption Date (i) distributions with
respect to the Preferred Units shall cease to accumulate, (ii) the Preferred
Units shall no longer be deemed outstanding, (iii) the holders thereof shall
cease to be Partners to the extent of their interest in such Preferred Units,
and (iv) all rights whatsoever with respect to the Preferred Units shall
terminate, except the right of the holders of the Preferred Units to receive
Cash Amount and/or Common Shares or Preferred
Q-11
<PAGE> 13
Shares therefor, without interest or any sum of money in lieu of interest
thereon, upon surrender of their certificates therefor.
(k) Notwithstanding the provisions of this Section 6, the
Tendering Parties (i) shall not be entitled to elect or effect a Redemption
where the Redemption would consist of less than all the Preferred Units held by
Partners and, to the extent that the aggregate Percentage Interests of the
Limited Partners would be reduced, as a result of the Redemption, to less than
one percent (1%) and (ii) shall have no rights under the Agreement that would
otherwise be prohibited under the Charter. To the extent that any attempted
Redemption would be in violation of this Section 6(k), it shall be null and void
ab initio, and the Tendering Party shall not acquire any rights or economic
interests in Common Shares or Preferred Shares otherwise issuable by the
Previous General Partner hereunder.
(l) Notwithstanding any other provision of the Agreement, on
and after the date on which the aggregate Percentage Interests of the Limited
Partners (other than the Special Limited Partner) are less than one percent
(1%), the Partnership shall have the right, but not the obligation, from time to
time and at any time to redeem any and all outstanding Limited Partner Interests
(other than the Special Limited Partner's Limited Partner Interest) by treating
any Limited Partner as a Tendering Party who has delivered a Notice of
Redemption pursuant to this Section 6 for the amount of Preferred Units to be
specified by the General Partner, in its sole and absolute discretion, by notice
to such Limited Partner that the Partnership has elected to exercise its rights
under this Section 6(l). Such notice given by the General Partner to a Limited
Partner pursuant to this Section 6(l) shall be treated as if it were a Notice of
Redemption delivered to the General Partner by such Limited Partner. For
purposes of this Section 6(l), (a) any Limited Partner (whether or not eligible
to be a Tendering Party) may, in the General Partner's sole and absolute
discretion, be treated as a Tendering Party and (b) the provisions of Sections
6(f)(1), 6(h)(2), 6(h)(3) and 6(h)(5) hereof shall not apply, but the remainder
of this Section shall apply, mutatis mutandis.
7. STATUS OF REACQUIRED UNITS.
All Preferred Units which shall have been issued and reacquired in any
manner by the Partnership shall be deemed cancelled and no longer outstanding.
8. GENERAL.
The ownership of the Preferred Units shall be evidenced by one or more
certificates in the form of Annex II hereto. The General Partner shall amend
Exhibit A to the Agreement from time to time to the extent necessary to reflect
accurately the issuance of, and subsequent redemption, or any other event having
an effect on the ownership of, the Preferred Units.
9. ALLOCATIONS OF INCOME AND LOSS.
For each taxable year, (i) each holder of Preferred Units will be
allocated net income of the Partnership in an amount equal to the distributions
made on such holder's Preferred Units during such taxable year, and (ii) each
holder of Preferred Units will be allocated its pro rata share, based
Q-12
<PAGE> 14
on the portion of outstanding Preferred Units held by it, of any net loss of the
Partnership that is not allocated to holders of Partnership Common Units or
other interests in the Partnership. Upon liquidation, dissolution or winding up
of the Partnership, the holders of Preferred Units will be allocated income and
gain sufficient to enable them to realize the Liquidation Preference in full.
10. VOTING RIGHTS.
Except as otherwise required by applicable law or in the Agreement, the
holders of the Preferred Units will have the same voting rights as holders of
the Partnership Common Units. As long as any Preferred Units are outstanding,
for purposes of determining the Consent of Limited Partners under the Agreement,
the "Majority of Interests of Limited Partners" shall have the meaning set forth
in Section 2 hereof. As long as any Preferred Units are outstanding, in addition
to any other vote or consent of partners required by law or by the Agreement,
the affirmative vote or consent of holders of at least 50% of the outstanding
Preferred Units will be necessary for effecting any amendment of any of the
provisions of the Partnership Unit Designation of the Preferred Units that
materially and adversely affects the rights or preferences of the holders of the
Preferred Units. The creation or issuance of any class or series of Partnership
Units, including, without limitation, any Partnership Units that may have rights
junior to, on a parity with, or senior or superior to the Preferred Units, will
not be deemed to have a material adverse effect on the rights or preferences of
the holders of Preferred Units. With respect to the exercise of the
above-described voting rights, each Preferred Unit will have one (1) vote per
Preferred Unit.
11. RESTRICTIONS ON TRANSFER.
Preferred Units are subject to the same restrictions on transfer
applicable to Common Units, as set forth in the Agreement.
Q-13
<PAGE> 15
ANNEX I
TO EXHIBIT Q
NOTICE OF REDEMPTION
To: AIMCO Properties, L.P.
c/o AIMCO-GP, Inc.
1873 South Bellaire Street
17th Floor
Denver, Colorado 80222
Attention: Investor Relations
The undersigned Limited Partner or Assignee hereby irrevocably tenders
for redemption Class I Partnership Preferred Units in AIMCO Properties, L.P. in
accordance with the terms of the Agreement of Limited Partnership of AIMCO
Properties, L.P., dated as of July 29, 1994, as it may be amended and
supplemented from time to time (the "Agreement"). All capitalized terms used
herein and not otherwise defined shall have the respective meanings ascribed
thereto in the Partnership Unit Designation of the Class I Partnership Preferred
Units. The undersigned Limited Partner or Assignee:
(a) if the Partnership elects to redeem such Class I
Partnership Preferred Units for Common Shares or Preferred Shares
rather than cash, hereby irrevocably transfers, assigns, contributes
and sets over to the Previous General Partner all of the undersigned
Limited Partner's or Assignee's right, title and interest in and to
such Class I Partnership Preferred Units;
(b) undertakes (i) to surrender such Class I Partnership
Preferred Units and any certificate therefor at the closing of the
Redemption contemplated hereby and (ii) to furnish to the Previous
General Partner, prior to the Specified Redemption Date:
(1) A written affidavit, dated the same date as this
Notice of Redemption, (a) disclosing the actual and
constructive ownership, as determined for purposes of Code
Sections 856(a)(6) and 856(h), of Common Shares or Preferred
Shares by (i) the undersigned Limited Partner or Assignee and
(ii) any Related Party and (b) representing that, after giving
effect to the Redemption, neither the undersigned Limited
Partner or Assignee nor any Related Party will own Common
Shares or Preferred Shares in excess of the Ownership Limit;
(2) A written representation that neither the
undersigned Limited Partner or Assignee nor any Related Party
has any intention to acquire any additional Common Shares or
Preferred Shares prior to the closing of the Redemption
contemplated hereby on the Specified Redemption Date; and
Q-I-1
<PAGE> 16
(3) An undertaking to certify, at and as a condition
to the closing of the Redemption contemplated hereby on the
Specified Redemption Date, that either (a) the actual and
constructive ownership of Common Shares or Preferred Shares
by the undersigned Limited Partner or Assignee and any Related
Party remain unchanged from that disclosed in the affidavit
required by paragraph (1) above, or (b) after giving effect to
the Redemption contemplated hereby, neither the undersigned
Limited Partner or Assignee nor any Related Party shall own
Common Shares or Preferred Shares in violation of the
Ownership Limit.
