<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
<TABLE>
<S> <C> <C>
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
</TABLE>
---------------------
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
Incorporation or organization) Identification No.)
1873 S. BELLAIRE STREET, SUITE 1700,
DENVER, COLORADO 80222-4348
(Address of principal executive offices) (Zip Code)
</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 July 31,
1999: 65,120,767
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
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 June 30, 1999 (unaudited)
and December 31, 1998..................................... 3
Consolidated Statements of Income for the Three and Six
Months Ended June 30, 1999 and 1998 (unaudited)........... 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1999 and 1998 (unaudited).................. 5
Notes to Consolidated Financial Statements (unaudited)...... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 13
ITEM 3. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 21
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings........................................... 22
ITEM 2. Changes in Securities and Use of Proceeds................... 22
ITEM 4. Submission of Matters to a Vote of Security Holders......... 23
ITEM 6. Exhibits and Reports on Form 8-K............................ 23
Signatures ............................................................ 24
</TABLE>
2
<PAGE> 3
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
Real estate, net of accumulated depreciation of $291,755 and
$228,880.................................................. $2,679,317 $2,573,718
Property held for sale...................................... 10,625 27,304
Investments in unconsolidated real estate partnerships...... 1,045,426 945,035
Investments in unconsolidated subsidiaries.................. 46,698 62,244
Notes receivable from unconsolidated real estate
partnerships.............................................. 99,507 103,979
Notes receivable from and advances to unconsolidated
subsidiaries.............................................. 137,367 136,173
Cash and cash equivalents................................... 51,658 71,305
Restricted cash............................................. 54,267 55,826
Notes receivable............................................ 20,027 33,708
Other assets................................................ 255,798 258,993
---------- ----------
Total assets................................................ $4,400,690 $4,268,285
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured notes payable....................................... $1,185,219 $ 843,791
Secured tax-exempt bond financing........................... 381,876 398,602
Unsecured short-term financing.............................. -- 310,300
Secured short-term financing................................ -- 108,022
---------- ----------
Total indebtedness................................ 1,567,095 1,660,715
Accounts payable, accrued and other liabilities............. 181,472 208,300
Resident security deposits and prepaid rents................ 13,475 12,654
---------- ----------
Total liabilities................................. 1,762,042 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......................... 83,471 185,705
Minority interest in operating partnership.................. 132,252 148,847
Stockholders' equity
Preferred Stock........................................... 641,250 792,468
Class A Common Stock, $.01 par value, 475,937,500 shares
and 484,027,500 shares authorized, 65,079,240 and
48,451,388 shares issued and outstanding,
respectively........................................... 651 485
Additional paid-in capital................................ 1,831,482 1,246,962
Notes receivable on common stock purchases................ (51,273) (49,658)
Distributions in excess of earnings....................... (148,685) (87,693)
---------- ----------
Total stockholders' equity........................ 2,273,425 1,902,564
---------- ----------
Total liabilities and stockholders' equity.................. $4,400,690 $4,268,285
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS SIX MONTHS
ENDED ENDED
------------------- -------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS:
Rental and other property revenues................. $116,237 $ 89,928 $228,823 $161,264
Property operating expenses........................ (45,095) (33,334) (88,265) (59,643)
Owned property management expense.................. (3,500) (2,581) (7,002) (4,713)
Depreciation....................................... (27,827) (20,312) (54,939) (34,289)
-------- -------- -------- --------
Income from property operations.................... 39,815 33,701 78,617 62,619
-------- -------- -------- --------
SERVICE COMPANY BUSINESS:
Management fees and other income................... 7,536 4,741 16,092 9,562
Management and other expenses...................... (2,386) (3,558) (11,288) (5,670)
-------- -------- -------- --------
Income from service company business............... 5,150 1,183 4,804 3,892
-------- -------- -------- --------
General and administrative expenses................ (2,860) (2,129) (6,550) (4,103)
Interest expense................................... (29,734) (19,337) (61,064) (34,778)
Interest income.................................... 11,575 5,274 21,942 11,350
Equity in earnings (losses) of unconsolidated real
estate partnerships.............................. 2,963 (4,028) 3,779 (4,681)
Equity in earnings (losses) of unconsolidated
subsidiaries..................................... (959) 1,541 1,413 5,609
Minority interest in other entities................ (15) 66 96 (516)
Amortization....................................... (1,942) (1,677) (3,884) (3,394)
-------- -------- -------- --------
Income from operations............................. 23,993 14,594 39,153 35,998
Gain on disposition of properties.................. -- -- 15 2,526
-------- -------- -------- --------
Income before minority interest in operating
partnership...................................... 23,993 14,594 39,168 38,524
Minority interest in operating partnership......... (876) (974) (2,095) (3,262)
-------- -------- -------- --------
Net income......................................... $ 23,117 $ 13,620 $ 37,073 $ 35,262
======== ======== ======== ========
Net income attributable to preferred
stockholders..................................... $ 13,993 $ 4,969 $ 27,613 $ 8,650
-------- -------- -------- --------
Net income attributable to common stockholders..... $ 9,124 $ 8,651 $ 9,460 $ 26,612
======== ======== ======== ========
COMPREHENSIVE INCOME:
Net income......................................... $ 23,117 $ 13,620 $ 37,073 $ 35,262
Other comprehensive income:
Net unrealized loss on investment in
securities............................. -- 1,626 -- 1,466
-------- -------- -------- --------
Comprehensive income............................... $ 23,117 $ 15,246 $ 37,073 $ 36,728
======== ======== ======== ========
Basic earnings per common share.................... $ 0.15 $ 0.19 $ 0.16 $ 0.62
======== ======== ======== ========
Diluted earnings per common share.................. $ 0.14 $ 0.19 $ 0.16 $ 0.61
======== ======== ======== ========
Weighted average common shares outstanding......... 62,323 45,298 59,396 43,206
======== ======== ======== ========
Weighted average common shares and common share
equivalents outstanding.......................... 63,552 45,539 60,982 43,409
======== ======== ======== ========
Dividends paid per common share.................... $0.625 $0.5625 $1.25 $1.125
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
----------------------
JUNE 30, JUNE 30,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................ $ 37,073 $ 35,262
--------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 67,095 38,666
Gain on disposition of properties....................... (15) (2,526)
Minority interest in operating partnership.............. 2,095 3,262
Minority interests in other entities.................... (96) 516
Equity in (earnings) losses of unconsolidated real
estate partnerships.................................... (3,779) 4,681
Equity in (earnings) of unconsolidated subsidiaries..... (1,413) (5,609)
Changes in operating assets and operating liabilities... 2,767 (68,414)
--------- ---------
Total adjustments................................... 66,654 (29,424)
--------- ---------
Net cash provided by operating activities........... 103,727 5,838
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of real estate................................... (32,366) (30,405)
Additions to real estate.................................. (48,088) (28,652)
Proceeds from sale of property held for sale.............. 38,594 11,617
Purchase of notes receivable, general limited partnerships
interests and other assets.............................. (29,467) (10,894)
Purchase of/additions to notes receivable................. (29,201) (64,914)
Proceeds from sale of notes receivable.................... 17,788 --
Proceeds from repayment of notes receivable............... 15,220 18,087
Cash received in connection with acquisitions............. -- 4,492
Cash paid for merger related costs........................ (14,743) --
Distributions from investments in real estate
partnerships............................................ 22,329 --
Distributions from investments in unconsolidated
subsidiaries............................................ 18,393 --
--------- ---------
Net cash used in investing activities............... (41,541) (100,669)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from secured notes payable borrowings............ 248,014 32,284
Principal repayments on secured notes payable............. (18,768) (51,582)
Proceeds from secured tax-exempt bond financing........... 20,731 --
Principal repayments on secured tax-exempt bond
financing............................................... (35,887) (979)
Repayments on secured short-term financing................ (4,522) (19,099)
Net borrowings (paydowns) on revolving credit
facilities.............................................. (360,300) 100,913
Payment of loan costs, including proceeds and costs from
interest rate hedge..................................... (9,423) (6,659)
Proceeds from issuances of Class A Common Stock........... -- 9,004
Proceeds from issuances of Preferred Stock................ 234,669 100,294
Proceeds from exercises of employee stock options and
warrants................................................ 1,691 1,978
Principal repayments received on notes due from officers
on Class A Common Stock purchases....................... 3,183 5,730
Repurchase of Class A common stock........................ -- (5,982)
Payment of common stock dividends......................... (73,361) (46,672)
Payment of distributions to minority interest............. (17,827) (6,283)
Payment of preferred stock dividends...................... (70,033) (5,884)
--------- ---------
Net cash (used in) provided by financing
activities.......................................... (81,833) 107,063
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (19,647) 12,232
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 71,305 37,088
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 51,658 $ 49,320
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 92% interest in the AIMCO operating partnership as of June
30, 1999. AIMCO-GP, Inc. is the sole general partner of the AIMCO operating
partnership.
At June 30, 1999, AIMCO had 65,079,240 shares of Class A Common Stock
outstanding and the AIMCO operating partnership had 5,419,504 Partnership Common
Units ("Common OP Units") outstanding (excluding units held by the Company), for
a combined total of 70,498,744 shares and Common OP Units outstanding.
As of June 30, 1999, AIMCO:
- owned or controlled 64,640 units in 241 apartment properties;
- held an equity interest in 168,392 units in 887 apartment properties; and
- managed 136,627 units in 909 apartment properties for third party owners
and affiliates.
NOTE 2 -- BASIS OF PRESENTATION
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 of AIMCO or the AIMCO operating partnership.
The accompanying unaudited consolidated financial statements of the Company
as of June 30, 1999 and for the three and six months ended June 30, 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. The following notes to
consolidated financial statements highlight significant changes to the notes
included in the Annual Report on Form 10-K and present interim disclosures as
required by the Securities and Exchange Commission. 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. 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
6
<PAGE> 7
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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).
NOTE 4 -- ACQUISITIONS
During the six months ended June 30, 1999, in addition to the IPT Merger
(see Note 3), the Company purchased nine apartment communities containing a
total of 3,362 apartment units for a total purchase price of $120.6 million.
<TABLE>
<CAPTION>
DATE ACQUIRED PROPERTY LOCATION NUMBER OF UNITS PURCHASE PRICE
- ------------- -------- -------- --------------- --------------
<S> <C> <C> <C> <C>
May 1999.............. Beach Lake Durham, NC 345 $ 15.0 million
May 1999.............. Briarwood Fayetteville, NC 274 8.3 million
May 1999.............. Hunters Creek Cincinnati, OH 146 4.4 million
May 1999.............. Somerset Lakes Indianapolis, IN 360 23.5 million
May 1999.............. Steeplechase Loveland, OH 272 11.0 million
May 1999.............. Walden Village Clarkson, GA 372 13.4 million
May 1999.............. Windgate Place Charlotte, NC 196 6.9 million
May 1999.............. Woodfield Gardens Charlotte, NC 132 3.5 million
May 1999.............. Lake Castleton Indianapolis, IN 1,265 34.6 million
----- --------------
3,362 $120.6 million
===== ==============
</TABLE>
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
Legal
The Company is a party to various legal actions resulting from its
operating activities. These actions are routine litigation and administrative
proceedings arising in the ordinary course of business, some of which are
covered by liability insurance, and none of which are expected to have a
material adverse effect on the consolidated financial condition or results of
operations of the Company and its subsidiaries taken as a whole.
In connection with the Company's offers to purchase interests in limited
partnerships that own properties, the Company and its affiliates are sometimes
subject to legal actions, including allegations that such activities may involve
breaches of fiduciary duties to the limited partners of such partnerships or
violations of the relevant partnership agreements. The Company believes it
complies with its fiduciary obligations and relevant partnership agreements, and
does not expect such legal actions to have a material adverse effect on the
consolidated financial condition or results of operations of the Company and its
subsidiaries taken as a whole.
Pending Investigations of HUD Management Arrangements
In July 1999, NHP received a grand jury subpoena requesting documents
relating to NHP's management of HUD-assisted or HUD-insured multi-family
projects and NHP's operation of a group purchasing program created by NHP, known
as Buyers Access. The subpoena relates to the same subject matter as subpoenas
NHP received in October and December of 1997 from the HUD Inspector General. To
date, neither the HUD Inspector General nor the grand jury has initiated any
action against NHP or AIMCO or, to NHP's or AIMCO's knowledge, any owner of HUD
property managed by NHP. AIMCO believes that NHP's operations and programs are
in compliance, in all material respects, with all laws, rules and regulations
relating to HUD-assisted or HUD-insured properties. AIMCO does not believe that
the investigations will result in a
7
<PAGE> 8
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
material adverse impact on its operations. However, as with any similar
investigation, there can be no assurance that these will not result in material
fines, penalties or other costs.
Environmental
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.
NOTE 6 -- 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 separate loan transactions in February and March 1999, the Company
incurred, in the aggregate, $125.4 million of long-term, fixed rate, fully
amortizing notes payable. Each of the notes payable is individually secured by
one of the 20 properties that was refinanced with no cross-collateralization.
The Company used $8.2 million of the net proceeds from the borrowings to
refinance existing notes payable, and $117.2 million of net proceeds from the
borrowings to repay debt under the interim loan agreement with Lehman Brothers
Inc.
In the second quarter of 1999, the Company closed twelve mortgage loans
totaling approximately $98.3 million with a weighted average interest rate of
6.85%. Each of the mortgage loans is individually secured by one of the twelve
properties with no cross-collateralization. The Company used $25.6 million of
the proceeds from such loans for new acquisitions (as described in Note 4), and
$72.7 million to refinance existing debt.
As of June 30, 1999, there were no amounts outstanding under the credit
facility or the IPT credit agreement, and the Lehman Brothers Inc. interim loan
agreement had been repaid in full. The amount available under the credit
facilities at June 30, 1999 was $145.0 million.
8
<PAGE> 9
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7 -- STOCKHOLDERS' EQUITY
Preferred Stock
At June 30, 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,
2,400,000 shares authorized, 2,400,000 and 2,400,000
shares issued and outstanding; dividends payable at 9.0%,
per annum................................................. 60,000 60,000
Class D Cumulative Preferred Stock, $.01 par value,
4,200,000 shares authorized, 4,200,000 and 4,200,000
shares issued and outstanding; dividends payable at 8.75%,
per annum................................................. 105,000 105,000
Class G Cumulative Preferred Stock, $.01 par value,
4,050,000 shares authorized, 4,050,000 and 4,050,000
shares issued and outstanding; dividends payable at
9.375%, per annum......................................... 101,250 101,250
Class H Cumulative Preferred Stock, $.01 par value,
2,000,000 shares authorized, 2,000,000 and 2,000,000
shares issued and outstanding; dividends payable at 9.5%,
per annum................................................. 50,000 50,000
Class J Cumulative Convertible Preferred Stock, $.01 par
value, 1,250,000 shares authorized, no and 1,000,000
shares issued and outstanding............................. -- 100,000
Class K Convertible Cumulative Preferred Stock, $.01 par
value, 5,000,000 shares authorized, 5,000,000 and no
shares issued and outstanding............................. 125,000 --
Class L Convertible Cumulative Preferred Stock, $.01 par
value, 5,000,000 shares authorized, 5,000,000 and no
shares issued and outstanding............................. 125,000 --
Class E Cumulative Convertible Preferred Stock, $.01 par
value, 10,000,000 shares authorized, no and 8,423,658
shares issued and outstanding............................. -- 301,218
-------- --------
$641,250 $792,468
======== ========
</TABLE>
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.
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),
9
<PAGE> 10
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
In May 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.
In May 1999, AIMCO issued 5,000,000 shares of newly created Class L
Convertible Cumulative Preferred Stock, par value $.01 per share ("Class L
Preferred Stock"), in a private offering. The proceeds of $125.0 million were
used to repay certain indebtedness and for working capital. For three years, the
holder of the Class L Preferred Stock is 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) $2.025 per year (equivalent to 8.1% of the
liquidation preference), or (ii) the cash dividends payable on the number of
shares of Class A Common Stock into which a share of Class L Preferred Stock is
convertible. Beginning with the third anniversary of the date of original
issuance, the holder of Class L Preferred Stock will be entitled to receive an
amount per share equal to the greater of (i) $2.50 per year (equivalent to 10%
of the liquidation preference), or (ii) the cash dividends payable on the number
of shares of Class A Common Stock into which a share of Class L Preferred Stock
is convertible. The Class L Preferred Stock is senior to the Class A Common
Stock as to dividends and liquidation. Upon any liquidation, dissolution or
winding up of the Company, before payments or distributions by the Company are
made to any holders of Class A Common Stock, the holder of the Class L Preferred
Stock is entitled to receive a liquidation preference of $25 per share, plus
accumulated, accrued and unpaid dividends.
10
<PAGE> 11
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8 -- 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. The following tables illustrate the
calculation of basic and diluted earnings per share for the six and three months
ended June 30, 1999 and 1998 (in thousands, except per share data):
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
NUMERATOR:
Net income.................................................. $ 37,073 $35,262
Preferred stock dividends................................... (27,613) (8,650)
-------- -------
Numerator for basic and diluted earnings per share --income
attributable to common stockholders....................... $ 9,460 $26,612
======== =======
DENOMINATOR:
Denominator for basic earnings per share -- weighted average
number of shares of common stock outstanding.............. 59,396 43,206
-------- -------
Effect of dilutive securities:
Class E Preferred Stock................................... 655 --
Employee stock options.................................... 622 203
Warrants.................................................. 309 --
-------- -------
Dilutive potential common shares.......................... 1,586 203
-------- -------
Denominator for dilutive earnings per share................. 60,982 43,409
======== =======
Basic earnings per common share:
Operations................................................ $ 0.16 $ 0.56
Gain on disposition of properties......................... -- 0.06
-------- -------
Total............................................. $ 0.16 $ 0.62
======== =======
Diluted earnings per common share:
Operations................................................ $ 0.16 $ 0.55
Gain on disposition of properties......................... -- 0.06
-------- -------
Total............................................. $ 0.16 $ 0.61
======== =======
</TABLE>
11
<PAGE> 12
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
THREE THREE
MONTHS MONTHS
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
NUMERATOR:
Net income.................................................. $ 23,117 $13,620
Preferred stock dividends................................... (13,993) (4,969)
-------- -------
Numerator for basic and diluted earnings per share --income
attributable to common stockholders....................... $ 9,124 $ 8,651
======== =======
DENOMINATOR:
Denominator for basic earnings per share -- weighted average
number of shares of common stock outstanding.............. 62,323 45,298
-------- -------
Effect of dilutive securities:
Employee stock options.................................... 915 241
Warrants.................................................. 314 --
-------- -------
Dilutive potential common shares.......................... 1,229 241
-------- -------
Denominator for dilutive earnings per share................. 63,552 45,539
======== =======
Basic earnings per common share:
Operations................................................ $ 0.15 $ 0.19
Gain on disposition of properties......................... -- --
-------- -------
Total............................................. $ 0.15 $ 0.19
======== =======
Diluted earnings per common share:
Operations................................................ $ 0.14 $ 0.19
Gain on disposition of properties......................... -- --
-------- -------
Total............................................. $ 0.14 $ 0.19
======== =======
</TABLE>
NOTE 9 -- INDUSTRY SEGMENTS
The Company owns and operates multi-family apartment communities throughout
the United States and Puerto Rico, which generate rental and other
property-related income through the leasing of apartment units. The Company
separately evaluates the performance of each of its apartment communities.
However, because 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 who contributed 10% or
more of the Company's total revenues during the three months ended June 30, 1999
or June 30, 1998.
12
<PAGE> 13
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
As of June 30, 1999, the Company owned or managed 369,659 apartment units,
comprised of 64,640 units in 241 apartment communities owned or controlled by
the Company (the "Owned Properties"), 168,392 units in 887 apartment communities
in which the Company has an equity interest (the "Equity Properties") and
136,627 units in 909 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 election to be subject to tax 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 Six Months Ended June 30, 1999 to the Six Months Ended June
30, 1998
NET INCOME
The Company recognized net income of $37.1 million for the six months ended
June 30, 1999, compared to $35.3 million for the six months ended June 30, 1998.
The increase in net income of $1.8 million, or 5.1%, was primarily the result of
the acquisition of Insignia Financial Group, Inc. ("Insignia"), Ambassador
Apartments, Inc. ("Ambassador") and Insignia Properties Trust ("IPT"), and the
purchase of thirty properties during 1998 and nine properties during 1999.
CONSOLIDATED RENTAL PROPERTY OPERATIONS
Rental and other property revenues from the consolidated Owned Properties
totaled $228.8 million for the six months ended June 30, 1999, compared to
$161.3 million for the six months ended June 30, 1998, an increase of $67.5
million, or 41.8%. The increase in rental and other property revenues was
primarily due to the acquisitions of Ambassador, Insignia and IPT.
Property operating expenses for the consolidated Owned Properties,
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, totaled $88.3 million
for the six months ended June 30, 1999, compared to $59.6 million for the six
months ended June 30, 1998, an increase of $28.7 million or 48.2%. The increase
in property operating expenses was primarily due to the acquisitions of
Ambassador, Insignia and IPT.
13
<PAGE> 14
SERVICE COMPANY BUSINESS
The Company's share of income from the service company business was $4.8
million for the six months ended June 30, 1999, compared to $3.9 million for the
six months ended June 30, 1998. The increase in service company business income
of $0.9 million was primarily due to the acquisitions of Insignia and IPT and a
change in the allocation of management contracts expense between the
consolidated service company and the unconsolidated subsidiaries.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased from $4.1 million for the six
months ended June 30, 1998 to $6.6 million for the six months ended June 30,
1999, a 61.0% increase. The increase of $2.5 million is primarily due to
additional corporate costs and additional employee salaries associated with the
merger with Ambassador in May 1998, the merger with Insignia in October 1998 and
the merger with IPT in February 1999. 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 $61.1 million for the six months ended June 30, 1999, compared to
$34.8 million for the six months ended June 30, 1998, an increase of $26.3
million, or 75.6%. The increase was primarily due to interest expense incurred
in connection with the acquisitions of Ambassador, Insignia and IPT, and
interest expense incurred in connection with 1998 and 1999 acquisitions.
INTEREST INCOME
Interest income totaled $21.9 million for the six months ended June 30,
1999, compared to $11.4 million for the six months ended June 30, 1998. The
increase of $10.5 million is primarily due to interest earned on loans made by
the Company to partnerships in which the Company acts as the general partner and
interest earned on notes receivable acquired in the merger with IPT.
Comparison of the Three Months Ended June 30, 1999 to the Three Months Ended
June 30, 1998
NET INCOME
The Company recognized net income of $23.1 million for the three months
ended June 30, 1999, compared to $13.6 million for the three months ended June
30, 1998. The increase in net income of $9.5 million, or 69.8%, was primarily
the result of the acquisitions of Insignia, Ambassador, and IPT, and the
purchase of thirty properties during 1998 and nine properties during 1999.
CONSOLIDATED RENTAL PROPERTY OPERATIONS
Rental and other property revenues from the consolidated Owned Properties
totaled $116.2 million for the three months ended June 30, 1999, compared to
$89.9 million for the three months ended June 30, 1998, an increase of $26.3
million, or 29.3%. The increase in rental and other property revenues was
primarily due to the acquisitions of Ambassador, Insignia and IPT.
Property operating expenses for the consolidated Owned Properties,
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, totaled $45.1 million
for the three months ended June 30, 1999, compared to $33.3 million for the
three months ended June 30, 1998, an increase of $11.8 million or 35.4%. The
increase in property operating expenses was primarily due to the acquisitions of
Ambassador, Insignia and IPT.
14
<PAGE> 15
SERVICE COMPANY BUSINESS
Income from the service company business was $5.2 million for the three
months ended June 30, 1999, compared to $1.2 million for the three months ended
June 30, 1998. The increase in service company business income of $4.0 million
was primarily due to the acquisitions of Insignia and IPT and a change in the
allocation of management contracts expense between the consolidated service
company and the unconsolidated subsidiaries.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased from $2.1 million for the
three months ended June 30, 1998 to $2.9 million for the three months ended June
30, 1999, a 38.1% increase. The increase is primarily due to additional
corporate costs and additional employee salaries associated with the merger with
Ambassador in May 1998, the merger with Insignia in October 1998, and the merger
with IPT in February 1999. 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 $29.7 million for the three months ended June 30, 1999, compared
to $19.3 million for the three months ended June 30, 1998, an increase of $10.4
million, or 53.9%. The increase was primarily due to interest expense incurred
in connection with the acquisitions of Ambassador, Insignia and IPT, and
interest expense incurred in connection with 1998 and 1999 acquisitions.
INTEREST INCOME
Interest income totaled $11.6 million for the three months ended June 30,
1999, compared to $5.3 million for the three months ended June 30, 1998. The
increase of $6.3 million is primarily due to interest earned on loans made by
the Company to partnerships in which the Company acts as the general partner and
interest earned on notes receivable acquired in the merger with IPT.
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to meet its short-term liquidity requirements,
including property acquisitions, tender offers and refinancings of short-term
debt with long-term, fixed rate, fully amortizing debt, secured or unsecured
short-term debt, the issuance of debt 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 the AIMCO operating
partnership. The registration statement was declared effective by the SEC on
December 10, 1998. As of June 30, 1999, the Company had $1,143 million of
securities available and the AIMCO operating partnership had $500 million of
securities available from this registration statement.
At June 30, 1999, the Company had $51.7 million in cash and cash
equivalents. In addition, the Company had $54.3 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.
15
<PAGE> 16
In the second quarter of 1999, the Company closed twelve mortgage loans
totaling approximately $98.3 million with a weighted average interest rate of
6.85%. Each of the mortgage loans is individually secured by one of the twelve
properties with no cross-collateralization. The Company used $25.6 million of
the proceeds from such loans for new acquisitions, and $72.7 million to
refinance existing debt.
As of June 30, 1999, there were no amounts outstanding under the credit
facility or the IPT credit agreement, and the Lehman Brothers, Inc. interim loan
agreement had been repaid in full. The amount available under the credit
facilities at June 30, 1999 was $145.0 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 six months ended June 30, 1999, the Company made separate
offers to the limited partners of 247 partnerships to acquire their limited
partnership interests. The Company committed to acquire approximately $69.0
million (including transaction costs) of limited partnership interests pursuant
to the offers.
In May 1999, the Company met the 12.5% internal rate of return threshold
and converted $100 million of convertible preferred stock into 2.5 million
shares of Class A Common Stock at $40 per share.
In May 1999, the Company issued 5,000,000 shares of newly created Class L
Convertible Cumulative Preferred Stock, par value $.01 per share ("Class L
Preferred Stock"), in a private transaction. The proceeds of $125.0 million were
used to repay certain indebtedness and for working capital. For three years,
holders of the Class L 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) $2.025 per year (equivalent to 8.1% of the
liquidation preference), or (ii) the cash dividends payable on the number of
shares of Class A Common Stock into which a share of Class L Preferred Stock is
convertible. Beginning with the third anniversary of the date of original
issuance, holders of Class L Preferred Stock will be entitled to receive an
amount per share equal to the greater of (i) $2.50 per year (equivalent to 10%
of the liquidation preference), or (ii) the cash dividends payable on the number
of shares of Class A Common Stock into which a share of Class L Preferred Stock
is convertible. The Class L Preferred Stock is senior to the Class A Common
Stock as to dividends and liquidation. Upon any liquidation, dissolution or
winding up of the Company, before payments or distributions by the Company may
be made to any holders of Class A Common Stock, the holders of the Class L
Preferred Stock are entitled to receive a liquidation preference of $25 per
share, plus accumulated, accrued and unpaid dividends.
CAPITAL EXPENDITURES
For the six months ended June 30, 1999, the Company spent $19.3 million for
Capital Replacements (expenditures for routine maintenance of a property), $4.5
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 $24.3 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),
16
<PAGE> 17
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.
For the three months and six months ended June 30, 1999 and 1998, the
Company's FFO was as follows (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Income before minority interest in
operating partnership........... $23,993 $14,594 $ 39,168 $38,524
Gain on disposition of
properties................... -- -- (15) (2,526)
Real estate depreciation, net of
minority interest............ 26,713 19,644 52,413 32,423
Real estate depreciation related
to unconsolidated entities... 23,641 5,938 44,756 9,131
Amortization of goodwill........ 2,309 2,338 4,911 4,727
Amortization of recoverable
amount of management
contracts.................... 10,399 1,709 20,796 3,088
Deferred taxes charged
(benefit).................... (659) 3,982 1,797 4,291
Preferred stock dividends....... (8,142) (3,647) (18,489) (6,001)
Preferred OP Unit
distributions................ (180) -- (1,038) --
------- ------- -------- -------
Funds From Operations (FFO)..... $78,074 $44,558 $144,299 $83,657
======= ======= ======== =======
Weighted average number of
common shares, common share
equivalents and OP Units
outstanding:
Common stock and common stock
equivalents................ 71,909 48,002 66,392 45,872
OP Units..................... 5,621 5,861 6,964 5,606
------- ------- -------- -------
77,530 53,863 73,356 51,478
======= ======= ======== =======
</TABLE>
For the six months ended June 30, 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.................. $103,727 $ 5,838
Cash flow used in investing activities...................... (41,541) (100,669)
Cash flow (used in) provided by financing activities........ (81,833) 107,063
</TABLE>
LITIGATION
The Company is a party to various legal actions resulting from its
operating activities. These actions are routine litigation and administrative
proceedings arising in the ordinary course of business, some of which are
covered by liability insurance, and none of which are expected to have a
material adverse effect on the consolidated financial condition or results of
operations of the Company and its subsidiaries taken as a whole.
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
17
<PAGE> 18
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.
CONTINGENCIES
Pending Investigations of HUD Management Arrangements
In July 1999, NHP received a grand jury subpoena requesting documents
relating to NHP's management of HUD-assisted or HUD-insured multi-family
projects and NHP's operation of a group purchasing program created by NHP, known
as Buyers Access. The subpoena relates to the same subject matter as subpoenas
NHP received in October and December of 1997 from the HUD Inspector General. To
date, neither the HUD Inspector General nor the grand jury has initiated any
action against NHP or AIMCO or, to NHP's or AIMCO's knowledge, any owner of a
HUD property managed by NHP. AIMCO believes that NHP's operation and program are
in compliance, in all material respects, with all laws, rules and regulations
relating to HUD-assisted or HUD-insured properties. AIMCO does not believe that
the investigations will result in a material adverse impact on its operations.
However, as with any similar investigation, there can be no assurance that these
will not result in material fines, penalties or other costs.
Environmental
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.
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
18
<PAGE> 19
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 the Company 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 October 1998, the Company merged with Insignia. In April 1999, the
Company embarked on a data center consolidation project that unifies the
Company's and Insignia's core financial systems under one Year 2000 compliant
system. The estimated completion date for this project is October 1999.
In connection with the data center consolidation, PC-based network servers,
routers and desktop PCs were analyzed for compliance. The Company has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
June 30, 1999, had completed approximately 90% 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 September 30, 1999. The
completion of this process is scheduled to coincide with the release of a
compliant version of the operating system.
Computer Software
The Company 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.
In 1997, when the Company merged with NHP, the core financial system used
by NHP was Year 2000 compliant. During 1998, the Company integrated all of its
core financial systems to this compliant system for general ledger and financial
reporting purposes.
The data center consolidation project will also unify the core computer
software applications of the Company and those acquired in the merger with
Insignia.
In 1997, the Company determined that the software used for property
management and rent collection was not Year 2000 compliant. During 1998, the
Company implemented a Year 2000 compliant system at each of its owned or managed
properties, at a cost of $1.5 million. During 1998, the Company acquired 82
properties and acquired the Insignia multi-family business. Insignia owned or
managed 1,100 properties. As properties are acquired, the Company converts the
existing property management and rent collection systems to the Company'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 was completed in June 1999.
The final software area is the office software and server operating
systems. The Company has upgraded all non-compliant office software systems on
each PC and has upgraded 90% of the server operating systems. The remaining
server operating systems are expected to be upgraded to be Year 2000 compliant
by September 1999. The completion of this process is scheduled to coincide with
the release of a compliant version of the operating system.
19
<PAGE> 20
Operating Equipment
The Company has operating equipment, primarily at the property sites, which
is being evaluated for Year 2000 compliance. In September 1997, the Company
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 the Company at risk financially or
operationally.
A pre-assessment of the Company's properties has indicated no Year 2000
issues. A complete, formal assessment of all properties is in process and will
be completed in September 1999. Any operating equipment that is found
non-compliant will be repaired or replaced.
The total cost incurred as of June 30, 1999 to replace or repair the
operating equipment was approximately $70,000. The Company estimates the cost to
replace or repair any remaining operating equipment is approximately $125,000,
and the Company expects the replacement and repairs to be completed by September
30, 1999.
The Company 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
The Company continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Company
has banking relationships with three major financial institutions, all of which
have indicated their compliance efforts will be complete before the end of the
third quarter 1999. The Company has updated data transmission standards with two
of the three financial institutions. The Company's contingency plan in this
regard is to move accounts from any institution that cannot be certified Year
2000 compliant by September 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 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 Company's Year 2000 project is estimated at $3.4
million and is being funded from operating cash flows. To date, the Company has
incurred approximately $2.9 million ($0.7 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 $0.4 million
is attributable to the purchase of new software and operating equipment, which
will be capitalized. The remaining $100,000 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
20
<PAGE> 21
occur. The worst case scenarios include failure of operation of 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 an event 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.
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 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 $31.7 million of variable rate debt outstanding at June 30,
1999, which represents 2.0% 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 $0.3 million on an annual
basis.
The estimated aggregate fair value of the Company's cash and cash
equivalents, receivables, payables and short-term secured and unsecured debt as
of June 30, 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.
21
<PAGE> 22
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
HUD APPROVALS AND ENFORCEMENT
Pending Investigations of HUD Management Arrangements
In July 1999, NHP received a grand jury subpoena requesting documents
relating to NHP's management of HUD-assisted or HUD-insured multi-family
projects and NHP's operation of a group purchasing program created by NHP, known
as Buyer Access. The subpoena relates to the same subject matter as subpoenas
NHP received in October and December of 1997 from the HUD Inspector General. To
date, neither the HUD Inspector General nor the grand jury has initiated any
action against NHP or AIMCO or, to NHP's or AIMCO's knowledge, any owner of a
HUD property managed by NHP. AIMCO believes that NHP's operations and programs
are in compliance, in all material respects, with all laws, rules and
regulations relating to HUD-assisted or HUD-insured properties. AIMCO does not
believe that the investigations will result in a material adverse impact on its
operations. However, as with any similar investigation, there can be no
assurance that these will not result in material fines, penalties or other
costs.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In May 1999, the Company met the 12.5% internal rate of return threshold
and converted $100 million of convertible preferred stock into 2.5 million
shares of Class A Common Stock at $40 per share.
In May 1999, AIMCO issued 5,000,000 shares of newly created Class L
Convertible Cumulative Preferred Stock, par value $.01 per share ("Class L
Preferred Stock"), in a private offering. The proceeds of $125.0 million were
used to repay certain indebtedness and for working capital. For three years, the
holder of the Class L Preferred Stock is 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) $2.025 per year (equivalent to 8.1% of the
liquidation preference), or (ii) the cash dividends payable on the number of
shares of Class A Common Stock into which a share of Class L Preferred Stock is
convertible. Beginning with the third anniversary of the date of original
issuance, the holder of Class L Preferred Stock will be entitled to receive an
amount per share equal to the greater of (i) $2.50 per year (equivalent to 10%
of the liquidation preference), or (ii) the cash dividends payable on the number
of shares of Class A Common Stock into which a share of Class L Preferred Stock
is convertible. The Class L Preferred Stock is senior to the Class A Common
Stock as to dividends and liquidation. Upon any liquidation, dissolution or
winding up of the Company, before payments or distributions by the Company are
made to any holders of Class A Common Stock, the holder of the Class L Preferred
Stock is 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 June 30,
1999, 590,867 shares of Class A Common Stock were issued in exchange for Common
OP Units.
22
<PAGE> 23
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE COMPANY HELD ITS ANNUAL MEETING OF STOCKHOLDERS ON APRIL 22, 1999. AT
THE MEETING, THE STOCKHOLDERS APPROVED THE PROPOSALS SET FORTH BELOW:
1. Proposal to elect six directors, for a term for one year each, until the
next annual meeting of stockholders and until their successors are
elected and qualify
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST INSTRUCTED BROKER NON VOTES
--------- ------------- ---------- ----------------
<S> <C> <C> <C>
52,207,279........................................... 53,265 115,835 0
</TABLE>
VOTES CAST FOR EACH DIRECTOR
<TABLE>
<CAPTION>
VOTES VOTES
FOR WITHHELD
---------- --------
<S> <C> <C>
Terry Considine............................................. 52,271,762 104,617
Peter K. Kompaniez.......................................... 52,207,279 169,100
Richard S. Ellwood.......................................... 52,320,694 55,685
J. Landis Martin............................................ 52,323,114 53,265
Thomas L. Rhodes............................................ 52,276,727 99,652
John D. Smith............................................... 52,319,987 56,392
</TABLE>
2. Proposal to ratify the selection of Ernst & Young LLP, to serve as
independent auditors for the Company for the fiscal year ending December
31, 1999:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS BROKER NON VOTES
--------- ------------- ----------- ----------------
<S> <C> <C> <C>
52,044,680........................................... 196,202 135,496 1
</TABLE>
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>
3.1.......... -- Charter
3.2.......... -- Bylaws (Exhibit 3.2 to AIMCO's Quarterly Report on Form
10-Q/A for the quarterly period ending March 31, 1999 is
incorporated herein by this reference)
10.1.......... -- Sixth 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 and 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 April 19, 1999, relating to an increase in
Apartment Investment and Management Company's measure of economic profitability
and other financial indicators for the quarter ended March 31, 1999; its Current
Report on Form 8-K, dated April 22, 1999, relating to an increase in Apartment
Investment and Management Company's measure of economic profitability and other
financial indicators for the quarter ended March 31, 1999; and its Current
Report on Form 8-K, dated June 2, 1999, relating to Apartment Investment and
Management Company's sale of $125 million of newly issued Class L Convertible
Cumulative Preferred Stock in a private transaction.
23
<PAGE> 24
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: August 16, 1999
24
<PAGE> 25
EXHIBIT INDEX(1)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1.......... -- Charter
3.2.......... -- Bylaws (Exhibit 3.2 to AIMCO's Quarterly Report on Form
10-Q/A for the quarterly period ending March 31, 1999 is
incorporated herein by this reference)
10.1.......... -- Sixth 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 and Exchange Commission upon request.
<PAGE> 1
EXHIBIT 3.1
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLES OF RESTATEMENT
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation, having
its principal office in Baltimore City, Maryland (hereinafter referred to as the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Corporation desires to and does hereby restate its Charter as
currently in effect. The Charter as currently in effect is found in Articles of
Amendment and Restatement dated July 13, 1994 and filed on July 15, 1994 (as
corrected by Certificate of Correction dated November 6, 1997 and filed on
November 6, 1997), Articles of Amendment dated July 27, 1994 and filed July 28,
1994 at 11:33 a.m. (as corrected by Certificate of Correction dated November 6,
1997 and filed on November 6, 1997), Articles of Amendment dated July 27, 1994
and filed July 28, 1994 at 11:35 a.m. (as corrected by Certificate of Correction
dated November 6, 1997 and filed on November 6, 1997), Articles Supplementary
dated May 20, 1997 and filed May 21, 1997, and Articles Supplementary dated
August 1, 1997 and filed August 4, 1997. The Charter of the Corporation is
hereby restated in its entirety as follows:
ARTICLE I
NAME
The name of the corporation (the "Corporation") is Apartment Investment and
Management Company.
ARTICLE II
PURPOSE
The purpose for which the Corporation is formed is to engage in any lawful
act or activity for which corporations may be organized under the general laws
of the State of Maryland authorizing the formation of corporations as now or
hereafter in force.
ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The PrenticeHall Corporation System, Maryland, 11 East
Chase Street, Baltimore, Maryland 21202. The name and address of the resident
agent of the Corporation in the State of Maryland is The PrenticeHall
Corporation System, Maryland, 11 East Chase Street, Baltimore, Maryland 21202.
The resident agent is a Maryland corporation located in the State of Maryland.
<PAGE> 2
ARTICLE IV
STOCK
SECTION 1. AUTHORIZED SHARES
1.1 CLASS AND NUMBER OF SHARES. The total number of shares of stock that
the Corporation from time to time shall have authority to issue is 160,750,000
shares of capital stock having a par value of $.01 per share, amounting to an
aggregate par value of $1,607,500, consisting of 150,000,000 shares initially
classified as Class A Common Stock having a par value of $.01 per share ("Class
A Common Stock"), 750,000(1) shares initially classified as Class B Common Stock
having a par value of $.01 per share (the "Class B Common Stock") (the Class A
Common Stock and Class B Common Stock being referred to collectively herein as
the "Common Stock") and 10,000,000(2) shares initially classified as Preferred
Stock having a par value of $.01 per share ("Preferred Stock").
1.2 CHANGES IN CLASSIFICATION AND PREFERENCES. The Board of Directors by
resolution or resolutions from time to time may classify and reclassify any
unissued shares of capital stock by setting or changing in any one or more
respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption of such shares of capital stock, including, but not limited to,
ownership restrictions consistent with the Ownership Restrictions with respect
to each such class or subclass of capital stock, and the number of shares
constituting each such class or subclass, and to increase or decrease the number
of shares of any such class or subclass.
SECTION 2. NO PREEMPTIVE RIGHTS. No holder of shares of stock of the
Corporation shall, as such holder, have any preemptive right to purchase or
subscribe for any additional shares of the stock of the Corporation or any other
security of the Corporation that it may issue or sell.
SECTION 3. COMMON STOCK.
3.1 DIVIDEND RIGHTS. The holders of shares of Common Stock shall be entitled
to receive such dividends as may be declared by the Board of Directors of the
Corporation out of funds legally available therefor.
3.2 RIGHTS UPON LIQUIDATION. Subject to the preferential rights of Preferred
Stock, if any, as may be determined by the Board of Directors pursuant to
Section 1 of this Article IV, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of
the Corporation, each holder of shares of Common Stock shall be entitled to
receive, ratably with each other holder of Common Stock, that portion of the
assets of the Corporation available for distribution to its shareholders as the
number of shares of the Common Stock held by such holder bears to the total
number of shares of Common Stock then outstanding.
3.3 VOTING RIGHTS. The holders of shares of Common Stock shall be entitled
to vote on all matters (on which a holder of shares of Common Stock shall be
entitled to vote) at the meetings of the shareholders of the Corporation, and
shall be entitled to one vote for each share of Common Stock entitled to vote at
such meeting.
3.4 RESTRICTION ON OWNERSHIP AND TRANSFERS. The Beneficial Ownership and
Transfer of Common Stock shall be subject to the restrictions set forth in this
Section 3.4 of this Article IV.
3.4.1 RESTRICTIONS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section
3.4.8 of this Article IV, from and after the date of the Initial Public
Offering, no Person (other than the Initial Holder or a Look-Through Entity)
shall Beneficially Own shares of Common Stock in excess of the Ownership Limit,
the Initial Holder shall not Beneficially Own shares of Common Stock in excess
of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own
shares of Common Stock in excess of the Look-Through Ownership Limit.
(1) See Article SIXTH.
(2) See Article SEVENTH.
<PAGE> 3
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 3.4.8 of this Article IV, from and after the date of the Initial Public
Offering (and subject to Section 3.4.12 of this Article IV), any Transfer
(whether or not such Transfer is the result of transactions entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system) that, if effective, would result in any Person
(other than the Initial Holder or a Look-Through Entity) Beneficially Owning
shares of Common Stock in excess of the Ownership Limit shall be void AB INITIO
as to the Transfer of such shares of Common Stock that would be otherwise
Beneficially Owned by such Person in excess of the Ownership Limit, and the
intended transferee shall acquire no rights in such shares of Common Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided
in Section 3.4.8 of this Article IV, from and after the date of the Initial
Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer
(whether or not such Transfer is the result of transactions entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system) that, if effective, would result in the Initial
Holder Beneficially Owning shares of Common Stock in excess of the Initial
Holder Limit shall be void AB INITIO as to the Transfer of such shares of Common
Stock that would be otherwise Beneficially Owned by the Initial Holder in excess
of the Initial Holder limit, and the Initial Holder shall acquire no rights in
such shares of Common Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 3.4.8 of this Article IV from and after the date of the
Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in any
Look-Through Entity Beneficially Owning shares of Common Stock in excess of the
Look-Through Ownership limit shall be void AB INITIO as to the Transfer of such
shares of Common Stock that would be otherwise Beneficially Owned by such
Look-Through Entity in excess of the Look-Through Ownership Limit and such
Look-Through Entity shall acquire no rights in such shares of Common Stock.
(E) TRANSFERS RESULTING IN OWNERSHIP BY FEWER THAN 100 PERSONS.
Except as provided in Section 3.4.8 of this Article IV, from and after the date
of the Initial Public Offering (and subject to Section 3.4.12 of this Article
IV), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated interdealer quotation system) that, if effective, would result in
the Common Stock being Beneficially Owned by less than 100 Persons (determined
without reference to any rules of attribution) shall be void AB INITIO as to the
Transfer of such shares of Common Stock that would be otherwise Beneficially
Owned by the transferee and the intended transferee shall acquire no rights in
such shares of Common Stock.
(F) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
date of the Initial Public Offering, any Transfer that, if effective would
result in the Corporation being "closely held" within the meaning of Section
856(h) of the Code, or would otherwise result in the Corporation failing to
qualify as a REIT (including, without limitation, a Transfer or other event that
would result in the Corporation owning (directly or constructively) an interest
in a tenant that is described in Section 856(d)(2)(B) of the Code if the income
derived by the Corporation from such tenant would cause the Corporation to fail
to satisfy any of the gross income requirements of Section 856(c) of the Code)
shall be void AB INITIO as to the Transfer of shares of Common Stock that would
cause the Corporation (i) to be "closely held" within the meaning of Section
856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may
be, and the intended transferee shall acquire no rights in such shares of Common
Stock.
(G) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of
Common Stock that is null and void under Sections 3.4.1(B), (C), (D), (E) or (F)
of this Article IV because it would, if effective, result in (i) the ownership
of Common Stock in excess of the Initial Holder Limit, the Ownership Limit, or
the Look-Through Ownership Limit, (ii) the Common Stock being Beneficially Owned
by less than 100 Persons (determined without reference to any rules of
attribution), (iii) the Corporation being "closely held" within the meaning of
Section 856(h) of the Code or (iv) the Corporation otherwise failing to qualify
as a REIT, shall not adversely affect the validity of the Transfer of any other
share of Common Stock in the same or any other related transaction.
3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine
<PAGE> 4
in good faith that a Transfer or other event has taken place in violation of
Section 3.4.1 of this Article IV or that a Person intends to acquire or has
attempted to acquire Beneficial Ownership of any shares of Common Stock in
violation of Section 3.4.1 of this Article IV (whether or not such violation is
intended), the Board of Directors or a committee thereof shall be empowered to
take any action as it deems advisable to refuse to give effect to or to prevent
such Transfer or other event, including, but not limited to, refusing to give
effect to such Transfer or other event on the books of the Corporation, causing
the Corporation to redeem such shares at the then current Market Price and upon
such terms and conditions as may be specified by the Board of Directors in its
sole discretion (including, but not limited to, by means of the issuance of
longterm indebtedness for the purpose of such redemption), demanding the
repayment of any distributions received in respect of shares of Common Stock
acquired in violation of Section 3.4.1 of this Article IV or instituting
proceedings to enjoin such Transfer or to rescind such Transfer or attempted
Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers (or in
the case of events other than a Transfer, Beneficial Ownership) in violation of
Section 3.4.1 of this Article IV, regardless of any action (or nonaction) by the
Board of Directors or such committee, (a) shall be void AB INITIO or (b) shall
automatically result in the transfer described in Section 3.4.3 of this Article
IV; PROVIDED, FURTHER, that the provisions of this Section 3.4.2 shall be
subject to the provisions of Section 3.4.12 of this Article IV; PROVIDED,
FURTHER, that neither the Board of Directors nor any committee thereof may
exercise such authority in a manner that interferes with any ownership or
transfer of Common Stock that is expressly authorized pursuant to Section
3.4.8(d) of this Article IV.
3.4.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article IV, at any time after the date of the Initial Public
Offering there is a purported Transfer (an "EXCESS TRANSFER") (whether or not
such Transfer is the result of transactions entered into through the facilities
of the NYSE or other securities exchange or an automated interdealer quotation
system) or other change in the capital structure of the Corporation (including,
but not limited to, any redemption of Preferred Stock) or other event such that
(a) any Person (other than the Initial Holder or a Look-Through Entity) would
Beneficially Own shares of Common Stock in excess of the Ownership Limit, or (b)
the Initial Holder would Beneficially Own shares of Common Stock in excess of
the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Common Stock in excess of the Look-Through Ownership
Limit (in any such event, the Person, Initial Holder or Look-Through Entity that
would Beneficially Own shares of Common Stock in excess of the Ownership Limit,
the Initial Holder Limit or the Look-Through Entity Limit is referred to as a
"PROHIBITED TRANSFEREE"), then, except as otherwise provided in Section 3.4.8 of
this Article IV, such shares of Common Stock in excess of the Ownership Limit,
the Initial Holder Limit or the Look-Through Ownership Limit, as the case may
be, (rounded up to the nearest whole share) shall be automatically transferred
to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of
one or more Charitable Beneficiaries. Such transfer to the Trustee shall be
deemed to be effective as of the close of business on the business day prior to
the date of the Excess Transfer, change in capital structure or another event
giving rise to a potential violation of the Ownership Limit, the Initial Holder
Limit or the Look-Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Common Stock held
by the Trustee shall be issued and outstanding shares of capital stock of the
Corporation. Except to the event provided in Section 3.4.3(E), the Prohibited
Transferee shall have no rights in the Common Stock held by the Trustee, and the
Prohibited Transferee shall not benefit economically from ownership of any
shares held in trust by the Trustee, shall have no rights to dividends and shall
not possess any rights to vote or other rights attributable to the shares held
in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Common Stock held in
the Trust, which rights shall be exercised for the benefit of the Charitable
Beneficiary. Any dividend or distribution paid prior to the discovery by the
Corporation that the shares of Common Stock have been transferred to the Trustee
shall be repaid to the Corporation upon demand, and any dividend or distribution
declared but unpaid shall be rescinded as void AB INITIO with respect to such
shares of Common Stock. Any dividends or distributions so disgorged or rescinded
shall be paid over to the Trustee and held
<PAGE> 5
in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Common
Stock have been transferred to the Trustee will be rescinded as AB INITIO and
shall be recast in accordance with the desires of the Trustee acting for the
benefit of the Charitable Beneficiary. The owner of the shares at the time of
the Excess Transfer, change in capital structure or other event giving rise to a
potential violation of the Ownership Limit, Initial Holder Limit or Look-Through
Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the
Trustee to vote the shares of Common Stock for the benefit of the Charitable
Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may transfer
the shares held in the Trust to a person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
transfer is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 3.4.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the Trust
and (2) the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any proceeds in excess of the
amount payable to the Prohibited Transferee shall be payable to the Charitable
Beneficiary. If any of the transfer restrictions set forth in this Section
3.4.3(E) or any application thereof is determined in a final judgment to be
void, invalid or unenforceable by any court having jurisdiction over the issue,
the Prohibited Transferee may be deemed, at the option of the Corporation, to
have acted as the agent of the Corporation in acquiring the Common Stock as to
which such restrictions would, by their terms, apply, and to hold such Common
Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Common Stock transferred to the Trustee shall be deemed to have been offered for
sale to the Corporation, or its designee, at a price per share equal to the
lesser of (i) the price per share in the transaction that resulted in such
transfer to the Trust (or, in the case of a devise or gift, the Market Price at
the time of such devise or gift) and (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation shall have the
right to accept such offer for a period of 90 days after the later of (i) the
date of the Excess Transfer or other event resulting in a transfer to the Trust
and (ii) the date that the Board of Directors determines in good faith that an
Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Common Stock held in the Trust would
not violate the Ownership Restrictions in the hands of such Charitable
Beneficiary and (ii) each Charitable Beneficiary is an organization described in
Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
3.4.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to
acquire shares of Common Stock in violation of Section 3.4.1 of this Article IV,
or any Person that is a Prohibited Transferee such that stock is transferred to
the Trustee under Section 3.4.3 of this Article IV, shall immediately give
written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted Transfer or other
event on the Corporation's status as a REIT. Failure to give such notice shall
not limit the rights and remedies of the Board of Directors provided herein in
any way.