(c) directs that the certificate representing the Common
Shares or Preferred Shares, or the certified check representing the
Cash Amount, in either case, deliverable upon the closing of the
Redemption contemplated hereby be delivered to the address specified
below;
(d) represents, warrants, certifies and agrees that:
(i) the undersigned Limited Partner or Assignee has,
and at the closing of the Redemption will have, good, market
able and unencumbered title to such Preferred Units, free and
clear of the rights or interests of any other person or
entity;
(ii) the undersigned Limited Partner or Assignee has,
and at the closing of the Redemption will have, the full
right, power and authority to tender and surrender such
Preferred Units as provided herein; and
(iii) the undersigned Limited Partner or Assignee has
obtained the consent or approval of all persons and entities,
if any, having the right to consent to or approve such tender
and surrender.
Dated:
---------------
Name of Limited Partner or Assignee:
------------------------------------------
------------------------------------------
(Signature of Limited Partner or Assignee)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
Q-I-2
<PAGE> 17
Signature Guaranteed by:
------------------------------------------
Issue check payable to
or Certificates in the
name of:
------------------------------------------
Please insert social security
or identifying number:
------------------------------------------
NOTICE: THE SIGNATURE OF THIS NOTICE OF REDEMPTION MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE FOR THE CLASS I PREFERRED
UNITS WHICH ARE BEING REDEEMED IN EVERY PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION,
(Banks, Stockbrokers, Savings and Loan Associations and Credit Unions), WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC
RULE 17Ad-15.
Q-I-3
<PAGE> 18
ANNEX II
TO EXHIBIT Q
FORM OF UNIT CERTIFICATE
OF
CLASS I PARTNERSHIP PREFERRED UNITS
[THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION,](1) THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPER TIES, L.P., DATED AS OF
JULY 29, 1994, AS IT MAY BE AMENDED AND/OR SUPPLEMENTED FROM TIME TO TIME, A
COPY OF WHICH MAY BE OBTAINED FROM AIMCO- GP, INC, THE GENERAL PARTNER, AT ITS
PRINCIPAL EXECUTIVE OFFICE.
Certificate Number ________
AIMCO PROPERTIES, L.P.
FORMED UNDER THE LAWS OF THE STATE OF DELAWARE
This certifies that
------------------------------------------------------------
is the owner of
----------------------------------------------------------------
CLASS I PARTNERSHIP PREFERRED UNITS
OF
AIMCO PROPERTIES, L.P.,
transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Class I Partnership Preferred Units represented hereby are
issued and shall be held subject to all of the provisions of the Agreement of
Limited Partnership of AIMCO Properties, L.P., as the same may be amended and/or
supplemented from time to time.
IN WITNESS WHEREOF, the undersigned has signed this Certificate.
Dated:
By
----------------------------
- ----------------
(1) Not required if Units are issued pursuant to a current and effective
registration statement under the Act.
Q-II-1
<PAGE> 19
ASSIGNMENT
For Value Received, ________________________________ hereby sells,
assigns and transfers unto
- --------------------------------------------------------------------------------
______________________ Class I Partnership Preferred Unit(s) represented by the
within Certificate, and does hereby irrevocably constitute and appoint the
General Partner of AIMCO Properties, L.P. as its Attorney to transfer said Class
I Partnership Preferred Unit(s) on the books of AIMCO Properties, L.P.
with full power of substitution in the premises.
Dated:
-----------------
By:
--------------------------
Name:
Signature Guaranteed by:
------------------------------
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S)
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (Banks,
Stockbrokers, Savings and Loan Associations and Credit Unions), WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC RULE
17Ad-15.
Q-II-2
<PAGE> 1
EXHIBIT 10.3
FIFTH AMENDMENT TO THE THIRD
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.
This FIFTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of March 26, 1999 (this
"Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the
"General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware
limited partnership (the "Partnership"), pursuant to the authority conferred on
the General Partner by Section 7.3.C(7) of the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29,
1994, as amended and/or supplemented from time to time (the "Agreement").
Capitalized terms used, but not otherwise defined herein, shall have the
respective meanings ascribed thereto in the Agreement.
WHEREAS, pursuant to Section 4.2.A of the Agreement, the
General Partner is authorized to determine the designations, preferences and
relative, participating, optional or other special rights, powers and duties of
Partnership Preferred Units.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
(1) The Agreement is hereby amended by the addition of a new exhibit,
entitled "Exhibit R," in the form attached hereto, which shall be attached to
and made a part of the Agreement.
(2) Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and effect and, except as amended hereby, all of the terms,
covenants, provisions and conditions of the Agreement are hereby ratified and
confirmed in all respects.
IN WITNESS WHEREOF, this Amendment has been executed as of the date
first written above.
GENERAL PARTNER:
AIMCO-GP, INC.
By: /s/ PETER KOMPANIEZ
----------------------------------
Name: Peter Kompaniez
Title: President and Vice Chairman
<PAGE> 2
EXHIBIT R
PARTNERSHIP UNIT DESIGNATION
OF THE
CLASS TWO PARTNERSHIP PREFERRED UNITS
OF
AIMCO PROPERTIES, L.P.
1. NUMBER OF UNITS AND DESIGNATION.
A class of Partnership Preferred Units is hereby designated as "Class
Two Partnership Preferred Units," and the number of Partnership Preferred Units
constituting such class shall be Ten Million (10,000,000).
2. DEFINITIONS.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the Third Amended and Restated Agreement of Limited
Partnership of AIMCO Properties, L.P. as amended, supplemented or restated from
time to time (the "Agreement"), as modified by this Partnership Unit Designation
and the defined terms used herein. For purposes of this Partnership Unit
Designation, the following terms shall have the respective meanings ascribed
below:
"Assignee" shall mean a Person to whom one or more Preferred Units have
been Transferred in a manner permitted under the Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5 of the Agreement.