3.4.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the date of the
Initial Public Offering certain record and Beneficial Owners and transferees of
shares of Common Stock will be required to provide certain information as set
out below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than
5% (or such other percentage between 0.5% and 5%, as provided in the applicable
regulations adopted under the Code) of the number of Outstanding shares of
Common Stock shall, within 30 days after January 1 of each year, give written
notice to the Corporation stating the name and address of such record or
Beneficial Owner, the number of shares of Common Stock Beneficially Owned, and a
full description of how such shares are held. Each such record or Beneficial
Owner
<PAGE> 6
of Common Stock shall, upon demand by the Corporation, disclose to the
Corporation in writing such additional information with respect to the
Beneficial Ownership of the Common Stock as the Board of Directors, in its sole
discretion, deems appropriate or necessary to (i) comply with the provisions of
the Code regarding the qualification of the Corporation as a REIT under the Code
and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as applicable. Each shareholder of record,
including without limitation any Person that holds shares of Common Stock on
behalf of a Beneficial Owner, shall take all reasonable steps to obtain the
written notice described in this Section 3.4.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is
a Beneficial Owner of shares of Common Stock and any Person (including the
shareholder of record) that is holding shares of Common Stock for a Beneficial
Owner, and any proposed transferee of shares, shall provide such information as
the Corporation, in its sole discretion, may request in order to determine the
Corporation's status as a REIT, to comply with the requirements of any taxing
authority or other governmental agency, to determine any such compliance or to
ensure compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit, and shall provide a statement or affidavit to the
Corporation setting forth the number of shares of Common Stock already
Beneficially Owned by such shareholder or proposed transferee and any related
persons specified, which statement or affidavit shall be in the form prescribed
by the Corporation for that purpose.
3.4.6 REMEDIES NOT LIMITED. Nothing contained in this Article IV shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 3.4.12 of this
Article IV) (i) to protect the Corporation and the interests of its shareholders
in the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
3.4.7 AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 3.4 of this Article IV, or in the case of an ambiguity
in any definition contained in Section 4 of this Article IV, the Board of
Directors shall have the power to determine the application of the provisions of
this Article IV with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
3.4.8 EXCEPTIONS. The following exceptions shall apply or may be established
with respect to the limitations of Section 3.4.1 of this Article IV.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt
of a ruling from the Internal Revenue Service or an opinion of tax counsel or
other evidence or undertaking acceptable to it, may waive the application, in
whole or in part, of the Ownership Limit to a Person subject to the Ownership
Limit, if such person is not an individual for purpose of Section 542(a) of the
Code and is a corporation, partnership, estate or trust; PROVIDED, HOWEVER, that
in no event may any such exception cause such Person's ownership, direct or
indirect (without taking into account such Person's ownership of interests in
any partnership of which the Corporation is a partner), to exceed 9.8% of the
number of Outstanding shares of Common Stock. In connection with any such
exemption, the Board of Directors may require such representations and
undertakings from such Person and may impose such other conditions as the Board
deems necessary, in its sole discretion, to determine the effect, if any, of the
proposed Transfer on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of
this Article IV, the pledge by the Initial Holder of all or any portion of the
Common Stock directly owned at any time or from time to time shall not
constitute a violation of Section 3.4.1 of this Article IV and the pledgee shall
not be subject to the Ownership Limit with respect to the Common Stock so
pledged to it either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days following the purchase of
Common Stock by an underwriter that (i) is a corporation or a partnership and
(ii) participates in an offering of the Common Stock, such underwriter shall not
be subject to the Ownership Limit with respect to the Common Stock purchased by
it as a part of or in connection with such offering and with respect to any
Common Stock purchased in connection with market making activities.
<PAGE> 7
(D) OWNERSHIP AND TRANSFERS BY THE CMO TRUSTEE. The Ownership Limit
shall not apply to the initial holding of Common Stock by the "CMO Trustee" (as
that term is defined in the "Glossary" to the Prospectus) for the benefit of "HF
Funding Trust" (as that term is defined in the "Glossary" to the Prospectus), to
any subsequent acquisition of Common Stock by the CMO Trustee in connection with
any conversion of Preferred Stock or to any transfer or assignment of all or any
part of the legal or beneficial interest in the Common Stock to the CMO Trustee,
"ESA" (as that term is defined in the "Glossary" to the Prospectus), any entity
controlled by ESA, or any direct or indirect creditor of HF Funding Trust
(including without limitation any reinsurer of any obligation of HF Funding
Trust) or any acquisition of Common Stock by any such person in connection with
any conversion of Preferred Stock.
3.4.9 LEGEND. Each certificate for Common Stock shall bear the following
legend: "The shares of Common Stock represented by this certificate are subject
to restrictions on transfer. No person may Beneficially Own shares of Common
Stock in excess of the Ownership Restrictions, as applicable, with certain
further restrictions and exceptions set forth in the Corporation's Amended and
Restated Certificate of Incorporation ("Certificate"). Any Person that attempts
to Beneficially Own shares of Common Stock in excess of the applicable
limitation must immediately notify the Corporation. All capitalized terms in
this legend have the meanings ascribed to such terms in the Corporation's
Certificate, as the same may be amended from time to time, a copy of which,
including the restrictions on transfer, will be sent without charge to each
shareholder that so requests. If the restrictions on transfer are violated, the
shares of Common Stock represented hereby will be either (i) void in accordance
with the Certificate or (ii) automatically transferred to a Trustee of a Trust
for the benefit of one or more Charitable Beneficiaries."
3.4.10 SEVERABILITY. If any provision of this Article IV or any application
of any such provision is determined in a final and unappealable judgment to be
void, invalid or unenforceable by any Federal or state court having jurisdiction
over the issues, the validity and enforceability of the remaining provisions
shall not be affected and other applications of such provision shall be affected
only to the extent necessary to comply with the determination of such court.
3.4.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article IV to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
3.4.12 SETTLEMENT. Nothing in this Section 3.4 of this Article IV shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system.
SECTION 4. DEFINITIONS. The terms set forth below shall have the meanings
specified below when used in this Article IV or in Article V of these Articles
of Amendment and Restatement.(3)
4.1 BENEFICIAL OWNERSHIP. The term "BENEFICIAL OWNERSHIP" shall mean, with
respect to any Person, ownership of shares of Common Stock equal to the sum of
(i) the shares of Common Stock directly owned by such Person, (ii) the number of
shares of Common Stock indirectly owned by such Person (if such Person is an
"individual" as defined in Section 542(a)(2) of the Code) taking into account
the constructive ownership rules of Section 544 of the Code, as modified by
Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Common Stock
that such Person is deemed to beneficially own pursuant to Rule 13d3 under the
Exchange Act or that is attributed to such Person pursuant to Section 318 of the
Code, as modified by Section 856(d)(5) of the Code, PROVIDED that when applying
this definition of Beneficial Ownership to the Initial Holder, clause (iii) of
this definition, and clause (b) of the definition of "Person" shall be
disregarded. The terms "BENEFICIAL OWNER,"
(3) See Article FOURTH
<PAGE> 8
"BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative
meanings.
4.2 CHARITABLE BENEFICIARY. The term "CHARITABLE BENEFICIARY" shall mean one
or more beneficiaries of the Trust as determined pursuant to Section 3.4.3 of
this Article IV, each of which shall be an organization described in Section
170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
4.3 CODE. The term "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time to time,
as the same may be amended, and any successor thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in effect from
time to time.
4.4 COMMON STOCK. The term "COMMON STOCK" shall mean all shares now or
hereafter authorized of any class of Common Stock of the Corporation and any
other capital stock of the Corporation, however designated, authorized after the
Issue Date, that has the right (subject always to prior rights of any class of
Preferred Stock) to participate in the distribution of the assets and earnings
of the Corporation without limit as to per share amount.
4.5 EXCESS TRANSFER. The term "EXCESS TRANSFER" has the meaning set forth in
Section 3.4.3(A) of this Article IV.
4.6 EXCHANGE ACT. The term "EXCHANGE ACT" shall mean the Securities Exchange
Act of 1934, as amended.
4.7 INITIAL HOLDER. The term "INITIAL HOLDER" shall mean Terry Considine.
4.8 INITIAL HOLDER LIMIT. The term "INITIAL HOLDER LIMIT" shall mean 15% of
the number of Outstanding shares of Common Stock applied, in the aggregate, to
the Initial Holder. From the date of the Initial Public Offering, the secretary
of the Corporation, or such other person as shall be designated by the Board of
Directors, shall upon request make available to the representative(s) of the
Initial Holder and the Board of Directors, a schedule that sets forth the
thencurrent Initial Holder Limit applicable to the Initial Holder.
4.9 INITIAL PUBLIC OFFERING. The term "INITIAL PUBLIC OFFERING" shall mean
the first underwritten public offering of Class A Common Stock registered under
the Securities Act of 1933, as amended, on a registration statement on Form S11
filed with the Securities and Exchange Commission.
4.10 LOOK-THROUGH ENTITY. The term "LOOK-THROUGH ENTITY" shall mean a Person
that is either (i) described in Section 401(a) of the Code as provided under
Section 856(h)(3) of the Code or (ii) registered under the Investment Company
Act of 1940.
4.11 LOOK-THROUGH OWNERSHIP LIMIT. The term "LOOK-THROUGH OWNERSHIP LIMIT"
shall mean 15% of the number of Outstanding shares of Common Stock.
4.12 MARKET PRICE. The term "MARKET PRICE" on any date shall mean the
Closing Price on the Trading Day immediately preceding such date. The term
"CLOSING PRICE" on any date shall mean the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE or, if the Common Stock is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price, or if not so quoted, the
average of the high bid and low asked prices in the overthecounter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or, if such system is no longer in use, the principal other
automated quotations system that may then be in use or, if the Common Stock is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. The term "TRADING DAY"
shall mean a day on which the principal national securities exchange on which
the Common Stock is listed or admitted to trading is open for the transaction of
business or, if the Common Stock is not listed or admitted to trading on any
national securities
<PAGE> 9
exchange, shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
4.13 NYSE. The term "NYSE" shall mean the New York Stock Exchange, Inc.
4.14 OUTSTANDING. The term "OUTSTANDING" shall mean issued and outstanding
shares of Common Stock of the Corporation, PROVIDED that for purposes of the
application of the Ownership Limit, the Look-Through Ownership Limit or the
Initial Holder Limit to any Person, the term "OUTSTANDING" shall be deemed to
include the number of shares of Common Stock that such Person alone, at that
time, could acquire pursuant to any options or convertible securities.
4.15 OWNERSHIP LIMIT. The term "OWNERSHIP LIMIT" shall mean, for any Person
other than the Initial Holder or a Look-Through Entity, 8.7% of the number of
the Outstanding shares of Common Stock of the Corporation.
4.16 OWNERSHIP RESTRICTIONS. The term "OWNERSHIP RESTRICTIONS" shall mean
collectively the Ownership Limit as applied to Persons other than the Initial
Holder or Look-Through Entities, the Initial Holder Limit as applied to the
Initial Holder and the Look-Through Ownership Limit as applied to Look-Through
Entities.
4.17 PERSON. The term "PERSON" shall mean (A) an individual, corporation,
partnership, estate, trust (including a trust qualifying under Section 401(a) or
501(c) of the Code), association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity, and (B) also
includes a group as that term is used for purposes of Section 13(d)(3) of the
Exchange Act.
4.18 PROHIBITED TRANSFEREE. The term "PROHIBITED TRANSFEREE" has the meaning
set forth in Section 3.4.3(A) of this Article IV.
4.19 REIT. The term "REIT" shall mean a "real estate investment trust" as
defined in Section 856 of the Code.
4.20 TRANSFER. The term "TRANSFER" shall mean any sale, transfer, gift,
assignment, devise or other disposition of a share of Common Stock (including
(i) the granting of an option or any series of such options or entering into any
agreement for the sale, transfer or other disposition of Common Stock or (ii)
the sale, transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Common Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by operation
of law or otherwise (including, but not limited to, any transfer of an interest
in other entities that results in a change in the Beneficial Ownership of shares
of Common Stock). The term "TRANSFERS" and "TRANSFERRED" shall have correlative
meanings.
4.21 TRUST. The term "TRUST" shall mean the trust created pursuant to
Section 3.4.3 of this Article IV.
4.22 TRUSTEE. The term "TRUSTEE" shall mean the Person unaffiliated with
either the Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
4.23 PROSPECTUS. The term "PROSPECTUS" shall mean the prospectus that forms
a part of the registration statement filed with the Securities and Exchange
Commission in connection with the Initial Public Offering, in the form included
in the registration statement at the time the registration statement becomes
effective; PROVIDED, HOWEVER, that, if such prospectus is subsequently
supplemented or amended for use in connection with the Initial Public Offering,
"PROSPECTUS" shall refer to such prospectus as so supplemented or amended.
<PAGE> 10
ARTICLE V
GENERAL REIT PROVISIONS
SECTION 1. TERMINATION OF REIT STATUS. The Board of Directors shall take no
action to terminate the Corporation's status as a REIT until such time as (i)
the Board of Directors adopts a resolution recommending that the Corporation
terminate its status as a REIT, (ii) the Board of Directors presents the
resolution at an annual or special meeting of the shareholders and (iii) such
resolution is approved by the vote of a majority of the shares entitled to be
cast on the resolution.
SECTION 2. EXCHANGE OR MARKET TRANSACTIONS. Nothing in Article IV or this
Article V shall preclude the settlement of any transaction entered into through
the facilities of the NYSE or other national securities exchange or an automated
interdealer quotation system. The fact that the settlement of any transaction is
permitted shall not negate the effect of any other provision of this Article V
or any provision of Article IV, and the transferee, including but not limited to
any Prohibited Transferee, in such a transaction shall remain subject to all the
provisions and limitations of Article IV and this Article V.
SECTION 3. SEVERABILITY. If any provision of Article IV or this Article V or
any application of any such provision is determined to be invalid by any federal
or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
SECTION 4. WAIVER. The Corporation shall have authority at any time to waive
the requirement that the Corporation redeem shares of Preferred Stock if, in the
sole discretion of the Board of Directors, any such redemption would jeopardize
the status of the Corporation as a REIT for federal income tax purposes.
ARTICLE VI
BOARD OF DIRECTORS
SECTION 1. MANAGEMENT. The business and the affairs of the Corporation
shall managed under the direction of its Board of Directors.
SECTION 2. NUMBER. The number of directors that will constitute the
entire Board of Directors shall be fixed by, or in the manner provided in, the
Bylaws but shall in no event be less than three. Any increases or decreases in
the size of the board shall be apportioned equally among the classes of
directors to prevent stacking in any one class of directors. There are
currently six directors in office whose names are as follows: Terry Considine,
Peter K. Kompaniez, Richard S. Ellwood, J. Landis Martin, Thomas L. Rhodes and
John D. Smith.(4)
SECTION 3. INTENTIONALLY DELETED.
SECTION 4. VACANCIES. Except as otherwise provided in these Articles of
Amendment and Restatement(5), newly created directorships resulting from any
increase in the number of directors may be filled by the majority vote of the
Board of Directors, and any vacancies on the Board of Directors resulting from
death, resignation, removal or other cause shall be filled by the affirmative
vote of a majority of the remaining directors then in office, even if less than
a quorum of the Board of Directors, or, if applicable, by a sole remaining
director. Any director elected in accordance with the preceding sentence shall
hold office until the next annual meeting of the Corporation at which time a
successor shall be elected to fill the remaining term of the position filled by
such director.
SECTION 5. REMOVAL. Except as otherwise provided in these Articles of
Amendment and Restatement(6), any director may be removed from office only for
cause and only by the affirmative vote of two thirds of the aggregate number of
votes then entitled to be cast generally in the election of directors. For
purposes of this Section 5, "CAUSE"
(4) See Article THIRD.
(5) See Article FOURTH.
(6) See Article FOURTH.
<PAGE> 11
shall mean the willful and continuous failure of a director to substantially
perform the duties to the Corporation of such director (other than any such
failure resulting from temporary incapacity due to physical or mental illness)
or the willful engaging by a director in gross misconduct materially and
demonstrably injurious to the Corporation.
SECTION 6. BYLAWS. The Board of Directors shall have power to adopt, amend,
alter, change and repeal any Bylaws of the Corporation by vote of the majority
of the Board of Directors then in office. Any adoption, amendment, alteration,
change or repeal of any Bylaws by the shareholders of the Corporation shall
require the affirmative vote of a majority of the aggregate number of votes then
entitled to be cast generally in the election of directors. Notwithstanding
anything in this Section 6 to the contrary, no amendment, alteration, change or
repeal of any provision of the Bylaws relating to the removal of directors or
repeal of the Bylaws shall be effected without the vote of twothirds of the
aggregate number of votes entitled be cast generally in the election of
Directors.
SECTION 7. POWERS. The enumeration and definition of particular powers of
the Board of Directors included elsewhere in these Articles of Amendment and
Restatement(7) shall in no way be limited or restricted by reference to or
inference from the terms of any other clause of this or any other Article of
these Articles of Amendment and Restatement(8), or construed as excluding or
limiting, or deemed by inference or otherwise in any manner to exclude or limit,
the powers conferred upon the Board of Directors under the Maryland General
Corporation Law ("MGCL") as now or hereafter in force.
ARTICLE VII
LIMITATION OF LIABILITY
No director or officer of the Corporation shall be liable to the Corporation
or its shareholders for money damages to the maximum extent that Maryland law in
effect from time to time permits limitation of the liability of directors and
officers. Neither the amendment nor repeal of this Article VII, nor the adoption
or amendment or any other provision of the charter or Bylaws of the Corporation
inconsistent with this Article VII, shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act that occurred prior to such amendment, repeal or adoption.
(7) See Article FOURTH.
(8) See Article FOURTH.
<PAGE> 12
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by Maryland
law, as applicable from time to time, all persons who at any time were or are
directors or officers of the Corporation for any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) relating to any action alleged to have been taken or omitted in
such capacity as a director or an officer. The Corporation shall pay or
reimburse all reasonable expenses incurred by a present or former director or
officer of the Corporation in connection with any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) in which the present or former director or officer is a party, in
advance of the final disposition of the proceeding, to the fullest extent
permitted by, and in accordance with the applicable requirements of, Maryland
law, as applicable from time to time. The Corporation may indemnify any other
persons permitted but not required to be indemnified by Maryland law, as
applicable from time to time, if and to extent indemnification is authorized and
determined to be appropriate, in each case in accordance with applicable law, by
the Board of Directors, the majority of the shareholders of the Corporation
entitled to vote thereon or special legal counsel appointed by the Board of
Directors. No amendment of these Articles of Amendment and Restatement(9) of the
Corporation or repeal of any of its provisions shall limit or eliminate any of
the benefits provided to directors and officers under this Article VIII in
respect of any act or omission that occurred prior to such amendment or repeal.
ARTICLE IX
WRITTEN CONSENT OF SHAREHOLDERS
Any corporate action upon which a vote of shareholders is required or
permitted may be taken without a meeting or vote of shareholders with the
unanimous written consent of shareholders entitled to vote thereon.
ARTICLE X
AMENDMENT
The Corporation reserves the right to amend, alter or repeal any provision
contained in this charter upon (i) adoption by the Board of Directors of a
resolution recommending such amendment, alteration, or repeal, (ii) presentation
by the Board of Directors to the shareholders of a resolution at an annual or
special meeting of the shareholders and (iii) approval of such resolution by the
affirmative vote of the holders of a majority (or, as applicable, a twothirds
vote) of the aggregate number of votes entitled to be case generally in the
election of directors. All rights conferred upon shareholders herein are subject
to this reservation.
ARTICLE XI
EXISTENCE
The Corporation is to have a perpetual existence.
ARTICLE XII
CLASS B COMMON STOCK
GENERAL. The holders of the Class B Common Stock shall have the same rights
and privileges as, and shall be subject to the same restrictions and limitations
contained in the Charter as apply to, the holders of the Class A Common Stock,
except as set forth below.
SECTION 1. DEFINITIONS. Capitalized terms used in these Articles
Supplementary(10) shall have the meanings ascribed to them in the Charter or
elsewhere in these Articles Supplementary, except that the terms set forth below
shall have the meanings specified below when used in this Article.
(9) See Article FOURTH.
(10) See Article FOURTH.
<PAGE> 13
"ADJUSTED FUNDS FROM OPERATIONS" shall have the same meaning as the
term "Adjusted Funds from Operations" used in the Prospectus and shall be
calculated in the manner specified in the Prospectus and based on generally
accepted accounting principles. Adjusted Funds from Operations shall be
determined from the Corporation's financial statements audited and certified by
an independent public accountant.
"ADJUSTED FUNDS FROM OPERATIONS PER SHARE" when used with respect to
any period shall mean the Adjusted Funds from Operations for such period DIVIDED
by the sum of (a) the number of shares of the Class A Common Stock outstanding
on the last day of such period (excluding any shares of the Class A Common Stock
into which shares of the Class B Common Stock shall have been converted as a
result of the conversion of shares of the Class B Common Stock on the last day
of such period) and (b) the number of shares of the Class A Common Stock
issuable to acquire units of limited partnership that (i) may be tendered for
redemption in any limited partnership in which the Corporation serves as general
partner and (ii) are outstanding on the last day of such period.
"AVERAGE MARKET PRICE" for a period shall mean the average of the
Closing Prices for a share of the Class A Common Stock for the Trading Days in
such period.
"CAUSE" shall mean the termination of employment of an individual with
an Employer as a result of (a) the performance by such individual of any
activity involving fraud or dishonesty, (b) the conviction of the individual of
a felony or a crime involving moral turpitude, (c) the failure or refusal of
such individual to reasonably or satisfactorily perform any material duties or
responsibilities reasonably required of such individual by an Employer, (d) the
gross negligence or willful neglect or malfeasance by the individual in the
performance or nonperformance of such individual's duties or responsibilities to
the Employer, or (e) any unauthorized act or omission by such individual that is
injurious in any material respect to the financial condition or business
reputation of any Employer.
"CHANGE IN CONTROL" shall mean the occurrence of any of the
following events:
(a) An acquisition (other than directly from the Corporation) of any
voting securities of the Corporation (the "VOTING SECURITIES") by any "person"
(as the term "person" is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 ACT")) immediately
after which such person has "beneficial ownership" (within the meaning of Rule
13d3 promulgated under the 1934 Act) ("BENEFICIAL OWNERSHIP") of 20% or more of
the combined voting power of the Corporation's then outstanding Voting
Securities; PROVIDED, HOWEVER, in determining whether a Change in Control has
occurred. Voting Securities that are acquired in a NonControl Acquisition (as
hereinafter defined) shall not constitute an acquisition that would cause a
Change in Control. "NONCONTROL ACQUISITION" shall mean an acquisition by (1) an
employee benefit plan (or a trust forming a part thereof) maintained by (a) the
Corporation or (b) any corporation, partnership or other Person of which a
majority of its voting power or its equity securities or equity interest is
owned directly or indirectly by the Corporation or in which the Corporation
serves as a general partner or manager (a "SUBSIDIARY"), (2) the Corporation or
any Subsidiary, or (3) any Person in connection with a NonControl Transaction
(as hereinafter defined);
(b) The individuals who are named in the Prospectus as constituting the
Board of Directors of the Corporation following the Initial Public Offering (the
"INCUMBENT BOARD") cease for any reason to constitute at least twothirds
(2/3rds) of the Board of Directors; PROVIDED, HOWEVER, that if the election, or
nomination for election by the Corporation's stockholders, of any new director
was approved by a vote of at least twothirds (2/3rds) of the Incumbent Board,
such new director shall be considered as a member of the Incumbent Board;
PROVIDED, FURTHER, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "election contest" (as described in Rule 14a11
promulgated under the 1934 Act) (an "ELECTION CONTEST") or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors (a "PROXY CONTEST") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Corporation of:
(1) A merger, consolidation, share exchange or reorganization
involving the Corporation, unless
<PAGE> 14
(A) the stockholders of the Corporation, immediately before such
merger, consolidation, share exchange or reorganization, own, directly or
indirectly immediately following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of the outstanding
voting securities of the corporation that is the successor in such merger,
consolidation, share exchange or reorganization (the "SURVIVING CORPORATION") in
substantiality the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, share exchange or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation, share exchange or reorganization constitute at least twothirds
(2/3rds) of the members of the board of directors of the Surviving Corporation,
and
(C) no Person (other than the corporation or any subsidiary, any
employee benefit plan (or any trust forming a part thereof) maintained by the
Corporation, the Surviving Corporation or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation, share exchange or
reorganization had Beneficial Ownership of 15% or more of the then outstanding
Voting Securities) has Beneficial Ownership of 15% or more of the combined
voting power of the Surviving Corporation's then outstanding voting securities
(a transaction described in clauses (i) through (iii) is referred to herein as a
"NONCONTROL TRANSACTION");
(2) A complete liquidation or dissolution of the Corporation,
or
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Corporation to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (a "SUBJECT PERSON") acquired Beneficial Ownership of
more than the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Corporation that, by reducing the
number of Voting Securities outstanding, increases the proportional number of
shares Beneficially Owned by such Subject Person, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Corporation, and after such share
acquisition by the Corporation, such subject Person becomes the Beneficial Owner
of any additional Voting Securities that increases the percentage of the then
outstanding Voting Securities Beneficially Owned by such Subject Person, then a
Change in Control shall occur.