"Cash Amount" shall mean, with respect to any Tendered Units, cash in
an amount equal to the product of (i) the number of Tendered Units, multiplied
by (ii) the Liquidation Preference for a Preferred Unit.
"Class Two Partnership Preferred Unit" or "Preferred Unit" shall mean a
Partnership Preferred Unit with the designations, preferences and relative,
participating, optional or other special rights, powers and duties as are set
forth in this Partnership Unit Designation.
"Common Shares" shall mean the shares of Class A Common Stock of the
Previous General Partner.
"Common Shares Amount" shall mean, with respect to any Tendered Units,
a number of Common Shares equal to the quotient obtained by dividing (i) the
Cash Amount for such Tendered Units, by (ii) the Market Value of a Common Share
calculated as of the date of receipt by the General Partner of a Notice of
Redemption for such Tendered Units.
"Cut-Off Date" shall mean the fifth (5th) Business Day after the
General Partner's receipt of a Notice of Redemption.
"Declination" shall have the meaning set forth in Section 6(f) of this
Partnership Unit Designation.
"Distribution Payment Date" shall have the meaning set forth in Section
4(a) of this Partnership Unit Designation.
R-1
<PAGE> 3
"Junior Partnership Units" shall have the meaning set forth in Section
3(c) of this Partnership Unit Designation.
"Liquidation Preference" shall have the meaning set forth in Section
5(a) of this Partnership Unit Designation.
"Majority in Interest of the Limited Partners" means Limited Partners
(other than (i) the Special Limited Partner and (ii) any Limited Partner fifty
percent (50%) or more of whose equity is owned, directly or indirectly, by the
(a) General Partner or (b) any REIT as to which the General Partner is a
"qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)))
holding more than fifty percent (50%) of the outstanding Partnership Common
Units, Class I High Performance Partnership Units, Class I Partnership Preferred
Units, Class One Partnership Preferred Units and Class Two Partnership Preferred
Units held by all Limited Partners (other than (i) the Special Limited Partner
and (ii) any Limited Partner fifty percent (50%) or more of whose equity is
owned, directly or indirectly, by (a) the General Partner or (b) any REIT as to
which the General Partner is a "qualified REIT subsidiary" (within the meaning
of Code Section 856(i)(2))).
"Market Value" shall mean, as of any calculation date and with respect
to any share of stock, the average of the daily market prices for ten (10)
consecutive trading days immediately preceding the calculation date. The market
price for any such trading day shall be:
(i) if the shares are listed or admitted to trading on any
securities exchange or The Nasdaq Stock Market's National Market
System, the closing price, regular way, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked
prices on such day, in either case as reported in the principal
consolidated transaction reporting system,
(ii) if the shares are not listed or admitted to trading on
any securities exchange or The Nasdaq Stock Market's National Market
System, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on
such day, as reported by a reliable quotation source designated by the
General Partner, or
(iii) if the shares are not listed or admitted to trading on
any securities exchange or The Nasdaq Stock Market's National Market
System and no such last reported sale price or closing bid and asked
prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than ten (10)
days prior to the date in question) for which prices have been so
reported;
provided, however, that, if there are no bid and asked prices reported during
the ten (10) days prior to the date in question, the Market Value of the shares
shall be determined by the General Partner acting in good faith on the basis of
such quotations and other information as it considers, in its reasonable
judgment, appropriate; provided, further, that the General Partner is authorized
to adjust the market price for any trading day as may be necessary, in its
judgment, to reflect an event that occurs at any time after the commencement of
such ten day period that would unfairly distort the Market Value, including,
without limitation, a stock dividend, split, subdivision, reverse stock split,
or share combination.
"Notice of Redemption" shall mean a Notice of Redemption in the form of
Annex I to this Partnership Unit Designation.
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"Parity Partnership Units" shall have the meaning set forth in Section
3(b) of this Partnership Unit Designation.
"Partnership" shall mean AIMCO Properties, L.P., a Delaware limited
partnership.
"Preferred Shares" shall mean shares of the Class I Cumulative
Preferred Stock of the Previous General Partner.
"Primary Offering Notice" shall have the meaning set forth in Section
6(h)(4) of this Partnership Unit Designation.
"Public Offering Funding" shall have the meaning set forth in Section
6(f)(2) of this Partnership Unit Designation.
"Redemption" shall have the meaning set forth in Section 6(b) of this
Partnership Unit Designation.
"Registrable Shares" shall have the meaning set forth in Section
6(f)(2) of this Partnership Unit Designation.
"Senior Partnership Units" shall have the meaning set forth in Section
3(a) of this Partnership Unit Designation.
"Single Funding Notice" shall have the meaning set forth in Section
6(f)(3) of this Partnership Unit Designation.
"Specified Redemption Date" shall mean, with respect to any Redemption,
the later of (a) the tenth (10th) Business Day after the receipt by the General
Partner of a Notice of Redemption or (b) in the case of a Declination followed
by a Public Offering Funding, the Business Day next following the date of the
closing of the Public Offering Funding; provided, however, that the Specified
Redemption Date, as well as the closing of a Redemption, or an acquisition of
Tendered Units by the Previous General Partner pursuant to Section 5 hereof, on
any Specified Redemption Date, may be deferred, in the General Partner's sole
and absolute discretion, for such time (but in any event not more than one
hundred fifty (150) days in the aggregate) as may reasonably be required to
effect, as applicable, (i) a Public Offering Funding or other necessary funding
arrangements, (ii) compliance with the Securities Act or other law (including,
but not limited to, (a) state "blue sky" or other securities laws and (b) the
expiration or termination of the applicable waiting period, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and (iii)
satisfaction or waiver of other commercially reasonable and customary closing
conditions and requirements for a transaction of such nature.
"Tendering Party" shall have the meaning set forth in Section 6(b)
hereof.
"Tendered Units" shall have the meaning set forth in Section 6(b)
hereof.