"CLOSING PRICE" on any date shall mean the last sale price, regular
way, or, in case that no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NYSE or, if shares of the Class A Common
Stock are not listed or admitted to trading on the NYSE, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which shares of the
Class A Common Stock are listed or admitted to trading or, if shares of the
Class A Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the average of
the high bid and low asked prices in the overthecounter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
or, if such system is no longer in use, the principal other automated quotations
system that may then be in use or, if shares of the Class A Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in shares of the
Class A Common Stock selected by the Board of Directors of the Corporation.
"CONVERTIBLE CLASS B SHARES" shall mean Eligible Class B Shares that
shall have become subject to automatic conversion into shares of the Class A
Common Stock, subject to Article IV, Section 3.4 of the Charter, pursuant to
Sections 3 and 4 of this Article.
"DISABILITY" shall mean the mental or physical illness or disability of
an individual that substantially impairs the ability of the individual to
perform substantially all of his duties as an employee of an Employer in a
satisfactory manner for a period in excess of ninety (90) days in any
consecutive 12month period.
"ELIGIBLE CLASS B SHARES" shall mean the following percentages
(subject to modification as provided
<PAGE> 15
in Section 3(c) of this Article) of the Outstanding Class B Shares as of the
Year-End Testing Dates indicated.
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
CLASS B SHARES
YEAR-END TESTING DATE
-----------------------------------------------------------
<S> <C>
December 31, 1994 10.0000%
December 31, 1995 22.2222%
December 31, 1996 28.5714%
December 31, 1997 50.0000%
December 31, 1998 100.0000%
</TABLE>
"EMPLOYER" shall mean (a) the Corporation, (b) any partnership in which
the Corporation serves as a general partner, (c) any corporation directly or
indirectly controlled by or under common control with the Corporation, (d) any
partnership or company in which any of the foregoing may own, directly or
indirectly, an equity interest or (e) any limited liability company in which any
of the foregoing may be a member.
"INITIAL HOLDER" shall refer to each person holding Outstanding Class B
Shares on the date of the closing of the Initial Public Offering, whether such
Outstanding Class B Shares result from designation of outstanding common stock
or from new issuance by the Corporation.
"OP UNITS" shall mean units of limited partnership interest in the
Operating Partnership.
"OPERATING PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware
limited partnership in which the Corporation holds a general partnership
interest.
"OUTSTANDING CLASS B SHARES" shall mean issued and outstanding shares
of the Class B Common Stock of the Corporation, excluding any Convertible Class
B Shares that have been converted into shares of the Class A Common Stock.
"PROSPECTUS" shall mean the prospectus that forms a part of the
registration statement filed with the Securities and Exchange Commission in
connection with the Initial Public Offering, in the form included in the
registration statement at the time the registration statement becomes effective;
PROVIDED, HOWEVER, that, if such prospectus is subsequently supplemented or
amended for use in connection with the Initial Public Offering, "PROSPECTUS"
shall refer to such prospectus as so supplemented or amended.
"TRADING DAY" shall mean a day on which the principal national
securities exchange on which shares of the Class A Common Stock are listed or
admitted to trading is open for the transaction of business or, if shares of the
Class A Common Stock are not listed or admitted to trading on any national
securities exchange, "TRADING DAY" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"YEAREND TESTING DATE" shall mean each of December 31, 1994, December
31, 1995, December 31, 1996, December 31, 1997 and December 31, 1998; PROVIDED,
HOWEVER, that December 31, 1999 shall be substituted in place of December 31,
1998 each place such earlier date appears in this Article if, as of December 31,
1998, either the Annual Growth Target requirement or the Compounded Cumulative
Growth Target requirement set forth in Section 3(a) of this Article in respect
of the YearEnd Testing Date of December 31, 1998 is not satisfied as of December
31, 1998.
SECTION 2. RESTRICTIONS ON DIVIDENDS AND VOTING RIGHTS.
(a) NO DIVIDENDS. No dividends shall accrue or be paid on any
shares of the Class B Common Stock.
(b) No Voting Rights; Exception for Convertible Class B Shares. Holders
of shares of the Class B Common Stock shall not have the right to vote on any
matter, including, but not limited to, the election of
<PAGE> 16
directors, the merger of the Corporation, the sale or other disposition of the
Corporation's assets, or the dissolution or liquidation of the Corporation;
PROVIDED, HOWEVER, that holders of Convertible Class B Shares shall have the
right to one (1) vote per share on all matters for which holders of shares of
the Class A Common Stock shall have the right to vote.
SECTION 3. CONVERTIBILITY OF OUTSTANDING CLASS B SHARES.
(a) IN GENERAL. The Eligible Class B Shares as of a Year-End Testing
Date shall automatically become Convertible Class B Shares according to the
Adjusted Funds from Operations Per Share and the Average Market Values of a
share of the Class A Common Stock for the periods indicated, provided that (i)
the "Annual Growth Target" requirement set forth below in this Section 3(a) is
satisfied, (ii) the "Compounded Cumulative Growth Target" requirement set forth
below in this Section 3(a) is satisfied AND (iii) the "MARKET VALUE" requirement
set forth in Section 3(b) of this Article is satisfied; PROVIDED, HOWEVER, that,
if in any calendar year an applicable Annual Growth Target requirement is not
satisfied, the Eligible Class B Shares becoming Convertible Class B Shares in
the following calendar year or years shall include, as a carryforward from year
to year, the Eligible Class B Shares otherwise applicable to the first year
provided that in the later year (which need not immediately follow the first
year) the Annual Growth Target requirement, the Cumulative Compounded Growth
Target requirement and the Market Value requirement for such later year are all
satisfied:
<TABLE>
<CAPTION>
YEAR-END TESTING COMPOUNDED CUMULATIVE
DATE. ANNUAL GROWTH TARGET GROWTH TARGET
- -------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1994 Adjusted Funds from Adjusted Funds from
Operations Per Share for the Operations Per Share for
period beginning on the the period beginning on the
Initial Public Offering and Initial Public Offering and
ending on the YearEnd ending on the YearEnd
Testing Date is at least Testing Date is at least
$0.864 $0.864
December 31, 1995 ANNUALIZED Adjusted Funds ANNUALIZED Adjusted Funds
from Operations Per Share from Operations Per Share
for the period beginning on for the period beginning on
the Initial Public Offering the Initial Public Offering
and ending on the YearEnd and ending on the YearEnd
Testing Date is at least Testing Date is at least
$2.161 $2.161
December 31, 1996 Adjusted Funds from ANNUALIZED Adjusted Funds
Operations Per Share for the from Operations Per Share
calendar year ending on the for the period beginning on
YearEnd Testing Date is at the Initial Public Offering
least 108.5% of the Adjusted and ending on the YearEnd
Funds from Operations Per Testing Date is at least
Share for the calendar year $2.345
ending on the previous
YearEnd Testing Date
December 31, 1997 Adjusted Funds from ANNUALIZED Adjusted Funds
Operations Per Share for the from Operations Per Share
calendar year ending on the for the period beginning on
YearEnd Testing Date is at the Initial Public Offering
least 108.5% of the Adjusted and ending on the YearEnd
Funds from Operations Per Testing Date is at least
Share for the calendar year $2.544
ending on the previous
YearEnd Testing Date
</TABLE>
<PAGE> 17
<TABLE>
<S> <C> <C>
December 31, 1998 Adjusted Funds from ANNUALIZED Adjusted Funds
Operations Per Share for the from Operations Per Share
calendar year ending on the for the period beginning on
YearEnd Testing Date is at the Initial Public Offering
least 108.5% of the Adjusted and ending on the YearEnd
Funds from Operations Per Testing Date is at least
Share for the calendar year $2.760
ending on the previous
YearEnd Testing Date
</TABLE>
(b) MARKET VALUE REQUIREMENT. The Market Value requirement shall be
satisfied as to any Year-End Testing Date if the Average Market Value of a share
of the Class A Common Stock shall equal or exceed the amount set forth in the
following table for any 90 calendar day period (whether or not a calendar
quarter or an exact three month period) beginning on any day (whether or not a
Trading Day) on or after October 1 immediately preceding the applicable YearEnd
Testing Date:
<TABLE>
<CAPTION>
YEAR-END TESTING DATE AVERAGE MARKET PRICE
-----------------------------------------------
<S> <C> <C>
December 31, 1994 $19.030
December 31, 1995 $20.648
December 31, 1996 $22.403
December 31, 1997 $24.307
December 31, 1998 $26.373
</TABLE>
By way of illustration, the Market Value requirement for the Year-End Testing
Date of December 31, 1996 would be satisfied if the Average Market Value of a
share of the Class A Common Stock equaled or exceeded $22.403 for (i) the 90day
period beginning on October 1, 1986 and ending on December 30, 1996, (ii) the
90day period beginning on April 17, 1997 and ending on July 16, 1997 OR (iii)
the 90day period beginning on November 20, 1997 and ending on February 18, 1998.
(c) MODIFICATIONS TO ELIGIBILITY AND CONVERTIBILITY SCHEDULES.
Notwithstanding the provisions of Section 3(a) of this Article, in or as to any
calendar year the Corporation's Board of Directors shall have the authority,
upon consideration of factors and financial performance criteria that it shall
in its sole and absolute discretion consider relevant, to declare a greater or
lesser percentage of (i) Outstanding Class B Shares as of a YearEnd Testing Date
to be Eligible Class B Shares and (ii) Eligible Class B Shares to be Convertible
Class B Shares; PROVIDED, HOWEVER, that no such declaration shall decrease the
number of Eligible Class B Shares or Convertible Class B Shares held by any
person without such person's consent.
SECTION 4. CONDITIONAL CONVERSION OF CLASS B COMMON STOCK.
(a) CONVERSION OF CONVERTIBLE CLASS B SHARES. Subject to Section 4(c)
of this Article and to the limitations set forth in Article IV, Section 3.4 of
the Charter, upon becoming a Convertible Class B Share, each Convertible Class B
Share shall be converted automatically into the number of shares of the Class A
Common Stock that results from dividing $18.50 by the Conversion Price in effect
at the time of conversion (the "CONVERSION PRICE"). Subject to the limitations
set forth in Article IV, Section 3.4 of the Charter, such conversion shall occur
and be effective as of the applicable YearEnd Testing Date or, if later, the
satisfaction of the Market Price requirement set forth in Section 3(b) of this
Article. The initial Conversion Price shall be $18.50 per share and shall be
subject to adjustment as provided in Section 7 of this Article.
(b) CONVERSION UPON OCCURRENCE OF OTHER EVENTS. Notwithstanding the
foregoing provisions of this Section 4, but nevertheless subject to the
limitations set forth in Article IV, Section 3.4 of the Charter:
(1) all Outstanding Class B Shares (whether or not Eligible Class
B Shares) that have not previously converted into shares of the Class A Common
Stock shall convert automatically upon any Change in Control of the Corporation.
<PAGE> 18
(2) all Outstanding Class B Shares (whether or not Eligible Class
B Shares) held by an Initial Holder and any transferee of such Initial Holder
shall convert automatically into shares of the Class A Common Stock on the date
on which employment of such Initial Holder by an Employer is terminated by the
Employer (and not voluntarily by such Initial Holder) for any reason other than
Cause if following termination such Initial Holder is no longer employed as an
employee by any Employer, and
(3) the Board of Directors of the Corporation may, by resolution
duly adopted by the Board of Directors (and, if there shall be a duly
constituted compensation committee of the Board of Directors at the time, only
with the approval of the compensation committee), accelerate the conversion of
Outstanding Class B Shares (whether or not Eligible Class B Shares) into shares
of the Class A Common Stock at such time and in such amount as it may determine
to be appropriate from time to time.
The conversion of any Outstanding Class B Share pursuant to this Section 4(b)
shall be into the number of shares of the Class A Common Stock that results from
dividing $18.50 by the Conversion Price then in effect.
(c) IDENTIFICATION OF CLASS B COMMON STOCK CONVERTED. Whenever shares
of the Class B Common Stock are converted into shares of the Class A Common
Stock pursuant to Section 4(a), Section 4(b)(1) or Section 4(b)(3) of this
Article, the shares converted shall be allocated among all the record holders of
such shares of the Class B Common Stock in proportion to their record ownership.
(d) DELAYED CONVERSION. If the conversion of any shares of Class B
Common Stock into shares of the Class A Common Stock shall be limited or
restricted by reason of the provisions of Article IV, Section 3.4 of the
Charter, such shares shall automatically be so converted at such later time, if
any, and to such extent as such limitations and restrictions do not apply.
(e) NO FRACTIONAL SHARES. No fractional shares of the Class A Common
Stock shall be issued upon conversion of any shares of the Class B Common Stock.
Rather, the Corporation shall pay to the record holder cash for such fractional
shares at a rate equal to the Conversion Price per share.
SECTION 5. MANDATORY REPURCHASE OR STOCKHOLDER PURCHASE OF OUTSTANDING
CLASS B SHARES.
(a) REPURCHASE FOLLOWING THE FIFTH YEAREND TESTING DATE. Subject to the
limitations set forth in Article IV, Section 3.4 of the Charter, each
Outstanding Class B Share (whether or not an Eligible Class B Share) that has
not converted into shares of the Class A Common Stock in respect of the YearEnd
Testing Date of December 31, 1998 shall be subject to mandatory repurchase by
the Corporation at a price of $.10 per Outstanding Class B Share. Such mandatory
repurchase shall close upon the determination, no earlier than March 31, 2000,
that such Outstanding Class B Share is not convertible into shares of the Class
A Common Stock pursuant to Section 3 of this Article.
(b) INITIAL HOLDER PURCHASE UPON CERTAIN TERMINATIONS OF EMPLOYMENT.
Subject to the limitations set forth in Article IV, Section 3.4 of the Charter,
each Outstanding Class B Share (whether or not an Eligible Class B Share), other
than a Convertible Class B Share, held by the Initial Holder of such Outstanding
Class B Share, or by any holder who acquired such Outstanding Class B Share
directly or indirectly from such Initial Holder, that has neither converted nor
become convertible into shares of the Class A Common Stock or prior to either
(i) the date of termination of employment of such Initial Holder by an Employer
for Cause or (ii) the date of such Initial Holder's voluntary termination of
employment with an Employer shall be subject to mandatory purchase, at the time
of such termination of employment, by the other Initial Holders that are at that
time employed by an Employer. The purchase price shall be $.10 per Outstanding
Class B Share. The purchase of such Outstanding Class B Shares shall be made, by
the Initial Holders that are at that time employed by an Employer, proportionate
to the following percentages:
<TABLE>
<CAPTION>
INITIAL HOLDER PERCENTAGE
---------------------------------------
<S> <C> <C>
Terry Considine 68.33%
Peter K. Kompaniez 13.50%
Steven D. Ira 13.67%
Robert P. Lacy 4.50%
</TABLE>
<PAGE> 19
(c) REPURCHASE UPON CERTAIN TERMINATIONS OF EMPLOYMENT FOLLOWING
CONVERSION. Subject to the limitations set forth in Article IV, Section 3.4 of
the Charter, each share of the Class A Common Stock, whether held by an Initial
Holder of any other person who acquired such share of the Class A Common Stock
directly or indirectly from an Initial Holder, into which an Outstanding Class B
Share was originally converted pursuant to Section 4 of this Article shall be
subject to mandatory repurchase by the Corporation, at a price of $.10 per share
of the Class A Common Stock, upon such Initial Holder's termination of
employment with an Employer, other than (i) by reason of death, disability or a
Change in Control or (ii) the involuntary termination of employment of such
Initial Holder by an Employer without Cause, within 12 months following such
conversion of an Outstanding Class B Share into such share of the Class A Common
Stock; PROVIDED, HOWEVER, that nothing in this Section 5(c) shall be interpreted
or applied to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system.
(d) DELAYED REPURCHASE OR PURCHASE. If either the limitations or
restrictions of Article IV, Section 3.4 of the Charter shall apply to (i) a
mandatory repurchase under Section 5(a) or Section 5(c) of this Article or (ii)
a mandatory purchase by the Initial Holders under Section 5(b) of this Article,
or if the Corporation cannot then lawfully effect a repurchase of its shares,
then the repurchase or purchase, as the case may be, shall be deferred until,
and then only to the extent that, such repurchase or purchase can be lawfully
effected within such limitations and restrictions.
(e) PROCEDURES UPON REPURCHASE OR PURCHASE. Any repurchase of
Outstanding Class B Shares as provided by Section 5(a) or Section 5(c) of this
Article shall be effected by delivery by the Corporation to the record holder of
such Outstanding Class B Shares of a certified or cashier's check in the amount
of the aggregate repurchase price. Upon such payment by the Corporation in
repurchase of Outstanding Class B Shares, the certificates evidencing such
repurchased Outstanding Class B Shares shall be canceled. Any purchase of
Outstanding Class B Shares as provided by Section 5(b) of this Article shall be
effected by delivery of the Initial Holders then employed by an Employer to the
record holder of such Outstanding Class B Shares of a certified or cashier's
check in the amount of the aggregate purchase price.
(f) CHANGE IN CONTROL. The provisions of Sections 5(a), 5(b) and 5(c)
of this Article shall not apply following any Change in Control.
SECTION 6. REDUCTION IN AUTHORIZED SHARES. The number of authorized shares
of the Class B Common Stock shall be reduced automatically by (a) the number of
shares of the Class B Common Stock converted into shares of the Class A Common
Stock pursuant to Section 4 of this Article and (b) the number of shares of the
Class B Common Stock repurchased by the Corporation pursuant to Section 5(a) or
Section 5(c) of this Article.
SECTION 7. ADJUSTMENTS. The Conversion Price and the number of shares of the
Class A Common Stock issuable upon the conversion of each share of the Class B
Common Stock shall be subject to adjustment from time to time as provided in
this Section 7.
(a) ADJUSTMENT UPON CERTAIN EVENTS. In case that the Corporation shall
at any time after the date of the Initial Public Offering (i) pay a dividend in
shares of the Class A Common Stock or make a distribution in shares of the Class
A Common Stock, (ii) subdivide the outstanding shares of the Class A Common
Stock, (iii) combine the outstanding Class A Common Stock into a smaller number
of shares of the Class A Common Stock, or (iv) issue any shares of its capital
stock or other securities by reclassification of the Class A Common Stock, the
Conversion Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that each holder of shares
of the Class B Common Stock converted after such time shall be entitled to
receive the aggregate number and kind of the Class A Common Stock or other
securities of the Corporation that, if such shares of the Class B Common Stock
had been converted immediately prior to such time, he would have owned upon such
conversion and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination or reclassification. Such adjustment
shall
<PAGE> 20
be made successively whenever any event listed above shall occur.
(b) ISSUANCE OF RIGHTS, OPTIONS OR WARRANTS. If after the Initial
Public Offering the Corporation issues any rights, options or warrants to all
holders of its Class A Common Stock entitling them for a period expiring within
60 days after the record date mentioned below to purchase shares of the Class A
Common Stock (or securities convertible into or exchangeable for shares of the
Class A Common Stock) at a price per share less than the current market price
per share on that record date, the Conversion Price shall be adjusted in
accordance with the formula:
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common Stock outstanding
on the record date.
N equals the number of additional shares of the Class A Common Stock
offered or initially issuable upon conversion or exchange of the
convertible or exchangeable securities offered.
P equals the offering price or conversion price or exchange per share
of the additional shares.
M equals the current market price per share of the Class A Common
Stock on the record date.
The adjustment shall be made successively whenever any such rights, options or
warrants are issued and shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights, options or
warrants. If all of the shares of the Class A Common Stock or securities
convertible into or exchangeable for shares of the Class A Common Stock subject
to such rights, options or warrants have not been issued when such rights,
options or warrants expire, then the Conversion Price shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares of the Class A Common Stock actually issued upon the exercise
of such rights, options or warrants or initially issuable based upon the number
of convertible securities or exchangeable securities actually issued upon the
exercise of such rights or warrants.
(c) DISTRIBUTION OF ASSETS AND DEBT SECURITIES. If after the Initial
Public Offering the Corporation distributes to all holders of its Class A Common
Stock any of its assets or debt securities or any rights or warrants to purchase
debt securities, assets or other securities of the Corporation (including shares
of the Class A Common Stock), the Conversion Price shall be adjusted in
accordance with the formula:
where
A equals the adjusted Conversion Price.
C equals the then current
Conversion Price.
M equals the current market price per share of the Class A Common
Stock on the record date mentioned below.
F equals the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of the Class
A Common Stock. The Board of Directors shall determine, in good
faith, such fair market value, which determination shall be
conclusive.
This Section 7(c) does not apply to any rights, options or warrants referred to
in Section 7(b) of this Article.
This Section 7(c) does not apply to cash dividends or cash distributions paid in
respect of the Class A Common Stock for any period if the cash dividends or cash
distributions paid in respect of the Class A Common Stock and OP Units for that
period, when added to the amount of all other cash dividends or cash
distributions paid in respect to the Class A Common Stock and OP Units for the
twelve (12) month period ending on the last day of such period, does not exceed
100% of Cash Available for Distribution for such twelve (12) month period. "CASH
AVAILABLE FOR DISTRIBUTION" shall mean "Funds from Operations" (as that term is
defined in the "Glossary" of the Prospectus but computed at the Operating
Partnership level) minus (i) the amount of any dividend on Preferred Stock
accrued during such twelve (12) month period, whether or not declared or paid,
and (ii) an annual reserve for capital replacements of $300 per apartment unit
for the weighted average number of apartment units owned by the Corporation
during such twelve (12) month period. By way of example, Cash Available for
Distribution for the twelve (12) month
<PAGE> 21
period ending June 15, 1995 as set forth in the Prospectus is projected on a PRO
FORMA basis to be $18,476,000.
(d) ISSUANCE OF DISCOUNTED SHARES. If after the Initial Public Offering
the Corporation issues shares of the Class A Common Stock for a consideration
per share less than the current market price per share, on the date that the
Corporation fixes the offering price of such additional shares, the Conversion
Price shall be adjusted in accordance with the formula:
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common Stock outstanding
immediately prior to the issuance of such additional shares.
P equals the aggregate consideration received for the issuance of
such additional shares.
M equals the current market price per share of the Class A Common
Stock on the date of issuance of such additional shares.
S equals the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance.
This Section 7(d) does not apply to (i) any of the transactions described in
Section 7(b) or Section 7(c) of this Article, (ii) the conversion or exchange of
shares of the Class B Common Stock or other securities convertible into or
exchangeable for shares of the Class A Common Stock, (iii) shares of the Class A
Common Stock issued by the Corporation upon, and as consideration for, the
purchase of OP Units, (iv) shares of the Class A Common Stock issued to the
Corporation's employees (other than upon the exercise of options of the type
referred to in clause (v) below) under BONA FIDE employee benefit plans adopted
by the Board of Directors, if such Class A Common Stock would otherwise be
covered by this Section 7(d), (v) the Class A Common Stock issued upon the
exercise of options granted to employees at an exercise price equal to at least
85% of the fair market value of such Class A Common Stock at the time that such
options were granted, (vi) the Class A Common Stock issued to stockholders of
any person that merges into the Corporation, or with a subsidiary of the
Corporation, in proportion to their stock holdings in such Person immediately
prior to such merger, upon such merger, (vii) the Class A Common Stock issued in
a BONA FIDE public offering pursuant to a firm commitment or best efforts
underwriting, or (viii) the Class A Common Stock issued in a BONA FIDE private
placement through a placement agent that is a member firm of the National
Association of Securities Dealers, Inc. (except to the extent that any discount
from the current market price attributable to restrictions on transferability of
the Class A Common Stock, as determined in good faith by the Board of Directors,
shall exceed 10% of the then current market price).
(e) ISSUANCE OF CONVERTIBLE DISCOUNTED SECURITIES. If after the Initial
Public Offering the Corporation issues any securities convertible into or
exchangeable for shares of the Class A Common Stock (other than securities
issued in transactions described in Section 7(b) or Section 7(c)) of this
Article for a consideration per share of the Class A Common Stock initially
deliverable upon conversion or exchange of such securities less than the current
market price per share of the Class A Common Stock on the date of issuance of
such securities, the Conversion Price shall be adjusted in accordance with the
formula:
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common Stock outstanding
immediately prior to the issuance of such securities.
P equals the aggregate consideration received for the issuance of
such securities.
M equals the current market price per share of the Class A Common
Stock on the date of issuance of such securities.
<PAGE> 22
D equals the maximum number of shares deliverable upon conversion or
in exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance. If all of the Class
A Common Stock deliverable upon conversion or exchange of such securities have
not been issued when such securities are no longer outstanding, then the
Conversion Price shall promptly be readjusted to the conversion price that would
then be in effect had the adjustment upon the issuance of such securities been
made on the basis of the actual number of shares of the Class A Common Stock
issued upon conversion or exchange of such securities.
This Section 7(e) does not apply to (i) convertible securities issued to
stockholders of any Person that merges into the Corporation, or with a
subsidiary of the Corporation, in proportion to their stock holdings in such
Person immediately prior to such merger, upon such merger, (ii) convertible
securities issued in a BONA FIDE public offering pursuant to a firm commitment
or best efforts underwriting, or (iii) convertible securities issued in a BONA
FIDE private placement through a placement agent that is a member firm of the
National Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of the Class A Common Stock issuable upon conversion, as
determined in good faith by the Board of Directors and described in a Board
resolution, shall exceed 20% of the then current market price).
(f) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If at
any time or from time to time there is a capital reorganization of the
Corporation (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section 7
or Section 4 of this Article) or a merger or consolidation of the Corporation
with or into another corporation, or the sale of all or substantially all of the
Corporation's properties and assets to any other person then, each share of the
Class B Common Stock then outstanding shall thereafter be convertible into, in
lieu of the Class A Common Stock issuable upon such conversion prior to
consummation of such reorganization, merger, consolidation or sale, the kind and
amount of shares of stock and other securities and property receivable
(including cash) upon the consummation of such reorganization, merger,
consolidation or sale by a holder of that number of shares of Class A Common
Stock into which one share of the Class B Common Stock was convertible
immediately prior to such reorganization, merger, consolidation or sale
(including, on a PRO RATA basis, the cash, securities or property received by
holders of Class A Common Stock in any tender or exchange offer that is a step
in such transaction). In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 7 and Section 4 of this
Article with respect to the rights of the holders of the shares of the Class B
Common Stock after the reorganization, merger, consolidation or sale to the end
that the provisions of this Section 7 (including adjustment of the Conversion
Price then in effect and the number of shares issuable upon conversion of the
shares of the Class B Common Stock) shall be applicable after that event and be
as nearly equivalent as may be practicable.
(g) COMPUTATION OF CONSIDERATION. For purposes of any computation
respecting consideration received pursuant to Sections 7(d) and 7(e) of this
Article, the following shall apply:
(1) In the case of the issuance of shares of the Class A Common
Stock for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Corporation for any underwriting of the issue or
otherwise in connection therewith;
(2) In the case of the issuance of shares of the Class A Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive, and
described in a Board resolution; and
(3) In the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor shall be
deemed to be the consideration received by the Corporation for the issuance of
such securities plus the additional minimum consideration if any, to be received
by the Corporation upon the conversion of exchange thereof (the consideration in
each case to be determined in the same manner
<PAGE> 23
provided in Sections 7(g)(1) and 7(g)(2) of this Article.
(h) COMPUTATION OF CURRENT MARKET PRICE. For the purpose of any
computation pursuant to Sections 7(b), 7(c), 7(d) and 7(e) of this Article, the
current market price per share of the Class A Common Stock on any date shall be
deemed to be the average of the Closing Prices for 15 consecutive Trading Days
commencing 30 Trading Days before that date. However, if the Class A Common
Stock is not publicly listed or publicly traded, current market price shall mean
the fair market value per share of Class A Common Stock, as determined in good
faith by the Board of Directors, based on the opinion of an independent
investment banking firm.
(i) EXCEPTIONS. No adjustment in the Conversion Price need be made:
(1) unless the adjustment would require an increase or decrease of
at least 1% in the Conversion Price. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 7 shall be made to the nearest cent or to the
nearest one hundredth (1/100th) of a share, as the case may be. The Conversion
Price shall not be adjusted upward except in the event of a combination of the
outstanding shares of the Class A Common Stock into a smaller number of shares
of Common Stock or in the event of a readjustment of the Conversion Price
pursuant to Section 7(b) or Section 7(e) of this Article;
(2) for a transaction referred to in Section 7(a), Section 7(b),
Section 7(c), Section 7(d) or Section 7(e) of this Article if holders of the
Class B Common Stock are to participate in the transaction on a basis and with
notice that the Board of Directors determines to be fair and appropriate in
light of the basis and notice on which holders of the Class A Common Stock
participate in the transaction;
(3) for rights to purchase shares of the Class A Common Stock
pursuant to a plan for reinvestment of dividends or interest;
(4) for a change in the part value or no par value of the Class A
Common Stock; or
(5) to the extent that the Class B Common Stock becomes
convertible into cash, as to such cash. Interest will not accrue on any such
cash.
(j) NOTICE. Whenever the Conversion Price is adjusted or reduced, the
Corporation shall promptly mail, at least 12 days prior to the record date of
the distribution triggering the adjustment or reduction, to holders of the Class
B Common Stock and file with the transfer agent therefor a notice of the
adjustment or reduction and, in the case of an adjustment, file with the
transfer agent for the Class B Common Stock an officer's certificate briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is correct.
(k) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of the Class A Common Stock, solely for the purpose of effecting the
conversion of the shares of the Class B Common Stock, such number of its shares
of the Class A Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Class B Common Stock; and if at
any time the number of authorized but unissued shares of the Class A Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares of the Class B Common Stock, the Corporation will take such corporate and
other action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of the Class A Common Stock to such number of
shares as shall be sufficient for such purpose.
(l) DISCRETIONARY ADJUSTMENTS. The Board of Directors may (but shall
not be required to) make such adjustments in the Conversion Price, in addition
to those required by this Section 7, as shall be determined by the Board of
Directors, as evidenced by a Board resolution, to be advisable in order that any
event that would otherwise be treated for federal income tax purposes as a
dividend of stock or stock rights will, to the extent practicable, not be so
treated or not be taxable to all the recipients.
<PAGE> 24
(m) AMBIGUITY. The Board of Directors may interpret the provisions of
this Section 7 to resolve any inconsistency or ambiguity that may arise or be
revealed in connection with the adjustment procedures provided herein, and if
such inconsistency or ambiguity reflects an inaccurate provision hereof, the
Board of Directors may, in appropriate circumstances, authorize the filing of
additional articles supplementary or a certificate of designation.
SECTION 8. RESTRICTION ON ADDITIONAL ISSUANCES. Upon the filing of these
Articles of Amendment, there shall be authorized 750,000 shares and issued and
outstanding 650,000 shares of the Class B Common Stock.(11) No additional shares
of the Class B Common Stock shall be issued without the affirmative consent or
vote of a majority of the Corporation's Board of Directors other than employees
of an Employer.
ARTICLE XIII
CLASS B PREFERRED STOCK
The terms of the Class B Cumulative Convertible Preferred Stock (including
the preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class B Cumulative
Convertible Preferred Stock (the "Class B Preferred Stock") and Seven Hundred
Fifty Thousand (750,000) shall be the authorized number of shares of such
Class B Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class B Preferred Stock, the following terms shall have
the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock, the
sum of the products of (i) the number of shares of each class of Equity
Stock within such block multiplied by (ii) the corresponding Market Price of
one share of Equity Stock of such class.
"BASE COMMON STOCK DIVIDEND" shall have the meaning set forth in paragraph
(a) of Section 9 of this Article.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of
Equity Stock directly owned by such Person, (ii) the number of shares of
Equity Stock indirectly owned by such Person (if such Person is an
"individual" as defined in Section 542(a)(2) of the Code) taking into
account the constructive ownership rules of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares
of Equity Stock that such Person is deemed to beneficially own pursuant to
Rule 13d3 under the Exchange Act or that is attributed to such Person
pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the
Code, PROVIDED that when applying this definition of Beneficial Ownership to
the Initial Holder, clause (iii) of this definition, and clause (ii) of the
definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER,"
"BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative
meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation or
any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Class B Preferred Stock.
(11) See Article FIFTH.
<PAGE> 25
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New
York are not required to be open.
"CALL DATE" shall have the meaning set forth in paragraph (b) of Section 5
of this Article.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 11.3 of this Article, each of which shall
be an organization described in Section 170(b)(1)(A), 170(c)(2) and
501(c)(3) of the Code.
"CLASS B PREFERRED STOCK" shall have the meaning set forth in Section 1 of
this Article.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto. Reference to any provision
of the Code shall mean such provision as in effect from time to time, as the
same may be amended, and any successor thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in effect
from time to time.
"COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation or such shares of the Corporation's capital stock
into which outstanding shares of Common Stock shall be reclassified.
"CONVERSION PRICE" shall mean the conversion price per share of Common Stock
for which each share of Class B Preferred Stock is convertible, as such
Conversion Price may be adjusted pursuant to paragraph (d) of Section 7 of
this Article. The initial Conversion Price shall be $30.45
(equivalent to an initial conversion rate of 3.28407 shares of Common Stock
for each share of Class B Preferred Stock).
"CURRENT MARKET PRICE" of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the Corporation
or of any similar security of any other issuer for any day shall mean the
closing price, regular way on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices regular way on
such day, in either case as reported on the principal national securities
exchange on which such securities are listed or admitted for trading, or, if
such security is not quoted on any national securities exchange, on the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or, if such security is not quoted on
the NASDAQ National Market, the average of the closing bid and asked prices
on such day in the overthecounter market as reported by NASDAQ or, if bid
and asked prices for such security on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices on such day as
furnished by any New York Stock Exchange or National Association of
Securities Dealers, Inc. member firm regularly making a market in such
security selected for such purpose by the Chief Executive Officer or the
Board of Directors or if any class or series of securities are not publicly
traded, the fair value of the shares of such class as determined reasonably
and in good faith by the Board of Directors of the Corporation.
"DISTRIBUTION" shall have the meaning set forth in paragraph (d)(iii) of
Section 7 of this Article.
"DIVIDEND PAYMENT DATE" shall mean, with respect to each Dividend Period,
(a) the date that cash dividends are paid on the Common Stock with respect
to such Dividend Period; or (b) if such dividends have not been paid on the
Common Stock by 9:00 a.m., New York City time, on the sixtieth day from and
including the last day of such Dividend Period, then on such day; provided,
further, that if any Dividend Payment Date falls on any day other than a
Business Day, the dividend payment payable on such Dividend Payment Date
shall be paid on the Business Day immediately following such Dividend
Payment Date.
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January 1,
April 1, July 1 and October 1 of each year and ending on and including the
day preceding the first day of the next succeeding Dividend Period, other
than the Dividend Period during which any Class B Preferred Stock shall be
redeemed pursuant to Section 5 hereof, which shall end on and include the
Call Date with respect to the Class B Preferred Stock being redeemed.
<PAGE> 26
"EQUITY STOCK" shall mean one or more shares of any class of capital stock
of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 11.3(A) of this
Article.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" shall mean the average of the daily Current Market
Prices of a share of Common Stock during five (5) consecutive Trading Days
selected by the Corporation commencing not more than twenty (20) Trading
Days before, and ending not later than, the earlier of the day in question
and the day before the "ex" date with respect to the issuance or
distribution requiring such computation. The term "'ex' date," when used
with respect to any issuance or distribution, means the first day on which
the share of Common Stock trades regular way, without the right to receive
such issuance or distribution, on the exchange or in the market, as the case
may be, used to determine that day's Current Market Price.
"ISSUE DATE" shall mean August 4, 1997.
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including
the Issue Date and ending on and including September 30, 1997.
"INITIAL HOLDER" shall mean Terry Considine.
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class B Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding
shares of Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class B Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors, a schedule that sets forth the thencurrent
Initial Holder Limit applicable to the Initial Holder.
"JUNIOR STOCK" shall have the meaning set forth in paragraph (c) of Section
8 of this Article.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the
Code or (ii) registered under the Investment Company Act of 1940.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class B Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of (x) 15%
of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by
the Aggregate Value of all shares of Equity Stock other than Class B
Preferred Stock that are Beneficially Owned by the Look-Through Entity.
"MARKET PRICE" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of a share of that class of Equity Stock on the
Trading Day immediately preceding such date. The term "CLOSING PRICE" on any
date shall mean the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to trading on the NYSE or, if the Equity Stock is not listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Equity Stock is listed or admitted to
trading or, if the Equity Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price, or if not so quoted,
the average of the high bid and low asked prices in the overthecounter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or, if such system is no longer in use, the
principal other automated quotations system that may then be in use or, if
the Equity Stock is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Equity Stock selected by the Board of Directors of
the Company.
<PAGE> 27
"NYSE" shall mean the New York Stock Exchange, Inc.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of
the Corporation, PROVIDED that for purposes of the application of the
Ownership Limit, the Look-Through Ownership Limit or the Initial Holder
Limit to any Person, the term "OUTSTANDING" shall be deemed to include the
number of shares of Equity Stock that such Person alone, at that time, could
acquire pursuant to any options or convertible securities.
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder
or a Look-Through Entity, a number of the Outstanding shares of Class B
Preferred Stock of the Corporation having an Aggregate Value not in excess
of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock
other than Class B Preferred Stock that are Beneficially Owned by the
Person.
"OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or Look-Through Entities,
the Initial Holder Limit as applied to the Initial Holder and the
Look-Through Ownership Limit as applied to Look-Through Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section
8 of this Article.
"PERSON" shall mean (a) for purposes of Section 11 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association, private
foundation within the meaning of Section 509(a) of the Code, joint stock
company or other entity, and (ii) also includes a group as that term is used
for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of
the remaining Sections of this Article, any individual, firm, partnership,
corporation or other entity and shall include any successor (by merger or
otherwise) of such entity.
"PROHIBITED TRANSFEREE" has the meaning set forth in Section 11.3(A) of
this Article.
"REIT" shall mean a "real estate investment trust" as defined in Section 856
of the Code.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section
8 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action other
than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to
a declaration of dividends or other distribution by the Board of Directors,
the allocation of funds to be so paid on any series or class of capital
stock of the Corporation; provided, however, that if any funds for any class
or series of Junior Stock or any class or series of Parity Stock are placed
in a separate account of the Corporation or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect to
the Class B Preferred Stock shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar
agent.
"TRADING DAY", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on which
such securities are listed or admitted or, if such securities are not listed
or admitted for trading on any national securities exchange, the NASDAQ
National Market or, if such securities are not listed or admitted for
trading on the NASDAQ National Market, any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"TRANSACTION" shall have the meaning set forth in paragraph (e) of Section 7
of this Article.
"TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class B Preferred Stock (including (i) the
granting of an option or any series of such options or entering into any
agreement for the sale, transfer or other disposition of Class B Preferred
Stock or (ii) the sale, transfer,
<PAGE> 28
assignment or other disposition of any securities or rights convertible into
or exchangeable for Class B Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any transfer
of an interest in other entities that results in a change in the Beneficial
Ownership of shares of Class B Preferred Stock). The term "TRANSFERS" and
"TRANSFERRED" shall have correlative meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the Board
of Directors or their designee as the transfer agent for the Class B
Preferred Stock; provided, that if the Corporation has not designated a
transfer agent then the Corporation shall act as the transfer agent for the
Class B Preferred Stock.
"TRUST" shall mean the trust created pursuant to Section 11.3 of this
Article.
"TRUSTEE" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 9 of
this Article.
3. DIVIDENDS.
(a) The holders of Class B Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class B Preferred Stock equal to the greater of (i) the base
dividend of $1.78125 per quarter (the "Base Rate") or (ii) the cash dividends
declared on the number of shares of Common Stock, or portion thereof, into which
a share of Class B Preferred Stock is convertible. The dividends payable with
respect to the Initial Dividend Period shall be determined solely by reference
to the Base Rate. The amount referred to in clause (ii) of this paragraph (a)
with respect to each succeeding Dividend Period shall be determined as of the
applicable Dividend Payment Date by multiplying the number of shares of Common
Stock, or portion thereof calculated to the fourth decimal point, into which a
share of Class B Preferred Stock would be convertible at the opening of business
on such Dividend Payment Date (based on the Conversion Price then in effect) by
the aggregate cash dividends payable or paid for such Dividend Period in respect
of a share of Common Stock outstanding as of the record date for the payment of
dividends on the Common Stock with respect to such Dividend Period. If (A) the
Corporation pays a cash dividend on the Common Stock after the Dividend Payment
Date for the corresponding Dividend Period and (B) the dividend on the Class B
Preferred Stock for such Dividend Period calculated pursuant to clause (ii) of
this paragraph (a), taking into account the Common Stock dividend referenced in
clause (A), exceeds the dividend previously declared on the Class B Preferred
Stock for such Dividend Period, the Corporation shall pay an additional dividend
to the holders of the Class B Preferred Stock on the date that the Common Stock
dividend referenced in clause (A) is paid, in an amount equal to the difference
between the dividend calculated pursuant to clause (B) and the dividends
previously declared on the Class B Preferred Stock with respect to such Dividend
Period. Such dividends shall be cumulative from the Issue Date, whether or not
in any Dividend Period or Periods such dividends shall be declared or there
shall be funds of the Corporation legally available for the payment of such
dividends, and shall be payable quarterly in arrears on the Dividend Payment
Dates, commencing on the first Dividend Payment Date after the Issue Date. Each
such dividend shall be payable in arrears to the holders of record of the Class
B Preferred Stock, as they appear on the stock records of the Corporation at the
close of business on a record date fixed by the Board of Directors which shall
be not more than 60 days prior to the applicable Dividend Payment Date and,
within such 60 day period, shall be the same date as the record date for the
regular quarterly dividend payable with respect to the Common Stock for the
Dividend Period to which such Dividend Payment Date relates (or, if there is no
such record date for Common Stock, then such date as the Board of Directors may
fix). Accumulated, accrued and unpaid dividends for any past Dividend Periods
may be declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, which date shall not precede by
more than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
Upon a final administrative determination by the Internal Revenue
Service that the Corporation does not qualify as a real estate investment trust
in accordance with Section 856 of the Code, the Base Rate set forth in (a)(i)
will be increased to $3.03125 until such time as the Corporation regains its
status as a real estate investment
<PAGE> 29
trust; provided, however, that if the Corporation contests its loss of real
estate investment trust status in Federal Court, following its receipt of an
opinion of nationally recognized tax counsel to the effect that there is a
reasonable basis to contest such loss of status, the Base Rate shall not be
increased during the pendency of such judicial proceeding; provided further,
however, that upon a final judicial determination in Federal Tax Court, Federal
District Court or the Federal Claims Court that the Corporation does not qualify
as a real estate investment trust, the Base Rate will be increased as stated
above from the date of such judicial determination.
(b) The amount of dividends payable per share of Class B Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30day months
and a 360day year. Holders of Class B Preferred Stock shall not be entitled to
any dividends, whether payable in cash, property or stock, in excess of
cumulative dividends, as herein provided, on the Class B Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Class B Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class B Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment on the Class B Preferred
Stock for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Stock. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class B Preferred Stock and all
dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class B Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class B Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of or options, warrants or rights to subscribe for or purchase shares of Junior
Stock) shall be declared or paid or set apart for payment by the Corporation and
no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any shares of Junior
Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Common Stock
made for purposes of an employee incentive or benefit plan of the Corporation or
any subsidiary) for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
directly or indirectly by the Corporation (except by conversion into or exchange
for Junior Stock), nor shall any other cash or other property otherwise be paid
or distributed to or for the benefit of any holder of shares of Junior Stock in
respect thereof, directly or indirectly, by the Corporation unless in each case
(i) the full cumulative dividends (including all accumulated, accrued and unpaid
dividends) on all outstanding shares of Class B Preferred Stock and any other
Parity Stock of the Corporation shall have been paid or such dividends have been
declared and set apart for payment for all past Dividend Periods with respect to
the Class B Preferred Stock and all past dividend periods with respect to such
Parity Stock and (ii) sufficient funds shall have been paid or set apart for the
payment of the full dividend for the current Dividend Period with respect to the
Class B Preferred Stock and the current dividend period with respect to such
Parity Stock.
<PAGE> 30
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the Corporation (whether capital or surplus) shall be made to or
set apart for the holders of Junior Stock, the holders of shares of Class B
Preferred Stock shall be entitled to receive One Hundred Dollars ($100) per
share of Class B Preferred Stock (the "Liquidation Preference"), plus an amount
equal to all dividends (whether or not earned or declared) accumulated, accrued
and unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class B Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Class B
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Class B Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Class B Preferred Stock and any such other Parity Stock if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of Class B Preferred
Stock and any Parity Stock, as provided in this Section 4, any other series or
class or classes of Junior Stock shall, subject to the respective terms thereof,
be entitled to receive any and all assets remaining to be paid or distributed,
and the holders of the Class B Preferred Stock and any Parity Stock shall not be
entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class B Preferred Stock shall not be redeemable by the
Corporation prior to August 4, 2002. On and after August 4, 2002, the
Corporation, at its option, may redeem shares of Class B Preferred Stock, in
whole or from time to time in part, at a redemption price payable in cash equal
to 100% of the Liquidation Preference thereof, plus all accrued and unpaid
dividends to the Call Date.
(b) Shares of Class B Preferred Stock shall be redeemed by the
Corporation on the date specified in the notice to holders required under
paragraph (d) of this Section 5 (the "Call Date"). The Call Date shall be
selected by the Corporation, shall be specified in the notice of redemption and
shall be not less than 30 days nor more than 60 days after the date notice of
redemption is sent by the Corporation.
(c) If full cumulative dividends on all outstanding shares of Class B
Preferred Stock and any other class or series of Parity Stock of the Corporation
have not been paid or declared and set apart for payment, no shares of Class B
Preferred Stock may be redeemed unless all outstanding shares of Class B
Preferred Stock are simultaneously redeemed and neither the Corporation nor any
affiliate of the Corporation may purchase or acquire shares of Class B Preferred
Stock, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of shares of Class B Preferred Stock.
(d) If the Corporation shall redeem shares of Class B Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given to each holder of record of the shares to be redeemed. Such notice shall
be provided by first class mail, postage prepaid, at such holder's address as
the same appears on the stock records of the Corporation.
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state, as appropriate: (1) the Call Date; (2) the number of
<PAGE> 31
shares of Class B Preferred Stock to be redeemed and, if fewer than all such
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (3) the place or places at which certificates for
such shares are to be surrendered for cash; and (4) the thencurrent Conversion
Price. Notice having been mailed as aforesaid, from and after the Call Date
(unless the Corporation shall fail to make available the amount of cash
necessary to effect such redemption), (i) except as otherwise provided herein,
dividends on the shares of Class B Preferred Stock so called for redemption
shall cease to accumulate or accrue on the shares of Class B Preferred Stock
called for redemption (except that, in the case of a Call Date after a dividend
record date and prior to the related Dividend Payment Date, holders of Class B
Preferred Stock on the dividend record date will be entitled on such Dividend
Payment Date to receive the dividend payable on such shares), (ii) said shares
shall no longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Class B Preferred Stock of the Corporation shall cease
(except the rights to receive the cash payable upon such redemption, without
interest thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon). The Corporation's
obligation to make available the redemption price in accordance with the
preceding sentence shall be deemed fulfilled if, on or before the Call Date, the
Corporation shall deposit with a bank or trust company (which may be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption, in trust, with irrevocable
instructions that such cash be applied to the redemption of the shares of Class
B Preferred Stock so called for redemption. No interest shall accrue for the
benefit of the holders of shares of Class B Preferred Stock to be redeemed on
any cash so set aside by the Corporation. Subject to applicable escheat laws,
any such cash unclaimed at the end of two years from the Call Date shall revert
to the general funds of the Corporation, after which reversion the holders of
shares of Class B Preferred Stock so called for redemption shall look only to
the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class B Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) for which such shares have been
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class B Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class B
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class B Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If fewer
than all the shares of Class B Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class B Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation (including shares of Class B
Preferred Stock which have been surrendered for conversion into Common Stock)
shall be returned to the status of authorized, but unissued shares of Class B
Preferred Stock.
7. CONVERSION.
At any time on or after August 4, 1998. Holders of shares of Class B
Preferred Stock shall have the right to convert all or a portion of such shares
into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section
7, a holder of shares of Class B Preferred Stock shall have the right, at such
holder's option, at any time on or after August 4, 1998 to convert such shares,
in whole or in part, into the number of fully paid and nonassessable shares of
authorized but previously unissued shares of Common Stock per each share of
Class B Preferred Stock obtained by dividing the Liquidation Preference
(excluding any accumulated, accrued and unpaid dividends) per share of Class B
Preferred Stock by the Conversion Price (as in effect at the time and on the
date provided for in the last subparagraph of paragraph (b) of this Section 7)
and by surrendering such shares to be converted, such surrender to be made in
the manner provided in paragraph (b) of this Section 7; provided, however, that
the right to convert shares of Class B Preferred Stock called for redemption
pursuant to Section 5 shall terminate at the close of business on the Call Date
fixed for such redemption, unless the Corporation shall default in making
payment of cash payable upon such redemption under Section 5 of this Article.
<PAGE> 32
(b) In order to exercise the conversion right, the holder of each share
of Class B Preferred Stock to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof elects to convert such share of Class B
Preferred Stock. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Class B Preferred Stock is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid).
Holders of shares of Class B Preferred Stock at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to such
Dividend Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of Common Stock issued upon such
conversion.
As promptly as practicable after the surrender of certificates for shares of
Class B Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or send on such holder's written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares of Class B Preferred Stock in
accordance with provisions of this Section 7, and any fractional interest in
respect of a share of Common Stock arising upon such conversion shall be settled
as provided in paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of Class
B Preferred Stock shall have been surrendered and such notice received by the
Corporation as aforesaid, and the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby at such time on such date and such conversion
shall be at the Conversion Price in effect at such time on such date unless the
stock transfer books of the Corporation shall be closed on that date, in which
event such Person or Persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation. If the dividend payment
record date for the Class B Preferred Stock and Common Stock do not coincide,
and the preceding sentence does not operate to ensure that a holder of shares of
Class B Preferred Stock whose shares are converted into Common Stock does not
receive dividends on both the shares of Class B Preferred Stock and the Common
Stock into which such shares are converted for the same Dividend Period, then
notwithstanding anything herein to the contrary, it is the intent, and the
Transfer Agent is authorized to ensure that no conversion after the earlier of
such record dates will be accepted until after the latter of such record dates.
(c) No fractional share of Common Stock or scrip representing fractions
of a share of Common Stock shall be issued upon conversion of the shares of
Class B Preferred Stock. Instead of any fractional interest in a share of Common
Stock that would otherwise be deliverable upon the conversion of shares of Class
B Preferred Stock, the Corporation shall pay to the holder of such share an
amount in cash based upon the Current Market Price of the Common Stock on the
Trading Day immediately preceding the date of conversion.