3. RANKING.
Any class or series of Partnership Units of the Partnership shall be
deemed to rank:
(a) prior or senior to the Class Two Partnership Preferred
Units, as to the payment of distributions and as to the distribution of assets
upon liquidation, dissolution or winding
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up, if (i) such class or series of Partnership Units shall be Class One
Partnership Preferred Units or (ii) the holders of such class or series shall be
entitled to the receipt of distributions and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class Two Partnership Preferred Units (the
Partnership Units referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Senior Partnership Units");
(b) on a parity with the Class Two Partnership Preferred
Units, as to the payment of distributions and as to the distribution of assets
upon liquidation, dissolution or winding up, whether or not the distribution
rates, distribution payment dates or redemption or liquidation prices per unit
or other denomination thereof be different from those of the Class Two
Partnership Preferred Units if (i) such class or series of Partnership Units
shall be Class B Partnership Preferred Units, Class C Partnership Preferred
Units, Class D Partnership Preferred Units, Class G Partnership Preferred Units,
Class H Partnership Preferred Units, Class I Partnership Preferred Units, Class
J Partnership Preferred Units, Class K Partnership Preferred Units, Class One
Partnership Preferred Units, or (ii) the holders of such class or series of
Partnership Units and the Class Two Partnership Preferred Units shall be
entitled to the receipt of distributions and of amounts distributable upon
liquidation, dissolution or winding up in proportion to their respective amounts
of accrued and unpaid distributions per unit or other denomination or
liquidation preferences, without preference or priority one over the other (the
Partnership Units referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Parity Partnership Units"); and
(c) junior to the Class Two Partnership Preferred Units, as to
the payment of distributions and as to the distribution of assets upon
liquidation, dissolution or winding up, if (i) such class or series of
Partnership Units shall be Partnership Common Units or Class I High Performance
Partnership Units or (ii) the holders of Class Two Partnership Preferred Units
shall be entitled to receipt of distributions or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of such class or series of Partnership Units (the
Partnership Units referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Junior Partnership Units").
4. QUARTERLY CASH DISTRIBUTIONS.
(a) Holders of Preferred Units will be entitled to receive,
when and as declared by the General Partner, quarterly cash distributions at the
rate of $0.50 per Preferred Unit; provided, however, that at any time and from
time to time on or after March 1, 2005, the Partnership may adjust the quarterly
cash distribution rate on the Preferred Units to equal 25% of the lower of (i)
two percent (2%) plus the annual interest rate then applicable to U.S. Treasury
notes with a maturity of five years and (ii) the annual dividend rate on the
class or series of preferred stock most recently issued by the Previous General
Partner that (x) is not convertible into another security of the Previous
General Partner at the option of the holder and (y) ranks on a parity with its
Class H Cumulative Preferred Stock. Such adjustment shall become effective upon
the date the Partnership issues a notice to such effect to the holders of the
Preferred Units. Any such distributions will be cumulative from the date of
original issue, whether or not in any distribution period or periods such
distributions have been declared, and shall be payable quarterly on February 15,
May 15, August 15 and November 15 of each year (or, if not a Business Day, the
next succeeding Business Day) (each a "Distribution Payment Date"), commencing
on the first such date occurring after the date of original issue. If the
Preferred Units are issued on any day other than a Distribution Payment Date,
the first distribution payable on such Preferred Units will be prorated for the
portion of the quarterly period that such Preferred Units are outstanding on the
basis of twelve 30-day months and a 360-day year. Distributions will be payable
in arrears to holders of record as they appear on the records of the Partnership
at the close of business
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on the February 1, May 1, August 1 or November 1, as the case may be,
immediately preceding each Distribution Payment Date. Holders of Preferred Units
will not be entitled to receive any distributions in excess of cumulative
distributions on the Preferred Units. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
the Preferred Units that may be in arrears. Holders of any Preferred Units that
are issued after the date of original issuance will be entitled to receive the
same distributions as holders of any Preferred Units issued on the date of
original issuance.
(b) When distributions are not paid in full upon the Preferred
Units or any Parity Partnership Units, or a sum sufficient for such payment is
not set apart, all distributions declared upon the Preferred Units and any
Parity Partnership Units shall be declared ratably in proportion to the
respective amounts of distributions accumulated and unpaid on the Preferred
Units and accumulated and unpaid on such Parity Partnership Units. Except as set
forth in the preceding sentence, unless distributions on the Preferred Units
equal to the full amount of accumulated and unpaid distributions have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof has been or contemporaneously is set apart for such payment,
for all past distribution periods, no distributions shall be declared or paid or
set apart for payment by the Partnership with respect to any Parity Partnership
Units.
(c) Unless full cumulative distributions (including all
accumulated, accrued and unpaid distributions) on the Preferred Units have been
declared and paid, or declared and set apart for payment, for all past
distribution periods, no distributions (other than distributions paid in Junior
Partnership Units or options, warrants or rights to subscribe for or purchase
Junior Partnership Units) may be declared or paid or set apart for payment by
the Partnership and no other distribution of cash or other property may be
declared or made, directly or indirectly, by the Partnership with respect to any
Junior Partnership Units, nor shall any Junior Partnership Units be redeemed,
purchased or otherwise acquired (except for a redemption, purchase or other
acquisition of Partnership Common Units made for purposes of an employee
incentive or benefit plan of the Partnership or any affiliate thereof,
including, without limitation, the Previous General Partner and its affiliates)
for any consideration (or any monies be paid to or made available for a sinking
fund for the redemption of any such Junior Partnership Units), directly or
indirectly, by the Partnership (except by conversion into or exchange for Junior
Partnership Units, or options, warrants or rights to subscribe for or purchase
Junior Partnership Units), nor shall any other cash or other property be paid or
distributed to or for the benefit of holders of Junior Partnership Units.
(d) Notwithstanding the foregoing provisions of this Section
4, the Partnership shall not be prohibited from (i) declaring or paying or
setting apart for payment any distribution on any Parity Partnership Units or
(ii) redeeming, purchasing or otherwise acquiring any Parity Partnership Units,
in each case, if such declaration, payment, redemption, purchase or other
acquisition is necessary to maintain the Previous General Partner's
qualification as a REIT.
5. LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Partnership, before any allocation of income or gain by the
Partnership shall be made to or set apart for the holders of any Junior
Partnership Units, to the extent possible, the holders of Preferred Units shall
be entitled to be allocated income and gain to effectively enable them to
receive a liquidation preference (the "Liquidation Preference") of (i) $25 per
Preferred Unit, plus (ii) accumulated, accrued and unpaid distributions (whether
or not earned or declared) to the date of final distribution to such holders;
but such holders shall not be entitled to any further payment or allocation.
Until all holders
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of the Preferred Units have been paid the Liquidation Preference in full, no
allocation of income or gain will be made to any holder of Junior Units upon the
liquidation, dissolution or winding up of the Partnership.
(b) If, upon any liquidation, dissolution or winding up of the
Partnership, the assets of the Partnership, or proceeds thereof, distributable
among the holders of Preferred Partnership Units shall be insufficient to pay in
full the Liquidation Preference and liquidating payments on any Parity
Partnership Units, then following certain allocations made by the Partnership,
such assets, or the proceeds thereof, shall be distributed among the holders of
Preferred Units and any such Parity Partnership Units ratably in the same
proportion as the respective amounts that would be payable on such Preferred
Units and any such Parity Partnership Units if all amounts payable thereon were
paid in full.
(c) A voluntary or involuntary liquidation, dissolution or
winding up of the Partnership will not include a consolidation or merger of the
Partnership with one or more partnerships, corporations or other entities, or a
sale or transfer of all or substantially all of the Partnership's assets.
(d) Upon any liquidation, dissolution or winding up of the
Partnership, after all allocations shall have been made in full to the holders
of Preferred Units and any Parity Partnership Units to enable them to receive
their respective liquidation preferences, any Junior Partnership Units shall be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Preferred Units and any Parity Partnership Units shall not be
entitled to share therein.
6. REDEMPTION.
(a) Except as set forth in Section 6(l) hereof, the Preferred
Units may not be redeemed at the option of the Partnership, and will not be
required to be redeemed or repurchased by the Partnership or the Previous
General Partner except if a holder of a Preferred Unit effects a Redemption, as
provided for in Section 6(b) hereof. The Partnership or the Previous General
Partner may purchase Preferred Units from time to time in the open market, by
tender or exchange offer, in privately negotiated purchases or otherwise.
(b) On or after the first (1st) anniversary of becoming a
holder of Preferred Units, a Qualifying Party shall have the right (subject to
the terms and conditions set forth herein) to require the Partnership to redeem
all or a portion of the Preferred Units held by such Qualifying Party (any
Preferred Units tendered for Redemption being hereafter "Tendered Units") in
exchange (a "Redemption") for Common Shares of Preferred Shares issuable on, or
the Cash Amount payable on, the Specified Redemption Date, as determined by the
Partnership in its sole discretion. Any Redemption shall be exercised pursuant
to a Notice of Redemption delivered to the General Partner by the Qualifying
Party when exercising the Redemption right (the "Tendering Party").
(c) If the Partnership elects to redeem Tendered Units for
Common Shares or Preferred Shares rather than cash, then the Partnership shall
direct the Previous General Partner to issue and deliver such Common Shares or
Preferred Shares to the Tendering Party pursuant to the terms set forth in this
Section 6, in which case, (i) the Previous General Partner, acting as a distinct
legal entity, shall assume directly the obligation with respect thereto and
shall satisfy the Tendering Party's exercise of its Redemption right, and (ii)
such transaction shall be treated, for federal income tax purposes, as a
transfer by the Tendering Party of such Tendered Units to the Previous General
Partner in exchange for Common Shares or Preferred Shares. In making such
election to cause the Previous General Partner
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Partner to acquire Tendered Units, the Partnership shall act in a fair,
equitable and reasonable manner that neither prefers one group or class of
Tendering Parties over another nor discriminates against a group or class of
Tendering Parties. If the Partnership elects to redeem any number of Tendered
Units for Common Shares or Preferred Shares, rather than cash, on the Specified
Redemption Date, the Tendering Party shall sell such number of the Tendered
Units to the Previous General Partner in exchange for (i) a number of Common
Shares equal to the Common Shares Amount for such number of Tendered Units, (ii)
if (x) the Notice of Redemption for such Tendered Units is received by the
General Partner after the second (2nd) anniversary of the Tendering Party
becoming a holder of such Preferred Units and (y) the Preferred Shares are then
listed on the New York Stock Exchange or another national securities exchange, a
number of Preferred Shares equal to such number of Tendered Units, or (iii) any
combination of (i) and (ii). The Tendering Party shall submit (i) such
information, certification or affidavit as the Previous General Partner may
reasonably require in connection with the application of the Ownership Limit and
other restrictions and limitations of the Charter to any such acquisition and
(ii) such written representations, investment letters, legal opinions or other
instruments necessary, in the Previous General Partner's view, to effect
compliance with the Securities Act. The Common Shares or Preferred Shares shall
be delivered by the Previous General Partner as duly authorized, validly issued,
fully paid and non-assessable shares, free of any pledge, lien, encumbrance or
restriction other than the Ownership Limit and other restrictions provided in
the Charter, the Bylaws of the Previous General Partner, the Securities Act and
relevant state securities or "blue sky" laws. Neither any Tendering Party whose
Tendered Units are acquired by the Previous General Partner pursuant to this
Section 6, any Partner, any Assignee nor any other interested Person shall have
any right to require or cause the Previous General Partner or the General
Partner to register, qualify or list any REIT Shares owned or held by such
Person, whether or not such Common Shares or Preferred Shares are issued
pursuant to this Section 6, with the SEC, with any state securities
commissioner, department or agency, under the Securities Act or the Exchange Act
or with any stock exchange; provided, however, that this limitation shall not be
in derogation of any registration or similar rights granted pursuant to any
other written agreement between the Previous General Partner and any such
Person. Notwithstanding any delay in such delivery, the Tendering Party shall be
deemed the owner of such Common Shares or Preferred Shares for all purposes,
including, without limitation, rights to vote or consent, receive dividends, and
exercise rights, as of the Specified Redemption Date. Common Shares or Preferred
Shares issued upon an acquisition of the Tendered Units by the Previous General
Partner pursuant to this Section 6 may contain such legends regarding
restrictions under the Securities Act and applicable state securities laws as
the Previous General Partner in good faith determines to be necessary or
advisable in order to ensure compliance with such laws.
(d) The Partnership shall have no obligation to effect any
redemption unless and until a Tendering Party has given the Partnership a Notice
of Redemption. Each Notice of Redemption shall be sent by hand delivery or by
first class mail, postage prepaid, to AIMCO Properties, L.P., c/o AIMCO-GP,
Inc., 1873 South Bellaire Street, 17th Floor, Denver, Colorado 80222, Attention:
Investor Relations, or to such other address as the Partnership shall specify in
writing by delivery to the holders of the Preferred Units in the same manner as
that set forth above for delivery of the Notice of Redemption. At any time prior
to the Specified Redemption Date for any Redemption, any holder may revoke its
Notice of Redemption.
(e) A Tendering Party shall have no right to receive
distributions with respect to any Tendered Units (other than the Cash Amount)
paid after delivery of the Notice of Redemption, whether or not the record date
for such distribution precedes or coincides with such delivery of the Notice of
Redemption. If the Partnership elects to redeem any number of Tendered Units for
cash, the Cash Amount for such number of Tendered Units shall be delivered as a
certified check payable to the
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Tendering Party or, in the General Partner's sole and absolute discretion, in
immediately available funds.
(f) In the event that the Partnership declines to cause the
Previous General Partner to acquire all of the Tendered Units from the Tendering
Party in exchange for Common Shares or Preferred Shares pursuant to this Section
6 following receipt of a Notice of Redemption (a "Declination"):
(1) The Previous General Partner or the General
Partner shall give notice of such Declination to the Tendering
Party on or before the close of business on the Cut-Off Date.