If more than one share shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Class B Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its capital stock in shares of Common Stock,
(B) subdivide its outstanding Common Stock into a greater number
<PAGE> 33
of shares, (C) combine its outstanding Common Stock into a smaller number of
shares or (D) issue any shares of capital stock by reclassification of its
outstanding Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or distribution or at the opening
of business on the day following the day on which such subdivision, combination
or reclassification becomes effective, as the case may be, shall be adjusted so
that the holder of any share of Class B Preferred Stock thereafter surrendered
for conversion shall be entitled to receive the number of shares of Common Stock
(or fraction of a share of Common Stock) that such holder would have owned or
have been entitled to receive after the happening of any of the events described
above had such share of Class B Preferred Stock been converted immediately prior
to the record date in the case of a dividend or distribution or the effective
date in the case of a subdivision, combination or reclassification. An
adjustment made pursuant to this paragraph (d)(i) of this Section 7 shall become
effective immediately after the opening of business on the day next following
the record date (except as provided in paragraph (h) below) in the case of a
dividend or distribution and shall become effective immediately after the
opening of business on the day next following the effective date in the case of
a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Stock entitling them (for a period
expiring within 45 days after the record date described below in this paragraph
(d)(ii) of this Section 7) to subscribe for or purchase Common Stock at a price
per share less than the Fair Market Value per share of the Common Stock on the
record date for the determination of stockholders entitled to receive such
rights, options or warrants, then the Conversion Price in effect at the opening
of business on the day next following such record date shall be adjusted to
equal the price determined by multiplying (A) the Conversion Price in effect
immediately prior to the opening of business on the day following the date fixed
for such determination by (B) a fraction, the numerator of which shall be the
sum of (X) the number of shares of Common Stock outstanding on the close of
business on the date fixed for such determination and (Y) the number of shares
that could be purchased at such Fair Market Value from the aggregate proceeds to
the Corporation from the exercise of such rights, options or warrants for Common
Stock, and the denominator of which shall be the sum of (XX) the number of
shares of Common Stock outstanding on the close of business on the date fixed
for such determination and (YY) the number of additional shares of Common Stock
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall become effective immediately after the opening
of business on the day next following such record date (except as provided in
paragraph (h) below). In determining whether any rights, options or warrants
entitle the holders of Common Stock to subscribe for or purchase Common Stock at
less than such Fair Market Value, there shall be taken into account any
consideration received by the Corporation upon issuance and upon exercise of
such rights, options or warrants, the value of such consideration, if other than
cash, to be determined in good faith by the Board of Directors.
(iii) If the Corporation shall after the Issue Date make a
distribution on its Common Stock other than in cash or shares of Common Stock
(including any distribution in securities (other than rights, options or
warrants referred to in paragraph (d)(ii) of this Section 7)) (each of the
foregoing being referred to herein as a "distribution"), then the Conversion
Price in effect at the opening of business on the next day following the record
date for determination of stockholders entitled to receive such distribution
shall be adjusted to equal the price determined by multiplying (A) the
Conversion Price in effect immediately prior to the opening of business on the
day following the record date by (B) a fraction, the numerator of which shall be
the difference between (X) the number of shares of Common Stock outstanding on
the close of business on the record date and (Y) the number of shares determined
by dividing (aa) the aggregate value of the property being distributed by (bb)
the Fair Market Value per share of Common Stock on the record date, and the
denominator of which shall be the number of shares of Common Stock outstanding
on the close of business on the record date. Such adjustment shall become
effective immediately after the opening of business on the day next following
such record date (except as provided below). The value of the property being
distributed shall be as determined in good faith by the Board of Directors;
provided, however, if the property being distributed is a publicly traded
security, its value shall be calculated in accordance with the procedure for
calculating the Fair Market Value of a share of Common Stock (calculated for a
period of five consecutive Trading Days commencing on the twentieth Trading Day
after the distribution). Neither the issuance by the Corporation of rights,
options or warrants to subscribe for or purchase securities of the Corporation
nor the exercise thereof shall be deemed a distribution under this paragraph.
(iv) If after the Issue Date the Corporation shall acquire,
pursuant to an issuer or self tender
<PAGE> 34
offer, all or any portion of the outstanding Common Stock and such tender offer
involves the payment of consideration per share of Common Stock having a fair
market value (as determined in good faith by the Board of Directors), at the
last time (the "Expiration Time") tenders may be made pursuant to such offer,
that exceeds the Current Market Price per share of Common Stock on the Trading
Day next succeeding the Expiration Time, then the Conversion Price in effect on
the opening of business on the day next succeeding the Expiration Time shall be
adjusted to equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the Expiration Time by (B) a fraction, the
numerator of which shall be (X) the number of shares of Common Stock outstanding
(including the shares acquired in the tender offer (the "Acquired Shares"))
immediately prior to the Expiration Time, multiplied by (Y) the Current Market
Price per share of Common Stock on the Trading Day next succeeding the
Expiration Time, and the denominator of which shall be the sum of (XX) the fair
market value (determined as aforesaid) of the aggregate consideration paid to
acquire the Acquired Shares and (YY) the product of (I) the number of shares of
Common Stock outstanding (less any Acquired Shares) at the Expiration Time,
multiplied by (II) the Current Market Price per share of Common Stock on the
Trading Day next succeeding the Expiration Time.
(v) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least 1%
in such price; provided, however, that any adjustments that by reason of this
paragraph (d)(v) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment until made; and provided, further,
that any adjustment shall be required and made in accordance with the provisions
of this Section 7 (other than this paragraph (d)(v)) not later than such time as
may be required in order to preserve the taxfree nature of a distribution to the
holders of shares of Common Stock. Notwithstanding any other provisions of this
Section 7, the Corporation shall not be required to make any adjustment of the
Conversion Price for the issuance of (A) any shares of Common Stock pursuant to
any plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of optional amounts in shares
of Common Stock under such plan or (B) any options, rights or shares of Common
Stock pursuant to any stock option, stock purchase or other stockbased plan
maintained by the Corporation. All calculations under this Section 7 shall be
made to the nearest cent (with $.005 being rounded upward) or to the nearest
onetenth of a share (with .05 of a share being rounded upward), as the case may
be. Anything in this paragraph (d) of this Section 7 to the contrary
notwithstanding, the Corporation shall be entitled, to the extent permitted by
law, to make such reductions in the Conversion Price, in addition to those
required by this paragraph (d), as it in its discretion shall determine to be
advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or warrants to
purchase stock or securities, or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its stockholders shall not be
taxable, or if that is not possible, to diminish any income taxes that are
otherwise payable because of such event.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, issuer or
self tender offer for at least 30% of the shares of Common Stock outstanding,
sale of all or substantially all of the Corporation's assets or recapitalization
of the Common Stock, but excluding any transaction as to which paragraph (d)(i)
of this Section 7 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Common Stock shall
be converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each share of Class B Preferred
Stock which is not converted into the right to receive stock, securities or
other property in connection with such Transaction shall thereupon be
convertible into the kind and amount of shares of stock, securities and other
property (including cash or any combination thereof) receivable upon such
consummation by a holder of that number of shares of Common Stock into which one
share of Class B Preferred Stock was convertible immediately prior to such
Transaction (without giving effect to any Conversion Price adjustment pursuant
to Section 7(d)(iv) of this Article). The Corporation shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this paragraph (e), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Class B Preferred Stock that will contain
provisions enabling the holders of the Class B Preferred Stock that remain
outstanding after such Transaction to convert into the consideration received by
holders of Common Stock at the Conversion Price in effect immediately prior to
such Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
<PAGE> 35
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than cash dividends and cash
distributions); or
(ii) the Corporation shall authorize the granting to all holders
of the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or series of capital stock or any other rights or warrants;
or
(iii) there shall be any reclassification of the outstanding
Common Stock or any consolidation or merger to which the Corporation is a party
and for which approval of any stockholders of the Corporation is required, or a
statutory share exchange, an issuer or self tender offer shall have been
commenced for at least 30% of the outstanding shares of Common Stock (or an
amendment thereto changing the maximum number of shares sought or the amount or
type of consideration being offered therefor shall have been adopted), or the
sale or transfer of all or substantially all of the assets of the Corporation as
an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Class B Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, a notice stating (A) the record date for the payment of such
dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up or (C) the date
on which such tender offer commenced, the date on which such tender offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto). Failure
to give or receive such notice or any defect therein shall not affect the
legality or validity of the proceedings described in this Section 7.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date such adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to each holder of shares of Class B Preferred Stock at such holder's last
address as shown on the stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section 7 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Class B Preferred Stock converted after
such record date and before the occurrence of such event the additional Common
Stock issuable upon such conversion by reason of the adjustment required by such
event over and above the Common Stock issuable upon such conversion before
giving effect to such adjustment and (B) paying to such holder any amount of
cash in lieu of any fraction pursuant to paragraph (c) of this Section 7.
(i) There shall be no adjustment of the Conversion Price in case of the
issuance of any capital stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section 7.
(j) If the Corporation shall take any action affecting the Common
Stock, other than action described in this Section 7, that in the opinion of the
Board of Directors would materially adversely affect the conversion rights of
the holders of Class B Preferred Stock, the Conversion Price for the Class B
Preferred Stock
<PAGE> 36
may be adjusted, to the extent permitted by law, in such manner, if any, and at
such time as the Board of Directors, in its sole discretion, may determine to be
equitable under the circumstances.
(k) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock solely for the purpose of effecting conversion of the Class B
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Class B Preferred Stock not theretofore
converted into Common Stock. For purposes of this paragraph (k), the number of
shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Class B Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single holder
(and without regard to the Ownership Limit set forth in the Charter of the
Corporation).
The Corporation covenants that any shares of Common Stock issued upon
conversion of the shares of Class B Preferred Stock shall be validly issued,
fully paid and nonassessable.
The Corporation shall use its best efforts to list the shares of Common
Stock required to be delivered upon conversion of the shares of Class B
Preferred Stock, prior to such delivery, upon each national securities exchange,
if any, upon which the outstanding shares of Common Stock are listed at the time
of such delivery.
(l) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion or redemption of
shares of Class B Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock or
other securities or property in a name other than that of the holder of the
shares of Class B Preferred Stock to be converted or redeemed, and no such issue
or delivery shall be made unless and until the Person requesting such issue or
delivery has paid to the Corporation the amount of any such tax or established,
to the reasonable satisfaction of the Corporation, that such tax has been paid.
(m) In addition to any other adjustment required hereby, to the extent
permitted by law, the Corporation from time to time may decrease the Conversion
Price by any amount, permanently or for a period of at least twenty Business
Days, if the decrease is irrevocable during the period.
(n) Notwithstanding anything to the contrary contained in this Section
7, conversion of Class B Preferred Stock pursuant to this Section 7 shall be
permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in the Charter), after
taking into account any waiver of such limitation granted to any holder of the
shares of Class B Preferred Stock.
8. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class B Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class B Preferred Stock ("Senior Stock");
(b) on a parity with the Class B Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class B Preferred Stock, if the holders of such class of stock or series and
the Class B Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
(c) junior to the Class B Preferred Stock, as to the payment of
dividends or as to the distribution
<PAGE> 37
of assets upon liquidation, dissolution or winding up, if such stock or series
shall be Common Stock or if the holders of Class B Preferred Stock shall be
entitled to receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to the
holders of shares of such class or series ("Junior Stock").
9. VOTING.
(a) If and whenever (i) six quarterly dividends (whether or not
consecutive) payable on the Class B Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, or (ii) for two consecutive quarterly
dividend periods the Corporation fails to pay dividends on the Common Stock in
an amount per share at least equal to $0.4625 (subject to adjustment consistent
with any adjustment of the Conversion Price pursuant to Section 7(d) of this
Article) (the "Base Common Stock Dividend") the number of directors then
constituting the Board of Directors shall be increased by two (in the case of an
arrearage in dividends described in clause (i)) or one additional director (in
the case of an arrearage in dividends described in clause (ii)) (in each case if
not already increased by reason of similar types of provisions with respect to
Voting Preferred Stock (as defined below)) and the holders of shares of Class B
Preferred Stock, together with the holders of shares of every other series or
class of Parity Stock (any other such series, the "Voting Preferred Stock"),
voting as a single class regardless of series, shall be entitled to elect the
two additional directors (in the case of an arrearage in dividends described in
clause (i)) or one (in the case of an arrearage in dividends described in clause
(ii)) to serve on the Board of Directors at any annual meeting of stockholders
or special meeting held in place thereof, or at a special meeting of the holders
of the Class B Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever (1) in the case of an arrearage in dividends
described in clause (i), all arrears in dividends on the Class B Preferred Stock
and the Voting Preferred Stock then outstanding shall have been paid and
dividends thereon for the current quarterly dividend period shall have been paid
or declared and set apart for payment, or 2) in the case of an arrearage in
dividends described in clause (ii), the Corporation makes a quarterly dividend
payment on the Common Stock in an amount per share equal to or exceeding the
Base Common Stock Dividend, then the right of the holders of the Class B
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors (in the case of an arrearage in dividends described in clause (i)) or
one additional director (in the case of an arrearage in dividends described in
clause (ii)) shall cease (but subject always to the same provision for the
vesting of such voting rights in the case of any similar future arrearages), and
the terms of office of all Persons elected as directors by the holders of the
Class B Preferred Stock and the Voting Preferred Stock shall forthwith terminate
and the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class B Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Class B Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Class B Preferred Stock and of the Voting Preferred Stock for the
election of the two directors (in the case of an arrearage in dividends
described in clause (i)) or one director (in the case of an arrearage in
dividends described in clause (ii)) to be elected by them as herein provided,
such call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Class B Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The directors or director elected at any such special meeting shall
hold office until the next annual meeting of the stockholders or special meeting
held in lieu thereof if such office shall not have previously terminated as
above provided. If any vacancy shall occur among the directors elected by the
holders of the Class B Preferred Stock and the Voting Preferred Stock, a
successor shall be elected by the Board of Directors, upon the nomination of the
thenremaining director elected by the holders of the Class B Preferred Stock and
the Voting Preferred Stock or the successor of such remaining director, to serve
until the next annual meeting of the stockholders or special meeting held in
place thereof if such office shall not have previously terminated as provided
above.
(b) So long as any shares of Class B Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 662/3% of the
votes entitled to be cast by the holders of the Class B Preferred Stock, given
in Person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:
<PAGE> 38
(i) Any amendment, alteration or repeal of any of the provisions
of these Articles Supplementary, the Charter or the ByLaws of the Corporation
that materially adversely affects the voting powers, rights or preferences of
the holders of the Class B Preferred Stock; provided, however, that the
amendment of the provisions of the Charter so as to authorize or create, or to
increase the authorized amount of, any Junior Stock or any shares of any class
of Parity Stock shall not be deemed to materially adversely affect the voting
powers, rights or preferences of the holders of Class B Preferred Stock; or
(ii) The authorization, creation of, the increase in the
authorized amount of, or issuance of , any shares of any class of Senior Stock
or any security convertible into shares of any class of Senior Stock (whether or
not such class of Senior Stock is currently authorized); provided, however, that
no such vote of the holders of Class B Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security is
to be made, as the case may be, provision is made for the redemption of all
shares of Class B Preferred Stock at the time outstanding to the extent such
redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class B Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock shall have the right to vote with the Class B Preferred Stock as a single
class on any matter, then the Class B Preferred Stock and such other class or
series shall have with respect to such matters one (1) vote per $100 of stated
liquidation preference. Except as otherwise required by applicable law or as set
forth herein, the Class B Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers other than as
set forth herein, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class B Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class B
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class B Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class B
Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 11.8, from and after the Issue Date (and subject to Section 11.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class B Preferred Stock in excess of the Ownership Limit shall
be void AB INITIO as to the Transfer of such shares of Class B Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class B Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided
in Section 11.8, from and after the Issue Date (and subject to Section 11.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class B Preferred Stock in excess
of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such
shares of Class B Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder
<PAGE> 39
limit, and the Initial Holder shall acquire no rights in such shares of Class B
Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 11.8 from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated interdealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class B Preferred Stock in
excess of the Look-Through Ownership limit shall be void AB INITIO as to the
Transfer of such shares of Class B Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class B Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class B Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class B
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class B
Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class B Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class B Preferred Stock in the same or any
other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 11.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class B Preferred Stock in violation of Section 11.1 of this Article
(whether or not such violation is intended), the Board of Directors or a
committee thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event, including,
but not limited to, refusing to give effect to such Transfer or other event on
the books of the Corporation, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of longterm indebtedness for the purpose of
such redemption), demanding the repayment of any distributions received in
respect of shares of Class B Preferred Stock acquired in violation of Section
11.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article,
regardless of any action (or nonaction) by the Board of Directors or such
committee, (a) shall be void AB INITIO or (b) shall automatically result in the
transfer described in Section 11.3 of this Article; PROVIDED, FURTHER, that the
provisions of this Section 11.2 shall be subject to the provisions of Section
11.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class B Preferred Stock that is
expressly authorized pursuant to Section 11.8(d) of this Article.
<PAGE> 40
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated interdealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Preferred Stock) or other event (including, but not limited to,
any acquisition of any share of Equity Stock) such that (a) any Person (other
than the Initial Holder or a Look-Through Entity) would Beneficially Own shares
of Class B Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class B Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class B Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class B Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except
as otherwise provided in Section 11.8 of this Article, such shares of Class B
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the business day prior to the Excess Transfer,
change in capital structure or another event giving rise to a potential
violation of the Ownership Limit, the Initial Holder Limit or the Look-Through
Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class B Preferred
Stock held by the Trustee shall be issued and outstanding shares of capital
stock of the Corporation. Except to the extent provided in Section 11.3(E), the
Prohibited Transferee shall have no rights in the Class B Preferred Stock held
by the Trustee, and the Prohibited Transferee shall not benefit economically
from ownership of any shares held in trust by the Trustee, shall have no rights
to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class B Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class B Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void AB
INITIO with respect to such shares of Class B Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class B
Preferred Stock have been transferred to the Trustee will be rescinded as void
AB INITIO and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class B Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price paid by the Prohibited Transferee for the
shares or, if the Prohibited Transferee did not give value for the shares
(through a gift, devise or other transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2) the
price per share received by the Trustee from the sale or other disposition of
the shares held in the Trust. Any proceeds in excess of the amount payable to
the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any
of the transfer
<PAGE> 41
restrictions set forth in this Section 11.3(E) or any application thereof is
determined in a final judgment to be void, invalid or unenforceable by any court
having jurisdiction over the issue, the Prohibited Transferee may be deemed, at
the option of the Corporation, to have acted as the agent of the Corporation in
acquiring the Class B Preferred Stock as to which such restrictions would, by
their terms, apply, and to hold such Class B Preferred Stock on behalf of the
Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class
B Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class B Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to
acquire shares of Class B Preferred Stock in violation of Section 11.1 of this
Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 11.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted Transfer or other
event on the Corporation's status as a REIT. Failure to give such notice shall
not limit the rights and remedies of the Board of Directors provided herein in
any way.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date
certain record and Beneficial Owners and transferees of shares of Class B
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than
5% (or such other percentage between 0.5% and 5%, as provided in the applicable
regulations adopted under the Code) of the number of Outstanding shares of Class
B Preferred Stock shall, within 30 days after January 1 of each year, give
written notice to the Corporation stating the name and address of such record or
Beneficial Owner, the number of shares of Class B Preferred Stock Beneficially
Owned, and a full description of how such shares are held. Each such record or
Beneficial Owner of Class B Preferred Stock shall, upon demand by the
Corporation, disclose to the Corporation in writing such additional information
with respect to the Beneficial Ownership of the Class B Preferred Stock as the
Board of Directors, in its sole discretion, deems appropriate or necessary to
(i) comply with the provisions of the Code regarding the qualification of the
Corporation as a REIT under the Code and (ii) ensure compliance with the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as applicable. Each stockholder of record, including without limitation any
Person that holds shares of Class B Preferred Stock on behalf of a Beneficial
Owner, shall take all reasonable steps to obtain the written notice described in
this Section 11.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a
Beneficial Owner of shares of Class B Preferred Stock and any Person (including
the stockholder of record) that is holding shares of Class B Preferred Stock for
a Beneficial Owner, and any proposed transferee of shares, shall provide such
information as the Corporation, in its sole discretion, may request in order to
determine the Corporation's status as a REIT, to comply with the requirements of
any taxing authority or other governmental agency, to determine any such
compliance or to ensure compliance with the Ownership Limit, the Initial Holder
Limit and the Look-Through Ownership Limit, and shall provide a statement or
affidavit to the Corporation setting forth the number of shares of Class B
Preferred Stock already Beneficially Owned by such stockholder or proposed
transferee and any related
<PAGE> 42
persons specified, which statement or affidavit shall be in the form prescribed
by the Corporation for that purpose.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the
authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (i) to protect the Corporation and the interests of its stockholders in
the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any of the
provisions of Section 11 of this Article, or in the case of an ambiguity in any
definition contained in Section 11 of this Article, the Board of Directors shall
have the power to determine the application of the provisions of this Article
with respect to any situation based on its reasonable belief, understanding or
knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be established
with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of
a ruling from the Internal Revenue Service or an opinion of tax counsel or other
evidence or undertaking acceptable to it, may waive the application, in whole or
in part, of the Ownership Limit to a Person subject to the Ownership Limit, if
such person is not an individual for purposes of Section 542(a) of the Code and
is a corporation, partnership, estate or trust. In connection with any such
exemption, the Board of Directors may require such representations and
undertakings from such Person and may impose such other conditions as the Board
deems necessary, in its sole discretion, to determine the effect, if any, of the
proposed Transfer on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of
this Article, the pledge by the Initial Holder of all or any portion of the
Class B Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 11.1 of this Article and the pledgee shall
not be subject to the Ownership Limit with respect to the Class B Preferred
Stock so pledged to it either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days following the purchase of
Class B Preferred Stock by an underwriter that (i) is a corporation or a
partnership and (ii) participates in an offering of the Class B Preferred Stock,
such underwriter shall not be subject to the Ownership Limit with respect to the
Class B Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class B Preferred Stock purchased in connection
with market making activities.
11.9 LEGEND. Each certificate for Class B Preferred Stock shall bear the
following legend:
"The shares of Class B Preferred Stock represented by this certificate
are subject to restrictions on transfer. No person may Beneficially Own
shares of Class B Preferred Stock in excess of the Ownership Restrictions,
as applicable, with certain further restrictions and exceptions set forth in
the Corporation's Charter (including the Articles Supplementary setting
forth the terms of the Class B Preferred Stock). Any Person that attempts to
Beneficially Own shares of Class B Preferred Stock in excess of the
applicable limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed to such terms in
the Corporation's Charter (including the Articles Supplementary setting
forth the terms of the Class B Preferred Stock), as the same may be amended
from time to time, a copy of which, including the restrictions on transfer,
will be sent without charge to each stockholder that so requests. If the
restrictions on transfer are violated, the shares of Class B Preferred Stock
represented hereby will be either (i) void in accordance with the
Certificate or (ii) automatically transferred to a Trustee of a Trust for
the benefit of one or more Charitable Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article or any application of
any such provision is determined in a final and unappealable judgment to be
void, invalid or unenforceable by any Federal or state court having jurisdiction
over the issues, the validity and enforceability of the remaining provisions
shall not be affected and other
<PAGE> 43
applications of such provision shall be affected only to the extent necessary to
comply with the determination of such court.
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system.
* * * * * *
SECOND: The Board of Directors of the Corporation at a meeting or by a
unanimous consent in writing in lieu of a meeting under Section 2408 of the
Maryland General Corporation Law, as of October 23, 1997, adopted a resolution
that set forth and approved the foregoing restatement of the Charter.
THIRD: The Charter of the Corporation is not amended by these Articles of
Restatement; PROVIDED, HOWEVER, consistent with Section 2608(b)(7) of the
Maryland General Corporation Law, the current number and names of directors are
provided in Section 2 of Article VI of the restated Charter of the Corporation.
FOURTH: References to "these Articles of Amendment and Restatement" have
been retained in Section 4 of Article IV, in Section 4, Section 5, and Section 7
of Article VI, and in Article VIII of the restated Charter and to "these
Articles Supplementary" have been retained in Section 1 of Article XII of the
restated Charter to conform to the original text of the provisions. In the
context of these Articles of Restatement the term "these Articles of Amendment
and Restatement" should be read as "the Charter" and the term "these Articles
Supplementary" should be read as "this Article".
FIFTH: The sentence "Upon the filing of these Articles of Amendment, there
shall be authorized 750,000 shares and issued and outstanding 650,000 shares of
the Class B Common Stock" has been retained in Section 8 of Article XII of the
restated Charter to conform to the original text of the provision.
In the context of these Articles of Restatement the sentence is not necessary.
SIXTH: The number of shares of Class B Common Stock shown as "750,000" has
been retained in Section 1.1 of Article IV of the restated Charter to conform to
the original text of the provision. As of August 11, 1997 a total of 325,000
shares of Class B Common Stock have been converted which causes the number of
authorized shares of Class B Common Stock to be reduced from 750,000 shares to
425,000 shares as provided in Sections 6(a) and 8 of Article XII of the restated
Charter.
SEVENTH: The number of shares of Preferred Stock shown as "10,000,000" has
been retained in Section 1.1 of Article IV of the restated Charter to conform to
the original text of the provision. As of August 4, 1997 a total of 750,000
shares of Preferred Stock were reclassified as Class B Cumulative Convertible
Preferred Stock, par value $.01 per share (the "Class B Preferred Stock"), which
causes the number of authorized shares of Preferred Stock to be reduced from
10,000,000 shares to 9,250,000 shares and the number of authorized shares of
Class B Preferred Stock to be increased from zero shares to 750,000 shares as
provided in Sections 1 Article XIII of the restated Charter.
<PAGE> 44
IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary on November 7, 1997.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LEEANN MOREIN By: /s/ PETER K. KOMPANIEZ
- ------------------------------- ----------------------------------
Leeann Morein, Secretary Peter K. Kompaniez, President
THE UNDERSIGNED, President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
who executed on behalf of the Corporation the foregoing Articles of Restatement
of which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Restatement to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information, and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
/s/ PETER K. KOMPANIEZ
--------------------------------------
Peter K. Kompaniez, President
<PAGE> 45
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS C CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
the Board of Directors has duly divided and classified 2,760,000 authorized but
unissued shares of the capital stock of the Corporation into a class designated
as Class C Cumulative Preferred Stock and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified as
Class C Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 2,760,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Preferred Stock, par value $.01 per share, from 9,250,000 shares
immediately prior to the reclassification to 6,490,000 shares immediately after
the reclassification. The number of shares classified as Class C Cumulative
Preferred Stock may be decreased pursuant to Section 6 of Article Third of these
Articles Supplementary upon reacquisition thereof in any manner, or by
retirement thereof, by the Corporation.
THIRD: The terms of the Class C Cumulative Preferred Stock (including the
preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class C Cumulative
Preferred Stock (the "Class C Preferred Stock") and Two Million Seven Hundred
Sixty Thousand (2,760,000) shall be the authorized number of shares of such
Class C Preferred Stock constituting such class.
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<PAGE> 46
2. DEFINITIONS.
For purposes of the Class C Preferred Stock, the following terms shall have
the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
"AFFILIATE" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock, the
sum of the products of (i) the number of shares of each class of Equity Stock
within such block multiplied by (ii) the corresponding Market Price of one share
of Equity Stock of such class.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of Equity
Stock directly owned by such Person, (ii) the number of shares of Equity Stock
indirectly owned by such Person (if such Person is an "individual" as defined in
Section 542(a)(2) of the Code) taking into account the constructive ownership
rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the
Code, and (iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d3 under the Exchange Act or that is
attributed to such Person pursuant to Section 318 of the Code, as modified by
Section 856(d)(5) of the Code, PROVIDED that when applying this definition of
Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and
clause (ii) of the definition of "Person" shall be disregarded. The terms
"BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the
correlative meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation or
any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Class C Preferred Stock.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
are not required to be open.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 10.3 of this Article, each of which shall be
an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of
the Code.
"CLASS C PREFERRED STOCK" shall have the meaning set forth in Section 1 of
this Article.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute thereto. Reference to any provision of the Code
shall mean such provision as in effect from time to time, as the same may be
amended, and any successor thereto, as interpreted by any applicable
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<PAGE> 47
regulations or other administrative pronouncements as in effect from time to
time.
"COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation or such shares of the Corporation's capital stock into
which outstanding shares of Common Stock shall be reclassified.
"DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15 and October
15 of each year; provided, further, that if any Dividend Payment Date falls on
any day other than a Business Day, the dividend payment payable on such Dividend
Payment Date shall be paid on the Business Day immediately following such
Dividend Payment Date and no interest shall accrue on such dividend from such
date to such Dividend Payment Date.
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January 15,
April 15, July 15 and October 15 of each year and ending on and including the
day preceding the first day of the next succeeding Dividend Period, other than
the Dividend Period during which any Class B Preferred Stock shall be redeemed
pursuant to Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class C Preferred Stock being redeemed.
"EQUITY STOCK" shall mean one or more shares of any class of capital stock
of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this
Article.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ISSUE DATE" shall mean December 23, 1997(1).
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including
the Issue Date and ending on and including April 14, 1998.
"INITIAL HOLDER" shall mean Terry Considine.
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class C Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class B Preferred Stock that are Beneficially Owned by the Initial Holder.
From the Issue Date, the secretary of the Corporation, or such other person as
shall be designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of Directors, a
schedule that sets forth the thencurrent Initial Holder Limit applicable to the
Initial Holder.
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<PAGE> 48
"JUNIOR STOCK" shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the shares of Class C Preferred
Stock have preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or
(ii) registered under the Investment Company Act of 1940.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class C Preferred Stock of the Corporation
having an Aggregate Value not in excess of the excess of (x) 15% of the
Aggregate Value of all Outstanding shares of Equity Stock over (y) by the
Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock
that are Beneficially Owned by the Look-Through Entity.
"MARKET PRICE" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of share of that class of Equity Stock on the Trading
Day immediately preceding such date. The term "CLOSING PRICE" on any date shall
mean the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or,
if the Equity Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Equity Stock is listed or admitted to trading or, if the Equity Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the overthecounter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if the Equity Stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Equity Stock selected by the Board of
Directors of the Company. The term "TRADING DAY" shall mean a day on which the
principal national securities exchange on which the Equity Stock is listed or
admitted to trading is open for the transaction of business or, if the Equity
Stock is not listed or admitted to trading on any national securities exchange,
shall mean any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of
the Corporation, PROVIDED that for purposes of the application of the Ownership
Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any
Person, the term "OUTSTANDING" shall be deemed to include the number of shares
of Equity Stock that such Person alone, at that time, could acquire pursuant to
any options or convertible securities.
8
<PAGE> 49
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder
or a Look-Through Entity, a number of the Outstanding shares of Class C
Preferred Stock of the Corporation having an Aggregate Value not in excess of
the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class C Preferred Stock that are Beneficially Owned by the Person.
"OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or Look-Through Entities, the
Initial Holder Limit as applied to the Initial Holder and the Look-Through
Ownership Limit as applied to Look-Through Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section
7 of this Article. The Class B Preferred Stock shall be a Parity Stock.
"PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and (ii) also includes a group as that term is used for
purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the
remaining Sections of this Article, any individual, firm, partnership,
corporation or other entity and shall include any successor (by merger or
otherwise) of such entity.
"PROHIBITED TRANSFEREE" has the meaning set forth in Section 10.3(A) of
this Article.
"REDEMPTION DATE" shall have the meaning set forth in paragraph (b) of
Section 5 of this Article.
"REIT" shall mean a "real estate investment trust" as defined in Section 856
of the Code.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section
7 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action other
than the following, the recording by the Corporation in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
Junior Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class C Preferred Stock
shall mean placing such funds in a separate account or delivering such funds to
a disbursing, paying or other similar agent.
"TRADING DAY", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on which
such securities are listed or admitted or, if such securities are not listed or
admitted for trading on any national securities exchange, the NASDAQ
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<PAGE> 50
National Market or, if such securities are not listed or admitted for trading on
the NASDAQ National Market, in the securities market in which such securities
are traded.
"TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class C Preferred Stock (including (i) the granting of
an option or any series of such options or entering into any agreement for the
sale, transfer or other disposition of Class C Preferred Stock or (ii) the sale,
transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Class C Preferred Stock), whether voluntary
or involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any transfer of an
interest in other entities that results in a change in the Beneficial Ownership
of shares of Class C Preferred Stock). The term "TRANSFERS" and "TRANSFERRED"
shall have correlative meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the Board
of Directors or their designee as the transfer agent for the Class C Preferred
Stock; provided, that if the Corporation has not designated a transfer agent
then the Corporation shall act as the transfer agent for the Class C Preferred
Stock.
"TRUST" shall mean the trust created pursuant to Section 10.3 of this
Article.
"TRUSTEE" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8 of
this Article.
3. DIVIDENDS.
(a) The holders of Class C Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class C Preferred Stock equal to $2.25 per annum. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly in arrears on each Dividend Payment Date, commencing on April
15, 1998. Each such dividend shall be payable in arrears to the holders of
record of the Class C Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on the January 1, April 1, July 1 or
October 1, as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) The amount of dividends payable per share of Class C Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30day months
and a 360day
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<PAGE> 51
year. Holders of Class C Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of cumulative dividends,
as herein provided, on the Class C Preferred Stock. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on the Class C Preferred Stock that may be in arrears.
(c) So long as any of the shares of Class C Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment on the Class C Preferred
Stock for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Stock. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class C Preferred Stock and all
dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class C Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class C Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Stock) shall be declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock), directly or indirectly, by the Corporation (except by
conversion into or exchange for shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Stock), nor shall any other cash or
other property otherwise be paid or distributed to or for the benefit of any
holder of shares of Junior Stock in respect thereof, directly or indirectly, by
the Corporation unless in each case the full cumulative dividends (including all
accumulated, accrued and unpaid dividends) on all outstanding shares of Class C
Preferred Stock shall have been paid or such dividends have been declared and
set apart for payment for all past Dividend Periods with respect to the Class C
Preferred Stock.
Notwithstanding the provisions of this Section 3(d), the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii) or
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
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<PAGE> 52
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital or surplus) shall be made to
or set apart for the holders of Junior Stock, the holders of shares of Class C
Preferred Stock shall be entitled to receive TwentyFive Dollars ($25) per share
of Class C Preferred Stock (the "Liquidation Preference"), plus an amount equal
to all dividends (whether or not earned or declared) accumulated, accrued and
unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class C Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Class C
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Class C Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Class C Preferred Stock and any such other Parity Stock if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of Class C Preferred
Stock and any Parity Stock, as provided in this Section 4, any other series or
class or classes of Junior Stock shall, subject to the respective terms thereof,
be entitled to receive any and all assets remaining to be paid or distributed,
and the holders of the Class C Preferred Stock and any Parity Stock shall not be
entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class C Preferred Stock shall not be redeemable by the
Corporation prior to December 23, 2002(2) except as set forth in Section 10.2 of
this Article. On and after December 23, 2002(3), the Corporation, at its option,
may redeem shares of Class C Preferred Stock, in whole or from time to time in
part, at a redemption price payable in cash equal to 100% of the Liquidation
Preference thereof, plus all accrued and unpaid dividends to the date fixed for
redemption (the "Redemption Date"). In connection with any redemption pursuant
to this Section 5(a), the redemption price of the Class C Preferred Stock (other
than any portion thereof consisting of accrued and unpaid dividends) shall be
payable solely with the proceeds from the sale by the Corporation or AIMCO
Properties, L.P., a Delaware limited partnership (the "Operating Partnership")
of other capital shares of the Corporation or the Operating Partnership (whether
or not such sale occurs concurrently with such redemption). For purposes of the
preceding sentence, 'capital shares' means any common stock, preferred stock,
depositary shares, partnership or other interests, participations or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable at the option of the holder for
equity securities (unless and to the extent such debt securities are
subsequently converted into capital shares)) or options to purchase any of the
foregoing of or in the Corporation or the Operating Partnership.
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<PAGE> 53
(b) The Redemption Date shall be selected by the Corporation, shall be
specified in the notice of redemption and shall be not less than 30 days nor
more than 60 days after the date notice of redemption is sent by the
Corporation.
(c) If full cumulative dividends on all outstanding shares of Class C
Preferred Stock have not been paid or declared and set apart for payment, no
shares of Class C Preferred Stock may be redeemed unless all outstanding shares
of Class C Preferred Stock are simultaneously redeemed and neither the
Corporation nor any affiliate of the Corporation may purchase or acquire shares
of Class C Preferred Stock, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of shares of Class C Preferred
Stock.
(d) If the Corporation shall redeem shares of Class C Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given to each holder of record of the shares to be redeemed. Such notice shall
be provided by first class mail, postage prepaid, at such holder's address as
the same appears on the stock records of the Corporation.
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state, as appropriate: (1) the Redemption Date; (2) the number of shares
of Class C Preferred Stock to be redeemed and, if fewer than all such shares
held by such holder are to be redeemed, the number of such shares to be redeemed
from such holder; and (3) the place or places at which certificates for such
shares are to be surrendered for cash. Notice having been mailed as aforesaid,
from and after the Redemption Date (unless the Corporation shall fail to make
available the amount of cash necessary to effect such redemption), (i) except as
otherwise provided herein, dividends on the shares of Class C Preferred Stock so
called for redemption shall cease to accumulate or accrue on the shares of Class
C Preferred Stock called for redemption (except that, in the case of a
Redemption Date after a dividend record date and prior to the related Dividend
Payment Date, holders of Class C Preferred Stock on the dividend record date
will be entitled on such Dividend Payment Date to receive the dividend payable
on such shares), (ii) said shares shall no longer be deemed to be outstanding,
and (iii) all rights of the holders thereof as holders of Class C Preferred
Stock of the Corporation shall cease (except the rights to receive the cash
payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Corporation's obligation to make available the redemption
price in accordance with the preceding sentence shall be deemed fulfilled if, on
or before the Call Date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) that has, or is an
affiliate of a bank or trust company that has, a capital and surplus of at least
$50,000,000, such amount of cash as is necessary for such redemption, in trust,
with irrevocable instructions that such cash be applied to the redemption of the
shares of Class C Preferred Stock so called for redemption. No interest shall
accrue for the benefit of the holders of shares of Class C Preferred Stock to be
redeemed on any cash so set aside by the Corporation. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class C Preferred Stock so called for
redemption shall look only to the general funds of the Corporation for the
payment of such cash.
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<PAGE> 54
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class C Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) for which such shares have been
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class C Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class C
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class C Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If fewer
than all the shares of Class C Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class C Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class C Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class C Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class C Preferred Stock ("Senior Stock");
(b) on a parity with the Class C Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class C Preferred Stock, if the holders of such class of stock or series and
the Class C Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
(c) junior to the Class C Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Class C Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series
("Junior Stock").
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8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class C Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (if not already increased by reason
of similar types of provisions with respect to shares of Parity Stock of any
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class C Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class C
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class C Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, then the right of the holders of the Class C Preferred Stock
and the Voting Preferred Stock to elect such additional two directors shall
cease (but subject always to the same provision for the vesting of such voting
rights in the case of any similar future arrearages), and the terms of office of
all Persons elected as directors by the holders of the Class C Preferred Stock
and the Voting Preferred Stock shall forthwith terminate and the number of
directors constituting the Board of Directors shall be reduced accordingly. At
any time after such voting power shall have been so vested in the holders of
Class C Preferred Stock and the Voting Preferred Stock, if applicable, the
Secretary of the Corporation may, and upon the written request of any holder of
Class C Preferred Stock (addressed to the Secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of the Class C
Preferred Stock and of the Voting Preferred Stock for the election of the two
directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the stockholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of any such request, then any holder of Class C
Preferred Stock may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock books of the Corporation. The
directors elected at any such special meeting shall hold office until the next
annual meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Class C
Preferred Stock and the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the thenremaining director
elected by the holders of the Class C Preferred Stock and the Voting Preferred
Stock or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(b) So long as any shares of Class C Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 662/3% of the
votes entitled to be cast by the holders of the Class C Preferred Stock voting
as a single class
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with the holders of all other classes or series of Preferred Stock entitled to
vote on such matters, given in Person or by proxy, either in writing without a
meeting or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions
of these Articles Supplementary, the Charter or the ByLaws of the Corporation
that materially adversely affects the voting powers, rights or preferences of
the holders of the Class C Preferred Stock; provided, however, that the
amendment of the provisions of the Charter so as to authorize or create, or to
increase the authorized amount of, or issue any Junior Stock or any shares of
any class of Parity Stock shall not be deemed to materially adversely affect the
voting powers, rights or preferences of the holders of Class C Preferred Stock;
or
(ii) The authorization, creation of, the increase in the
authorized amount of, or issuance of any shares of any class of Senior Stock or
any security convertible into shares of any class of Senior Stock (whether or
not such class of Senior Stock is currently authorized); provided, however, that
no such vote of the holders of Class C Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security is
to be made, as the case may be, provision is made for the redemption of all
shares of Class C Preferred Stock at the time outstanding to the extent such
redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class C Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock shall have the right to vote with the Class C Preferred Stock as a single
class on any matter, then the Class C Preferred Stock and such other class or
series shall have with respect to such matters one quarter of one (.25) vote per
$25 of stated liquidation preference. Except as otherwise required by applicable
law or as set forth herein, the Class C Preferred Stock shall not have any
relative, participating, optional or other special voting rights and powers
other than as set forth herein, and the consent of the holders thereof shall not
be required for the taking of any corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class C Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
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10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8,
from and after the Issue Date, no Person (other than the Initial Holder or a
Look-Through Entity) shall Beneficially Own shares of Class C Preferred Stock in
excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class C Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class C Preferred Stock in
excess of the Look-Through Ownership Limit.
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(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class C Preferred Stock in excess of the Ownership Limit shall
be void AB INITIO as to the Transfer of such shares of Class C Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class C Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class C Preferred Stock in excess
of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such
shares of Class C Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class C Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated interdealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class C Preferred Stock in
excess of the Look-Through Ownership limit shall be void AB INITIO as to the
Transfer of such shares of Class C Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class C Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class C Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class C
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class
C Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class C Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the
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meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing
to qualify as a REIT, shall not adversely affect the validity of the Transfer of
any other share of Class C Preferred Stock in the same or any other related
transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class C Preferred Stock in violation of Section 10.1 of this Article
(whether or not such violation is intended), the Board of Directors or a
committee thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event, including,
but not limited to, refusing to give effect to such Transfer or other event on
the books of the Corporation, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of longterm indebtedness for the purpose of
such redemption), demanding the repayment of any distributions received in
respect of shares of Class C Preferred Stock acquired in violation of Section
10.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article,
regardless of any action (or nonaction) by the Board of Directors or such
committee, (a) shall be void AB INITIO or (b) shall automatically result in the
transfer described in Section 10.3 of this Article; PROVIDED, FURTHER, that the
provisions of this Section 10.2 shall be subject to the provisions of Section
10.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class C Preferred Stock that is
expressly authorized pursuant to Section 10.8(d) of this Article.
10.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated interdealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Preferred Stock) or other event (including, but not limited to,
any acquisition of any share of Equity Stock) such that (a) any Person (other
than the Initial Holder or a Look-Through Entity) would Beneficially Own shares
of Class C Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class C Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class C Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class C Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class C
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the
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exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the Excess Transfer, change in capital structure or
another event giving rise to a potential violation of the Ownership Limit, the
Initial Holder Limit or the Look-Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class C Preferred
Stock held by the Trustee shall be issued and outstanding shares of capital
stock of the Corporation. Except to the extent provided in Section 10.3(E), the
Prohibited Transferee shall have no rights in the Class C Preferred Stock held
by the Trustee, and the Prohibited Transferee shall not benefit economically
from ownership of any shares held in trust by the Trustee, shall have no rights
to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class C Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class C Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void AB
INITIO with respect to such shares of Class C Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class C
Preferred Stock have been transferred to the Trustee will be rescinded as void
AB INITIO and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class C Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price paid by the Prohibited Transferee for the
shares or, if the Prohibited Transferee did not give value for the shares
(through a gift, devise or other transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2) the
price per share received by the Trustee from the sale or other disposition of
the shares held in the Trust. Any proceeds in excess of the amount payable to
the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any
of the transfer restrictions set forth in this Section 10.3(E) or any
application thereof is determined in a final judgment to be void, invalid or
unenforceable by any court
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having jurisdiction over the issue, the Prohibited Transferee may be deemed, at
the option of the Corporation, to have acted as the agent of the Corporation in
acquiring the Class C Preferred Stock as to which such restrictions would, by
their terms, apply, and to hold such Class C Preferred Stock on behalf of the
Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class C Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class C Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to
acquire shares of Class C Preferred Stock in violation of Section 10.1 of this
Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 10.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted Transfer or other
event on the Corporation's status as a REIT. Failure to give such notice shall
not limit the rights and remedies of the Board of Directors provided herein in
any way.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date
certain record and Beneficial Owners and transferees of shares of Class C
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than
5% (or such other percentage between 0.5% and 5%, as provided in the applicable
regulations adopted under the Code) of the number of Outstanding shares of Class
C Preferred Stock shall, within 30 days after January 1 of each year, give
written notice to the Corporation stating the name and address of such record or
Beneficial Owner, the number of shares of Class C Preferred Stock Beneficially
Owned, and a full description of how such shares are held. Each such record or
Beneficial Owner of Class C Preferred Stock shall, upon demand by the
Corporation, disclose to the Corporation in writing such additional information
with respect to the Beneficial Ownership of the Class C Preferred Stock as the
Board of Directors, in its sole discretion, deems appropriate or necessary to
(i) comply with the provisions of the Code regarding the qualification of the
Corporation as a REIT under the Code and (ii) ensure compliance with the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as applicable. Each stockholder of record, including
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without limitation any Person that holds shares of Class C Preferred Stock on
behalf of a Beneficial Owner, shall take all reasonable steps to obtain the
written notice described in this Section 10.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a
Beneficial Owner of shares of Class C Preferred Stock and any Person (including
the stockholder of record) that is holding shares of Class C Preferred Stock for
a Beneficial Owner, and any proposed transferee of shares, shall provide such
information as the Corporation, in its sole discretion, may request in order to
determine the Corporation's status as a REIT, to comply with the requirements of
any taxing authority or other governmental agency, to determine any such
compliance or to ensure compliance with the Ownership Limit, the Initial Holder
Limit and the Look-Through Ownership Limit, and shall provide a statement or
affidavit to the Corporation setting forth the number of shares of Class C
Preferred Stock already Beneficially Owned by such stockholder or proposed
transferee and any related persons specified, which statement or affidavit shall
be in the form prescribed by the Corporation for that purpose.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the
authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 10.12 of this
Article) (i) to protect the Corporation and the interests of its stockholders in
the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the
provisions of Section 10 of this Article, or in the case of an ambiguity in any
definition contained in Section 10 of this Article, the Board of Directors shall
have the power to determine the application of the provisions of this Article
with respect to any situation based on its reasonable belief, understanding or
knowledge of the circumstances.
10.8 EXCEPTIONS. The following exceptions shall apply or may be established
with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a
ruling from the Internal Revenue Service or an opinion of tax counsel or other
evidence or undertaking acceptable to it, may waive the application, in whole or
in part, of the Ownership Limit to a Person subject to the Ownership Limit, if
such person is not an individual for purposes of Section 542(a) of the Code and
is a corporation, partnership, estate or trust. In connection with any such
exemption, the Board of Directors may require such representations and
undertakings from such Person and may impose such other conditions as the Board
deems necessary, in its sole discretion, to determine the effect, if any, of the
proposed Transfer on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this
Article, the pledge by the Initial Holder of all or any portion of the Class C
Preferred Stock directly owned at any time or from time to time shall not
constitute a violation of Section 10.1 of this Article and the pledgee shall not
be subject to the Ownership Limit with respect to the Class C Preferred Stock so
pledged to it either as a result of the pledge or upon foreclosure.
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(C) UNDERWRITERS. For a period of 270 days following the purchase of
Class C Preferred Stock by an underwriter that (i) is a corporation or a
partnership and (ii) participates in an offering of the Class C Preferred Stock,
such underwriter shall not be subject to the Ownership Limit with respect to the
Class C Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class C Preferred Stock purchased in connection
with market making activities.
10.9 LEGEND. Each certificate for Class C Preferred Stock shall bear the
following legend:
"The shares of Class C Cumulative Preferred Stock represented by
this certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class C Cumulative Preferred Stock in excess of
the Ownership Restrictions, as applicable, with certain further restrictions
and exceptions set forth in the Corporation's Charter (including the
Articles Supplementary setting forth the terms of the Class C Cumulative
Preferred Stock). Any Person that attempts to Beneficially Own shares of
Class C Cumulative Preferred Stock in excess of the applicable limitation
must immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Corporation's Charter
(including the Articles Supplementary setting forth the terms of the Class C
Cumulative Preferred Stock), as the same may be amended from time to time, a
copy of which, including the restrictions on transfer, will be sent without
charge to each stockholder that so requests. If the restrictions on transfer
are violated, the shares of Class C Cumulative Preferred Stock represented
hereby will be either (i) void in accordance with the Certificate or (ii)
automatically transferred to a Trustee of a Trust for the benefit of one or
more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article or any application of
any such provision is determined in a final and unappealable judgment to be
void, invalid or unenforceable by any Federal or state court having jurisdiction
over the issues, the validity and enforceability of the remaining provisions
shall not be affected and other applications of such provision shall be affected
only to the extent necessary to comply with the determination of such court.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system.
FOURTH: The terms of the Class C Cumulative Preferred Stock set forth in
Article Third hereof shall become Article XIV of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Chairman and witnessed by its Secretary on
December 19, 1997.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Leeann Morein /s/ Terry Considine
- ----------------------- --------------------------
Leeann Morein, Terry Considine
Secretary Chairman
THE UNDERSIGNED, Chairman of APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
who executed on behalf of the Corporation the Articles Supplementary of which
this Certificate is made a part, hereby acknowledges in the name and on behalf
of said Corporation the foregoing Articles Supplementary to be the corporate act
of said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Terry Considine
Terry Considine
-----------------------
Chairman
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CERTIFICATE OF CORRECTION
TO
ARTICLES SUPPLEMENTARY
CLASS C CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A MARYLAND CORPORATION)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the
"Corporation"), having its principal office in Baltimore City, Maryland, hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Articles Supplementary, dated December, 1997, of the Corporation
relating to its Class C Cumulative Preferred Stock (par value $.01 per share)
were filed with the State Department of Assessments and Taxation of Maryland on
December 22, 1997, and said Articles Supplementary require correction as
permitted by Section 1-207 of the Corporations and Associations Article of the
Annotated Code of Maryland.
SECOND: ARTICLE FIRST of the Articles Supplementary as previously filed
and to be corrected hereby read as follows:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of
the Corporation, the Board of Directors has duly divided and classified
2,300,000 authorized but unissued shares of the capital stock of the
Corporation into a class designated as Class C Cumulative Preferred Stock
and has provided for the issuance of such class.
THIRD: ARTICLE FIRST of the Articles Supplementary as corrected hereby is
as follows:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of
the Corporation, the Board of Directors has duly divided and classified
2,760,000 authorized but unissued shares of the capital stock of the
Corporation into a class designated as Class C Cumulative Preferred Stock
and has provided for the issuance of such class.
FOURTH: The inaccuracy or defect in ARTICLE FIRST of the Articles
Supplementary as previously filed is that ARTICLE FIRST contained the wrong
number of shares classified as Class C Cumulative Preferred Stock.
<PAGE> 66
FIFTH: ARTICLE SECOND of the Articles Supplementary as previously filed
and to be corrected hereby reads as follows:
SECOND: The reclassification increases the number of shares
classified as Class C Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 2,300,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Preferred Stock, par value $.01 per share, from
9,250,000 shares immediately prior to the reclassification to 6,950,000
shares immediately after the reclassification. The number of shares classified
as Class C Cumulative Preferred Stock may be decreased pursuant to Section 6 of
Article Third of these Articles Supplementary upon reacquisition thereof in any
manner, or by retirement thereof, by the Corporation.
SIXTH: ARTICLE SECOND of the Articles Supplementary as corrected
hereby is as follows:
SECOND: The reclassification increases the number of shares
classified as Class C Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 2,760,00 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Preferred Stock, par value $.01 per share, from
9,250,000 shares immediately prior to the reclassification to 6,490,000 shares
immediately after the reclassification. The number of shares classified as
Class C Cumulative Preferred Stock may be decreases pursuant to Section 6 of
Article Third of these Articles Supplementary upon reacquisition thereof in any
manner, or by retirement thereof, by the Corporation.
SEVENTH: The inaccuracies or defects in ARTICLE SECOND of the Articles
Supplementary as previously filed are that ARTICLE SECOND contained the wrong
number of shares classified as Class C Cumulative Preferred Stock immediately
after the reclassification and the wrong number of shares classified as
Preferred Stock, par value $.01 per share, immediately after the
reclassification.
EIGHTH: Section 1 of ARTICLE THIRD of the Articles Supplementary as
previously filed and to be corrected hereby reads as follows:
1. Number of Shares and Designation.
This class of Preferred Stock shall be designated as Class C
Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million
Three Hundred Thousand (2,300,000) shall be the authorized number of shares of
such Class C Preferred Stock constituting such class.