(2) The Partnership may elect to raise funds for the
payment of the Cash Amount either (a) by requiring that the
Previous General Partner contribute such funds from the
proceeds of a registered public offering (a "Public Offering
Funding") by the Previous General Partner of a number of
Common Shares or Preferred Shares ("Registrable Shares") equal
to the Common Shares or Preferred Shares Amount with respect
to the Tendered Units or (b) from any other sources
(including, but not limited to, the sale of any Property and
the incurrence of additional Debt) available to the
Partnership.
(3) Promptly upon the General Partner's receipt of
the Notice of Redemption and the Previous General Partner or
the General Partner giving notice of the Partnership's
Declination, the General Partner shall give notice (a "Single
Funding Notice") to all Qualifying Parties then holding
Preferred Units and having Redemption rights pursuant to this
Section 6 and require that all such Qualifying Parties elect
whether or not to effect a Redemption of their Preferred Units
to be funded through such Public Offering Funding. In the
event that any such Qualifying Party elects to effect such a
Redemption, it shall give notice thereof and of the number of
Preferred Units to be made subject thereon in writing to the
General Partner within ten (10) Business Days after receipt of
the Single Funding Notice, and such Qualifying Party shall be
treated as a Tendering Party for all purposes of this Section
6. In the event that a Qualifying Party does not so elect, it
shall be deemed to have waived its right to effect a
Redemption for the next twelve months; provided, however, that
the Previous General Partner shall not be required to acquire
Preferred Units pursuant to this Section 6(f) more than twice
within any twelve-month period.
Any proceeds from a Public Offering Funding that are in excess of the Cash
Amount shall be for the sole benefit of the Previous General Partner and/or the
General Partner. The General Partner and/or the Special Limited Partner shall
make a Capital Contribution of such amounts to the Partnership for an additional
General Partner Interest and/or Limited Partner Interest. Any such contribution
shall entitle the General Partner and the Special Limited Partner, as the case
may be, to an equitable Percentage Interest adjustment.
(g) Notwithstanding the provisions of this Section 6, the
Previous General Partner shall not, under any circumstances, elect to acquire
Tendered Units in exchange for the Common Shares or Preferred Shares if such
exchange would be prohibited under the Charter.
(h) Notwithstanding anything herein to the contrary, with
respect to any Redemption pursuant to this Section 6:
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(1) All Preferred Units acquired by the Previous
General Partner pursuant to this Section 6 hereof shall be
contributed by the Previous General Partner to either or both
of the General Partner and the Special Limited Partner in such
proportions as the Previous General Partner, the General
Partner and the Special Limited Partner shall determine.
(2) Subject to the Ownership Limit, no Tendering
Party may effect a Redemption for less than five hundred (500)
Preferred Units or, if such Tendering Party holds (as a
Limited Partner or, economically, as an Assignee) less than
five hundred (500) Preferred Units, all of the Preferred Units
held by such Tendering Party.
(3) Each Tendering Party (a) may effect a Redemption
only once in each fiscal quarter of a Twelve-Month Period and
(b) may not effect a Redemption during the period after the
Partnership Record Date with respect to a distribution and
before the record date established by the Previous General
Partner for a distribution to its shareholders of some or all
of its portion of such Partnership distribution.
(4) Notwithstanding anything herein to the contrary,
with respect to any Redemption or acquisition of Tendered
Units by the Previous General Partner pursuant to this
Section 6, in the event that the Previous General Partner or
the General Partner gives notice to all Limited Partners (but
excluding any Assignees) then owning Partnership Interests (a
"Primary Offering Notice") that the Previous General Partner
desires to effect a primary offering of its equity securities
then, unless the Previous General Partner and the General
Partner otherwise consent, commencement of the actions
denoted in Section 6(f) hereof as to a Public Offering
Funding with respect to any Notice of Redemption thereafter
received, whether or not the Tendering Party is a Limited
Partner, may be delayed until the earlier of (a) the
completion of the primary offering or (b) ninety (90) days
following the giving of the Primary Offering Notice.
(5) Without the Consent of the Previous General
Partner, no Tendering Party may effect a Redemption within
ninety (90) days following the closing of any prior Public
Offering Funding.
(6) The consummation of such Redemption shall be
subject to the expiration or termination of the applicable
waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(7) The Tendering Party shall continue to own
(subject, in the case of an Assignee, to the provision of
Section 11.5 of the Agreement) all Preferred Units subject to
any Redemption, and be treated as a Limited Partner or an
Assignee, as applicable, with respect to such Preferred Units
for all purposes of the Agreement, until such Preferred Units
are either paid for by the Partnership pursuant to this
Section 6 or transferred to the Previous General Partner (or
directly to the General Partner or Special Limited Partner)
and paid for, by the issuance of the REIT Shares, pursuant to
this Section 6 on the Specified Redemption Date. Until a
Specified Redemption Date and an acquisition of the Tendered
Units by the Previous General Partner pursuant to this Section
6, the Tendering Party shall have no rights as a
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shareholder of the Previous General Partner with respect to
the REIT Shares issuable in connection with such acquisition.
For purposes of determining compliance with the restrictions set forth in this
Section 6(h), all Partnership Common Units and Partnership Preferred Units,
including Preferred Units, beneficially owned by a Related Party of a Tendering
Party shall be considered to be owned or held by such Tendering Party.
(i) In connection with an exercise of Redemption rights
pursuant to this Section 6, the Tendering Party shall submit the following to
the General Partner, in addition to the Notice of Redemption:
(1) A written affidavit, dated the same date as the
Notice of Redemption, (a) disclosing the actual and
constructive ownership, as determined for purposes of Code
Sections 856(a)(6) and 856(h), of Common Shares or Preferred
Shares and any other classes or shares of the Previous General
Partner by (i) such Tendering Party and (ii) any Related Party
and (b) representing that, after giving effect to the
Redemption, neither the Tendering Party nor any Related Party
will own Common Shares or Preferred Shares in excess of the
Ownership Limit;
(2) A written representation that neither the
Tendering Party nor any Related Party has any intention to
acquire any additional Common Shares, Preferred Shares or any
other class of shares of the Previous General Partner prior to
the closing of the Redemption on the Specified Redemption
Date; and
(3) An undertaking to certify, at and as a condition
to the closing of the Redemption on the Specified Redemption
Date, that either (a) the actual and constructive ownership of
Common Shares or Preferred Shares or any other class of shares
of the Previous General Partner by the Tendering Party and any
Related Party remain unchanged from that disclosed in the
affidavit required by Section 6(i)(a) or (b)) after giving
effect to the Redemption, neither the Tendering Party nor any
Related Party shall own Common Shares or Preferred Shares or
other shares of the Previous General Partner in violation of
the Ownership Limit.
(j) On or after the Specific Redemption Date, each holder of
Preferred Units shall surrender to the Partnership the certificate evidencing
such holder's Preferred Units, at the address to which a Notice of Redemption is
required to be sent. Upon such surrender of a certificate, the Partnership shall
thereupon pay the former holder thereof the applicable Cash Amount and/or
deliver Common Shares or Preferred Shares for the Preferred Units evidenced
thereby. From and after the Specific Redemption Date (i) distributions with
respect to the Preferred Units shall cease to accumulate, (ii) the Preferred
Units shall no longer be deemed outstanding, (iii) the holders thereof shall
cease to be Partners to the extent of their interest in such Preferred Units,
and (iv) all rights whatsoever with respect to the Preferred Units shall
terminate, except the right of the holders of the Preferred Units to receive
Cash Amount and/or Common Shares or Preferred Shares therefor, without interest
or any sum of money in lieu of interest thereon, upon surrender of their
certificates therefor.
(k) Notwithstanding the provisions of this Section 6, the
Tendering Parties (i) shall not be entitled to elect or effect a Redemption
where the Redemption would consist of less than all the Preferred Units held by
Partners and, to the extent that the aggregate Percentage Interests of the
Limited Partners would be reduced, as a result of the Redemption, to less than
one percent (1%) and
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(ii) shall have no rights under the Agreement that would otherwise be prohibited
under the Charter. To the extent that any attempted Redemption would be in
violation of this Section 6(k), it shall be null and void ab initio, and the
Tendering Party shall not acquire any rights or economic interests in Common
Shares or Preferred Shares otherwise issuable by the Previous General Partner
hereunder.
(l) Notwithstanding any other provision of the Agreement, on
and after the date on which the aggregate Percentage Interests of the Limited
Partners (other than the Special Limited Partner) are less than one percent
(1%), the Partnership shall have the right, but not the obligation, from time to
time and at any time to redeem any and all outstanding Limited Partner Interests
(other than the Special Limited Partner's Limited Partner Interest) by treating
any Limited Partner as a Tendering Party who has delivered a Notice of
Redemption pursuant to this Section 6 for the amount of Preferred Units to be
specified by the General Partner, in its sole and absolute discretion, by notice
to such Limited Partner that the Partnership has elected to exercise its rights
under this Section 6(l). Such notice given by the General Partner to a Limited
Partner pursuant to this Section 6(l) shall be treated as if it were a Notice of
Redemption delivered to the General Partner by such Limited Partner. For
purposes of this Section 6(l), (a) any Limited Partner (whether or not eligible
to be a Tendering Party) may, in the General Partner's sole and absolute
discretion, be treated as a Tendering Party and (b) the provisions of Sections
6(f)(1), 6(h)(2), 6(h)(3) and 6(h)(5) hereof shall not apply, but the remainder
of this Section shall apply, mutatis mutandis.
7. STATUS OF REACQUIRED UNITS.
All Preferred Units which shall have been issued and reacquired in any
manner by the Partnership shall be deemed cancelled and no longer outstanding.
8. GENERAL.
The ownership of the Preferred Units shall be evidenced by one or more
certificates in the form of Annex II hereto. The General Partner shall amend
Exhibit A to the Agreement from time to time to the extent necessary to reflect
accurately the issuance of, and subsequent redemption, or any other event having
an effect on the ownership of, the Preferred Units.
9. ALLOCATIONS OF INCOME AND LOSS.
For each taxable year, (i) each holder of Preferred Units will be
allocated net income of the Partnership in an amount equal to the distributions
made on such holder's Preferred Units during such taxable year, and (ii) each
holder of Preferred Units will be allocated its pro rata share, based on the
portion of outstanding Preferred Units held by it, of any net loss of the
Partnership that is not allocated to holders of Partnership Common Units or
other interests in the Partnership. Upon liquidation, dissolution or winding up
of the Partnership, the holders of Preferred Units will be allocated income and
gain sufficient to enable them to realize the Liquidation Preference in full.
10. VOTING RIGHTS.
Except as otherwise required by applicable law or in the Agreement, the
holders of the Preferred Units will have the same voting rights as holders of
the Partnership Common Units. As long as any Preferred Units are outstanding,
for purposes of determining the Consent of Limited Partners under the Agreement,
the "Majority of Interests of Limited Partners" shall have the meaning set forth
in Section 2 hereof. As long as any Preferred Units are outstanding, in addition
to any other vote or consent of partners required by law or by the Agreement,
the affirmative vote or consent of holders of
R-11
<PAGE> 13
at least 50% of the outstanding Preferred Units will be necessary for effecting
any amendment of any of the provisions of the Partnership Unit Designation of
the Preferred Units that materially and adversely affects the rights or
preferences of the holders of the Preferred Units. The creation or issuance of
any class or series of Partnership Units, including, without limitation, any
Partnership Units that may have rights junior to, on a parity with, or senior or
superior to the Preferred Units, will not be deemed to have a material adverse
effect on the rights or preferences of the holders of Preferred Units. With
respect to the exercise of the above-described voting rights, each Preferred
Unit will have one (1) vote per Preferred Unit.
11. RESTRICTIONS ON TRANSFER.
Preferred Units are subject to the same restrictions on transfer
applicable to Common Units, as set forth in the Agreement.
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<PAGE> 14
ANNEX I
TO EXHIBIT R
NOTICE OF REDEMPTION
To: AIMCO Properties, L.P.
c/o AIMCO-GP, Inc.
1873 South Bellaire Street
17th Floor
Denver, Colorado 80222
Attention: Investor Relations
The undersigned Limited Partner or Assignee hereby irrevocably
tenders for redemption Class Two Partnership Preferred Units in AIMCO
Properties, L.P. in accordance with the terms of the Agreement of Limited
Partnership of AIMCO Properties, L.P., dated as of July 29, 1994, as it may be
amended and supplemented from time to time (the "Agreement"). All capitalized
terms used herein and not otherwise defined shall have the respective meanings
ascribed thereto in the Partnership Unit Designation of the Class Two
Partnership Preferred Units. The undersigned Limited Partner or Assignee:
(a) if the Partnership elects to redeem such Class Two
Partnership Preferred Units for Common Shares or Preferred Shares
rather than cash, hereby irrevocably transfers, assigns, contributes
and sets over to the Previous General Partner all of the undersigned
Limited Partner's or Assignee's right, title and interest in and to
such Class Two Partnership Preferred Units;
(b) undertakes (i) to surrender such Class Two Partnership
Preferred Units and any certificate therefor at the closing of the
Redemption contemplated hereby and (ii) to furnish to the Previous
General Partner, prior to the Specified Redemption Date:
(1) A written affidavit, dated the same date as this
Notice of Redemption, (a) disclosing the actual and
constructive ownership, as determined for purposes of Code
Sections 856(a)(6) and 856(h), of Common Shares or Preferred
Shares by (i) the undersigned Limited Partner or Assignee and
(ii) any Related Party and (b) representing that, after giving
effect to the Redemption, neither the undersigned Limited
Partner or Assignee nor any Related Party will own Common
Shares or Preferred Shares in excess of the Ownership Limit;
(2) A written representation that neither the
undersigned Limited Partner or Assignee nor any Related Party
has any intention to acquire any additional Common Shares or
Preferred Shares prior to the closing of the Redemption
contemplated hereby on the Specified Redemption Date; and
(3) An undertaking to certify, at and as a condition
to the closing of the Redemption contemplated hereby on the
Specified Redemption Date, that either (a) the actual and
constructive ownership of Common Shares or Preferred Shares by
the undersigned Limited Partner or Assignee
R-I-1
<PAGE> 15
and any Related Party remain unchanged from that disclosed in
the affidavit required by paragraph (1) above, or (b) after
giving effect to the Redemption contemplated hereby, neither
the undersigned Limited Partner or Assignee nor any Related
Party shall own Common Shares or Preferred Shares in violation
of the Ownership Limit.
(c) directs that the certificate representing the Common
Shares or Preferred Shares, or the certified check representing the
Cash Amount, in either case, deliverable upon the closing of the
Redemption contemplated hereby be delivered to the address specified
below;
(d) represents, warrants, certifies and agrees that:
(i) the undersigned Limited Partner or Assignee has,
and at the closing of the Redemption will have, good,
marketable and unencumbered title to such Preferred Units,
free and clear of the rights or interests of any other person
or entity;
(ii) the undersigned Limited Partner or Assignee has,
and at the closing of the Redemption will have, the full
right, power and authority to tender and surrender such
Preferred Units as provided herein; and
(iii) the undersigned Limited Partner or Assignee has
obtained the consent or approval of all persons and entities,
if any, having the right to consent to or approve such tender
and surrender.
Dated:
---------------
Name of Limited Partner or Assignee:
------------------------------------------
------------------------------------------
(Signature of Limited Partner or Assignee)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------------------
(continued on next page)
R-I-2
<PAGE> 16
Issue check payable to
or Certificates in the
name of:
------------------------------------------
Please insert social security
or identifying number:
------------------------------------------
NOTICE: THE SIGNATURE OF THIS NOTICE OF REDEMPTION MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE FOR THE CLASS TWO PREFERRED
UNITS WHICH ARE BEING REDEEMED IN EVERY PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION,
(Banks, Stockbrokers, Savings and Loan Associations and Credit Unions), WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC
RULE 17Ad-15.
R-I-3
<PAGE> 17
ANNEX II
TO EXHIBIT R
FORM OF UNIT CERTIFICATE
OF
CLASS TWO PARTNERSHIP PREFERRED UNITS
[THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION,](1) THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE AGREEMENT OF LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., DATED AS OF JULY
29, 1994, AS IT MAY BE AMENDED AND/OR SUPPLEMENTED FROM TIME TO TIME, A COPY OF
WHICH MAY BE OBTAINED FROM AIMCO-GP, INC, THE GENERAL PARTNER, AT ITS PRINCIPAL
EXECUTIVE OFFICE.
Certificate Number ________
AIMCO PROPERTIES, L.P.
FORMED UNDER THE LAWS OF THE STATE OF DELAWARE
This certifies that
------------------------------------------------------------
is the owner of
----------------------------------------------------------------
CLASS TWO PARTNERSHIP PREFERRED UNITS
OF
AIMCO PROPERTIES, L.P.,
transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Class Two Partnership Preferred Units represented hereby are
issued and shall be held subject to all of the provisions of the Agreement of
Limited Partnership of AIMCO Properties, L.P., as the same may be amended and/or
supplemented from time to time.
IN WITNESS WHEREOF, the undersigned has signed this Certificate.
Dated:
-------------
By
-----------------------------------
- ------------
(1) Not required if Units are issued pursuant to a current and effective
registration statement under the Act.
R-II-1
<PAGE> 18
ASSIGNMENT
For Value Received, ________________________________ hereby sells,
assigns and transfers unto
- -------------------------------------------------------------------------------
______________________ Class Two Partnership Preferred Unit(s) represented by
the within Certificate, and does hereby irrevocably constitute and appoint the
General Partner of AIMCO Properties, L.P. as its Attorney to transfer said Class
Two Partnership Preferred Unit(s) on the books of AIMCO Properties, L.P. with
full power of substitution in the premises.
Dated:
-------------
By
-----------------------------------
Name:
Signature Guaranteed by:
--------------------------------------
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION,
(Banks, Stockbrokers, Savings and Loan Associations and Credit Unions), WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO SEC
RULE 17Ad-15.
R-II-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 10-Q and is
qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 93,826
<SECURITIES> 0
<RECEIVABLES> 22,241
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,852,477
<DEPRECIATION> (261,228)
<TOTAL-ASSETS> 4,291,747
<CURRENT-LIABILITIES> 0
<BONDS> 1,608,895
149,500
616,250
<COMMON> 617
<OTHER-SE> 1,535,746
<TOTAL-LIABILITY-AND-EQUITY> 4,291,747
<SALES> 121,142
<TOTAL-REVENUES> 131,509
<CGS> 82,686
<TOTAL-COSTS> 88,318
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,330
<INCOME-PRETAX> 13,956
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,956
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,956
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
<PAGE> 1
EXHIBIT 99.1
Agreement Regarding Disclosure of Long-Term Debt Instruments
In reliance upon Item 601(b)(4)(iii)(A), of Regulation S-K, AIMCO
Properties, L.P., a Delaware limited partnership (the "Partnership") has not
filed as an exhibit to its Quarterly Report on Form 10-Q for the quarterly
period ending March 31, 1999, any instrument with respect to long-term debt not
being registered where the total amount of securities authorized thereunder does
not exceed 10 percent of the total assets of the Partnership and its
subsidiaries on a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A), of
Regulation S-K, the Partnership hereby agrees to furnish a copy of any such
agreement to the Securities Exchange Commission upon request.
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
By: /s/ PETER KOMPANIEZ
--------------------------
Peter Kompaniez
President