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NINTH: The first paragraph of Section 1 of ARTICLE THIRD of the Articles
Supplementary as corrected hereby is as follows:
1. Number of Shares and Designation.
This class of Preferred Stock shall be designated as Class C
Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million
Seven Hundred Sixty Thousand (2,760,000) shall be the authorized number of
shares of such Class C Preferred Stock constituting such class.
TENTH: The inaccuracy or defect in Section 1 of ARTICLE THIRD of the
Articles Supplementary as previously filed is that Section 1 of ARTICLE FIRST
contained the wrong number of shares classified as Class C Cumulative Preferred
Stock.
ELEVENTH: The definition of "Dividend Periods" contained in Section 2 of
ARTICLE THIRD of the Articles Supplementary as previously filed and to be
corrected hereby reads as follows:
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January
15, April 15, July 15 and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, other than the Dividend Period during which any Class B Preferred
Stock shall be redeemed pursuant to Section 5 hereof, which shall end on
and include the Redemption Date with respect to the Class C Preferred Stock
being redeemed.
TWELFTH: The definition of "Dividend Periods" contained in Section 2 of
ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows:
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January
15, April 15, July 15 and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, other than the Dividend Period during which any Class C Preferred
Stock shall be redeemed pursuant to Section 5 hereof, which shall end on
and include the Redemption Date with respect to the Class C Preferred Stock
being redeemed.
THIRTEENTH: The inaccuracy or defect in the definition of "Dividend
Periods" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary
as previously filed is that the reference to "Class B Preferred Stock" in the
fifth line thereof should be to "Class C Preferred Stock."
FOURTEENTH: The definition of "Initial Holder Limit" contained in Section
2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be
corrected hereby reads as follows:
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<PAGE> 68
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class C Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding
shares of Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class B Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors' a schedule that sets forth the then-current
Initial Holder Limit applicable to the Initial Holder.
FIFTEENTH: The definition of "Initial Holder Limit" contained in Section 2
of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as
follows:
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class C Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding
shares of Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class C Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors, a schedule that sets forth the then-current
Initial Holder Limit applicable to the Initial Holder.
SIXTEENTH: The inaccuracy or defect in the definition of "Initial Holder
Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as
previously filed is that the reference to "Class B Preferred Stock" in the
fourth and fifth lines thereof should be to "Class C Preferred Stock."
SEVENTEENTH: The definition of "Look-Through Ownership Limit" contained in
Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed
and to be corrected hereby reads as follows:
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class C Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of (x)
15% of the Aggregate Value of all Outstanding shares of Equity Stock over
(y) by the Aggregate Value of all shares of Equity Stock other than Class B
Preferred Stock that are Beneficially Owned by the Look-Through Entity.
EIGHTEENTH: The definition of "Look-Through Ownership Limit" contained in
Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is
as follows:
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class C Preferred Stock of the
Corporation
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<PAGE> 69
having an Aggregate Value not in excess of the (x) 15% of the Aggregate
Value of all Outstanding shares of Equity Stock over (y) by the Aggregate
Value of all shares of Equity Stock other than Class C Preferred Stock that
are Beneficially Owned by the Look-Through Entity.
NINETEENTH: The inaccuracy or defect in the definition of "Look-Through
Ownership Limit" contained in Section 2 of ARTICLE THIRD of the Articles
Supplementary as previously filed is that the reference to "Class B Preferred
Stock" in the fifth line thereof should be to "Class C Preferred Stock."
TWENTIETH: The provision in the Articles Supplementary as previously filed
and to be corrected hereby reads as follows:
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Chairman and witnessed by its
Secretary on December ____, 1997.
TWENTY-FIRST: The provision in the Articles Supplementary as corrected
hereby is as follows:
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Chairman and witnessed by its
Secretary on December 22, 1997.
TWENTY-SECOND: The inaccuracy or defect in the provision of the Articles
Supplementary as previously filed is that such statement failed to state
correctly the date such Articles were signed.
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<PAGE> 70
IN WITNESS WHEREOF, Apartment Investment and Management Company has caused
this Certificate of Correction to be signed in its name and on its behalf by its
Chairman and witnessed by its Secretary on February 17, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LEEANN MOREIN By: TERRY CONSIDINE
- ----------------------------- -----------------------------
Leeann Morein, Secretary Terry Considine, Chairman
The undersigned, Chairman of APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
with respect to the foregoing Certificate of Correction of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Certificate of Correction to be the act of said
Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the authorization and approval thereof are true in all material respects, under
the penalties of perjury.
/s/ TERRY CONSIDINE
-----------------------------
Terry Considine, Chairman
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<PAGE> 71
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS D CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
the Board of Directors has duly divided and classified 4,600,000 authorized but
unissued shares of the capital stock of the Corporation into a class designated
as Class D Cumulative Preferred Stock and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified as
Class D Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 4,600,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Preferred Stock, par value $.01 per share, from 6,490,000 shares
immediately prior to the reclassification to 1,890,000 shares immediately after
the reclassification. The number of shares classified as Class D Cumulative
Preferred Stock may be decreased pursuant to Section 6 of Article Third of these
Articles Supplementary upon reacquisition thereof in any manner, or by
retirement thereof, by the Corporation.
THIRD: The terms of the Class D Cumulative Preferred Stock (including the
preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class D Cumulative
Preferred Stock (the "Class D Preferred Stock") and Four Million Six Hundred
Thousand (4,600,000) shall be the authorized number of shares of such Class D
Preferred Stock constituting such class.
<PAGE> 72
2. DEFINITIONS.
For purposes of the Class D Preferred Stock, the following terms shall have
the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
"AFFILIATE" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock,
the sum of the products of (i) the number of shares of each class of Equity
Stock within such block multiplied by (ii) the corresponding Market Price
of one share of Equity Stock of such class.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of
Equity Stock directly owned by such Person, (ii) the number of shares of
Equity Stock indirectly owned by such Person (if such Person is an
"individual" as defined in Section 542(a)(2) of the Code) taking into
account the constructive ownership rules of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code, and (iii) the number of
shares of Equity Stock that such Person is deemed to beneficially own
pursuant to Rule 13d3 under the Exchange Act or that is attributed to such
Person pursuant to Section 318 of the Code, as modified by Section
856(d)(5) of the Code, PROVIDED that when applying this definition of
Beneficial Ownership to the Initial Holder, clause (iii) of this
definition, and clause (ii) of the definition of "Person" shall be
disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and
"BENEFICIALLY OWNED" shall have the correlative meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of
its responsibilities with respect to the Class D Preferred Stock.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New
York are not required to be open.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 10.3 of this Article, each of which shall
be an organization described in Section 170(b)(1)(A), 170(c)(2) and
501(c)(3) of the Code.
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<PAGE> 73
"CLASS D PREFERRED STOCK" shall have the meaning set forth in Section 1 of
this Article.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto. Reference to any provision of
the Code shall mean such provision as in effect from time to time, as the
same may be amended, and any successor thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in effect
from time to time.
"COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation or such shares of the Corporation's capital stock
into which outstanding shares of Common Stock shall be reclassified.
"DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, further, that if any Dividend Payment
Date falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January
15, April 15, July 15 and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, other than the Dividend Period during which any Class D Preferred
Stock shall be redeemed pursuant to Section 5 hereof, which shall end on
and include the Redemption Date with respect to the Class D Preferred Stock
being redeemed.
"EQUITY STOCK" shall mean one or more shares of any class of capital stock
of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this
Article.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ISSUE DATE" shall mean February 19, 1998.
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including
the Issue Date and ending on and including April 14, 1998.
"INITIAL HOLDER" shall mean Terry Considine.
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class D Preferred Stock of the Corporation having an Aggregate Value not in
excess
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<PAGE> 74
of the excess of (x) 15% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock
other than Class D Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors, a schedule that sets forth the thencurrent
Initial Holder Limit applicable to the Initial Holder.
"JUNIOR STOCK" shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the shares of Class D Preferred
Stock have preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code
or (ii) registered under the Investment Company Act of 1940.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class D Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of (x)
15% of the Aggregate Value of all Outstanding shares of Equity Stock over
(y) by the Aggregate Value of all shares of Equity Stock other than Class D
Preferred Stock that are Beneficially Owned by the Look-Through Entity.
"MARKET PRICE" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of share of that class of Equity Stock on the
Trading Day immediately preceding such date. The term "CLOSING PRICE" on
any date shall mean the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the NYSE or, if the Equity Stock is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Equity Stock is listed
or admitted to trading or, if the Equity Stock is not listed or admitted to
trading on any national securities exchange, the last quoted price, or if
not so quoted, the average of the high bid and low asked prices in the
overthecounter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system is
no longer in use, the principal other automated quotations system that may
then be in use or, if the Equity Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Equity Stock selected
by the Board of
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<PAGE> 75
Directors of the Company. The term "TRADING DAY" shall mean a day on which
the principal national securities exchange on which the Equity Stock is
listed or admitted to trading is open for the transaction of business or,
if the Equity Stock is not listed or admitted to trading on any national
securities exchange, shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of
the Corporation, PROVIDED that for purposes of the application of the
Ownership Limit, the Look-Through Ownership Limit or the Initial Holder
Limit to any Person, the term "OUTSTANDING" shall be deemed to include the
number of shares of Equity Stock that such Person alone, at that time,
could acquire pursuant to any options or convertible securities.
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder
or a Look-Through Entity, a number of the Outstanding shares of Class D
Preferred Stock of the Corporation having an Aggregate Value not in excess
of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock
other than Class D Preferred Stock that are Beneficially Owned by the
Person.
"OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or Look-Through Entities,
the Initial Holder Limit as applied to the Initial Holder and the
Look-Through Ownership Limit as applied to Look-Through Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section
7 of this Article. The Class B Preferred Stock and the Class C Preferred
Stock shall each be a Parity Stock.
"PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association,
private foundation within the meaning of Section 509(a) of the Code, joint
stock company or other entity, and (ii) also includes a group as that term
is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for
purposes of the remaining Sections of this Article, any individual, firm,
partnership, corporation or other entity and shall include any successor
(by merger or otherwise) of such entity.
"PROHIBITED TRANSFEREE" has the meaning set forth in Section 10.3(A) of
this Article.
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<PAGE> 76
"REDEMPTION DATE" shall have the meaning set forth in paragraph (b) of
Section 5 of this Article.
"REIT" shall mean a "real estate investment trust" as defined in Section
856 of the Code.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section
7 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board
of Directors, the allocation of funds to be so paid on any series or class
of capital stock of the Corporation; provided, however, that if any funds
for any class or series of Junior Stock or any class or series of Parity
Stock are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment"
with respect to the Class D Preferred Stock shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying or
other similar agent.
"TRADING DAY", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on
which such securities are listed or admitted or, if such securities are not
listed or admitted for trading on any national securities exchange, the
NASDAQ National Market or, if such securities are not listed or admitted
for trading on the NASDAQ National Market, in the securities market in
which such securities are traded.
"TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class D Preferred Stock (including (i) the
granting of an option or any series of such options or entering into any
agreement for the sale, transfer or other disposition of Class D Preferred
Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Class D Preferred
Stock), whether voluntary or involuntary, whether of record or Beneficial
Ownership, and whether by operation of law or otherwise (including, but not
limited to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of Class D Preferred Stock).
The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the Class D
Preferred Stock; provided, that if the Corporation has not designated a
transfer agent then the Corporation shall act as the transfer agent for the
Class D Preferred Stock.
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<PAGE> 77
"TRUST" shall mean the trust created pursuant to Section 10.3 of this
Article.
"TRUSTEE" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8 of
this Article.
3. DIVIDENDS.
(a) The holders of Class D Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class D Preferred Stock equal to $2.1875 per annum. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly in arrears on each Dividend Payment Date, commencing on April
15, 1998. Each such dividend shall be payable in arrears to the holders of
record of the Class D Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on the January 1, April 1, July 1 or
October 1, as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) The amount of dividends payable per share of Class D Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30day months
and a 360day year. Holders of Class D Preferred Stock shall not be entitled to
any dividends, whether payable in cash, property or stock, in excess of
cumulative dividends, as herein provided, on the Class D Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Class D Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class D Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for
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<PAGE> 78
such payment on the Class D Preferred Stock for all Dividend Periods terminating
on or prior to the Dividend Payment Date with respect to such class or series of
Parity Stock. When dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends declared upon the Class D
Preferred Stock and all dividends declared upon any other class or series of
Parity Stock shall be declared ratably in proportion to the respective amounts
of dividends accumulated, accrued and unpaid on the Class D Preferred Stock and
accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class D Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Stock) shall be declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock), directly or indirectly, by the Corporation (except by
conversion into or exchange for shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Stock), nor shall any other cash or
other property otherwise be paid or distributed to or for the benefit of any
holder of shares of Junior Stock in respect thereof, directly or indirectly, by
the Corporation unless in each case the full cumulative dividends (including all
accumulated, accrued and unpaid dividends) on all outstanding shares of Class D
Preferred Stock shall have been paid or such dividends have been declared and
set apart for payment for all past Dividend Periods with respect to the Class D
Preferred Stock.
Notwithstanding the provisions of this Section 3(d), the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii) or
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital or surplus) shall be made to
or set apart for the holders of Junior Stock, the holders of shares of Class D
Preferred Stock shall be entitled to receive TwentyFive Dollars ($25) per share
of Class D Preferred Stock (the "Liquidation Preference"), plus an amount equal
to all dividends (whether or not earned or declared) accumulated, accrued and
unpaid thereon to the date of final
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<PAGE> 79
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Class D Preferred Stock have been paid
the Liquidation Preference in full, plus an amount equal to all dividends
(whether or not earned or declared) accumulated, accrued and unpaid thereon to
the date of final distribution to such holders, no payment will be made to any
holder of Junior Stock upon the liquidation, dissolution or winding up of the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Class D Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of Class D Preferred Stock and
any such other Parity Stock ratably in the same proportion as the respective
amounts that would be payable on such Class D Preferred Stock and any such other
Parity Stock if all amounts payable thereon were paid in full. For the purposes
of this Section 4, (i) a consolidation or merger of the Corporation with one or
more corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
D Preferred Stock and any Parity Stock, as provided in this Section 4, any other
series or class or classes of Junior Stock shall, subject to the respective
terms thereof, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Class D Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class D Preferred Stock shall not be redeemable by the
Corporation prior to February 19, 2003, except as set forth in Section 10.2 of
this Article. On and after February 19, 2003, the Corporation, at its option,
may redeem shares of Class D Preferred Stock, in whole or from time to time in
part, at a redemption price payable in cash equal to 100% of the Liquidation
Preference thereof, plus all accrued and unpaid dividends to the date fixed for
redemption (the "Redemption Date"). In connection with any redemption pursuant
to this Section 5(a), the redemption price of the Class D Preferred Stock (other
than any portion thereof consisting of accrued and unpaid dividends) shall be
payable solely with the proceeds from the sale by the Corporation or AIMCO
Properties, L.P., a Delaware limited Partnership (the "Operating Partnership"),
of other capital shares of the Corporation or the Operating Partnership (whether
or not such sale occurs concurrently with such redemption). For purposes of the
preceding sentence, 'capital shares' means any common stock, preferred stock,
depositary shares, partnership or other interests, participations or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable at the option of the holder for
equity securities (unless
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and to the extent such debt securities are subsequently converted into capital
shares)) or options to purchase any of the foregoing of or in the Corporation or
the Operating Partnership.
(b) The Redemption Date shall be selected by the Corporation, shall be
specified in the notice of redemption and shall be not less than 30 days nor
more than 60 days after the date notice of redemption is sent by the
Corporation.
(c) If full cumulative dividends on all outstanding shares of Class D
Preferred Stock have not been paid or declared and set apart for payment, no
shares of Class D Preferred Stock may be redeemed unless all outstanding shares
of Class D Preferred Stock are simultaneously redeemed and neither the
Corporation nor any affiliate of the Corporation may purchase or acquire shares
of Class D Preferred Stock, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of shares of Class D Preferred
Stock.
(d) If the Corporation shall redeem shares of Class D Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given to each holder of record of the shares to be redeemed. Such notice shall
be provided by first class mail, postage prepaid, at such holder's address as
the same appears on the stock records of the Corporation. Neither the failure to
mail any notice required by this paragraph (d), nor any defect therein or in the
mailing thereof to any particular holder, shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given on the date mailed whether or
not the holder receives the notice. Each such notice shall state, as
appropriate: (1) the Redemption Date; (2) the number of shares of Class D
Preferred Stock to be redeemed and, if fewer than all such shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; and (3) the place or places at which certificates for such shares are to
be surrendered for cash. Notice having been mailed as aforesaid, from and after
the Redemption Date (unless the Corporation shall fail to make available the
amount of cash necessary to effect such redemption), (i) except as otherwise
provided herein, dividends on the shares of Class D Preferred Stock so called
for redemption shall cease to accumulate or accrue on the shares of Class D
Preferred Stock called for redemption (except that, in the case of a Redemption
Date after a dividend record date and prior to the related Dividend Payment
Date, holders of Class D Preferred Stock on the dividend record date will be
entitled on such Dividend Payment Date to receive the dividend payable on such
shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii)
all rights of the holders thereof as holders of Class D Preferred Stock of the
Corporation shall cease (except the rights to receive the cash payable upon such
redemption, without interest thereon, upon surrender and endorsement of their
certificates if so required and to receive any dividends payable thereon). The
Corporation's obligation to make available the redemption price in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the Call
Date, the
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Corporation shall deposit with a bank or trust company (which may be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption, in trust, with irrevocable
instructions that such cash be applied to the redemption of the shares of Class
D Preferred Stock so called for redemption. No interest shall accrue for the
benefit of the holders of shares of Class D Preferred Stock to be redeemed on
any cash so set aside by the Corporation. Subject to applicable escheat laws,
any such cash unclaimed at the end of two years from the Redemption Date shall
revert to the general funds of the Corporation, after which reversion the
holders of shares of Class D Preferred Stock so called for redemption shall look
only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class D Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) for which such shares have been
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class D Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class D
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class D Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If fewer
than all the shares of Class D Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class D Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class D Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class D Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class D Preferred Stock ("Senior Stock");
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(b) on a parity with the Class D Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class D Preferred Stock, if the holders of such class of stock or series and
the Class D Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
(c) junior to the Class D Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Class D Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series
("Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class D Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (if not already increased by reason
of similar types of provisions with respect to shares of Parity Stock of any
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class D Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class D
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class D Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, then the right of the holders of the Class D Preferred Stock
and the Voting Preferred Stock to elect such additional two directors shall
cease (but subject always to the same provision for the vesting of such voting
rights in the case of any similar future arrearages), and the terms of office of
all Persons elected as directors by the holders of the Class D Preferred Stock
and the Voting Preferred Stock shall forthwith terminate and the number of
directors constituting the Board of Directors shall be reduced accordingly. At
any time after such voting power shall have been so vested in the holders of
Class D Preferred Stock and the Voting Preferred Stock, if applicable, the
Secretary of the Corporation may, and upon the written request of any holder of
Class D Preferred
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Stock (addressed to the Secretary at the principal office of the Corporation)
shall, call a special meeting of the holders of the Class D Preferred Stock and
of the Voting Preferred Stock for the election of the two directors to be
elected by them as herein provided, such call to be made by notice similar to
that provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class D Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors elected
at any such special meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu thereof if such office shall
not have previously terminated as above provided. If any vacancy shall occur
among the directors elected by the holders of the Class D Preferred Stock and
the Voting Preferred Stock, a successor shall be elected by the Board of
Directors, upon the nomination of the then remaining director elected by the
holders of the Class D Preferred Stock and the Voting Preferred Stock or the
successor of such remaining director, to serve until the next annual meeting of
the stockholders or special meeting held in place thereof if such office shall
not have previously terminated as provided above.
(b) So long as any shares of Class D Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 662/3% of the
votes entitled to be cast by the holders of the Class D Preferred Stock voting
as a single class with the holders of all other classes or series of Preferred
Stock entitled to vote on such matters, given in Person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions
of these Articles Supplementary, the Charter or the ByLaws of the Corporation
that materially adversely affects the voting powers, rights or preferences of
the holders of the Class D Preferred Stock; provided, however, that the
amendment of the provisions of the Charter so as to authorize or create, or to
increase the authorized amount of, or issue any Junior Stock or any shares of
any class of Parity Stock shall not be deemed to materially adversely affect the
voting powers, rights or preferences of the holders of Class D Preferred Stock;
or
(ii) The authorization, creation of, the increase in the
authorized amount of, or issuance of any shares of any class of Senior Stock or
any security convertible into shares of any class of Senior Stock (whether or
not such class of Senior Stock is currently authorized); provided, however, that
no such vote of the holders of Class D Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security is
to be made, as the case may be, provision
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is made for the redemption of all shares of Class D Preferred Stock at the time
outstanding to the extent such redemption is authorized by Section 5 of this
Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class D Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock shall have the right to vote with the Class D Preferred Stock as a single
class on any matter, then the Class D Preferred Stock and such other class or
series shall have with respect to such matters one quarter of one (.25) vote per
$25 of stated liquidation preference. Except as otherwise required by applicable
law or as set forth herein, the Class D Preferred Stock shall not have any
relative, participating, optional or other special voting rights and powers
other than as set forth herein, and the consent of the holders thereof shall not
be required for the taking of any corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class D Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section
10.8, from and after the Issue Date, no Person (other than the Initial Holder or
a Look-Through Entity) shall Beneficially Own shares of Class D Preferred Stock
in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class D Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class D Preferred Stock in
excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class D Preferred Stock in excess of the Ownership Limit shall
be void AB INITIO as to the Transfer of such shares of Class D Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class D Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into
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through the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system) that, if effective, would result in the Initial
Holder Beneficially Owning shares of Class D Preferred Stock in excess of the
Initial Holder Limit shall be void AB INITIO as to the Transfer of such shares
of Class D Preferred Stock that would be otherwise Beneficially Owned by the
Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class D Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated interdealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class D Preferred Stock in
excess of the Look-Through Ownership limit shall be void AB INITIO as to the
Transfer of such shares of Class D Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class D Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class D Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class D
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class
D Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class D Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class D Preferred Stock in the same or any
other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has
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attempted to acquire Beneficial Ownership of any shares of Class D Preferred
Stock in violation of Section 10.1 of this Article (whether or not such
violation is intended), the Board of Directors or a committee thereof shall be
empowered to take any action as it deems advisable to refuse to give effect to
or to prevent such Transfer or other event, including, but not limited to,
refusing to give effect to such Transfer or other event on the books of the
Corporation, causing the Corporation to redeem such shares at the then current
Market Price and upon such terms and conditions as may be specified by the Board
of Directors in its sole discretion (including, but not limited to, by means of
the issuance of longterm indebtedness for the purpose of such redemption),
demanding the repayment of any distributions received in respect of shares of
Class D Preferred Stock acquired in violation of Section 10.1 of this Article or
instituting proceedings to enjoin such Transfer or to rescind such Transfer or
attempted Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers
(or in the case of events other than a Transfer, Beneficial Ownership) in
violation of Section 10.1 of this Article, regardless of any action (or
nonaction) by the Board of Directors or such committee, (a) shall be void AB
INITIO or (b) shall automatically result in the transfer described in Section
10.3 of this Article; PROVIDED, FURTHER, that the provisions of this Section
10.2 shall be subject to the provisions of Section 10.12 of this Article;
PROVIDED, FURTHER, that neither the Board of Directors nor any committee thereof
may exercise such authority in a manner that interferes with any ownership or
transfer of Class D Preferred Stock that is expressly authorized pursuant to
Section 10.8(d) of this Article.
10.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated interdealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Preferred Stock) or other event (including, but not limited to,
any acquisition of any share of Equity Stock) such that (a) any Person (other
than the Initial Holder or a Look-Through Entity) would Beneficially Own shares
of Class D Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class D Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class D Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class D Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class D
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the
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exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the Excess Transfer, change in capital structure or
another event giving rise to a potential violation of the Ownership Limit, the
Initial Holder Limit or the Look-Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class D
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10.3(E), the Prohibited Transferee shall have no rights in the Class D Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class D Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class D Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void AB
INITIO with respect to such shares of Class D Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class D
Preferred Stock have been transferred to the Trustee will be rescinded as void
AB INITIO and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class D Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price
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paid by the Prohibited Transferee for the shares or, if the Prohibited
Transferee did not give value for the shares (through a gift, devise or other
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
proceeds in excess of the amount payable to the Prohibited Transferee shall be
payable to the Charitable Beneficiary. If any of the transfer restrictions set
forth in this Section 10.3(E) or any application thereof is determined in a
final judgment to be void, invalid or unenforceable by any court having
jurisdiction over the issue, the Prohibited Transferee may be deemed, at the
option of the Corporation, to have acted as the agent of the Corporation in
acquiring the Class D Preferred Stock as to which such restrictions would, by
their terms, apply, and to hold such Class D Preferred Stock on behalf of the
Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class D Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to
the Trustee, the Corporation shall designate one or more nonprofit organizations
to be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class D Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to
acquire shares of Class D Preferred Stock in violation of Section 10.1 of this
Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 10.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted Transfer or other
event on the Corporation's status as a REIT. Failure to give such notice shall
not limit the rights and remedies of the Board of Directors provided herein in
any way.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date
certain record and Beneficial Owners and transferees of shares of Class D
Preferred Stock will be required to provide certain information as set out
below.
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(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more
than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class D Preferred Stock shall, within 30 days after January 1 of each
year, give written notice to the Corporation stating the name and address of
such record or Beneficial Owner, the number of shares of Class D Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record or Beneficial Owner of Class D Preferred Stock shall, upon demand by
the Corporation, disclose to the Corporation in writing such additional
information with respect to the Beneficial Ownership of the Class D Preferred
Stock as the Board of Directors, in its sole discretion, deems appropriate or
necessary to (i) comply with the provisions of the Code regarding the
qualification of the Corporation as a REIT under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class D Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 10.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is
a Beneficial Owner of shares of Class D Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class D
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
shall provide such information as the Corporation, in its sole discretion, may
request in order to determine the Corporation's status as a REIT, to comply with
the requirements of any taxing authority or other governmental agency, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class D Preferred Stock already Beneficially Owned by such stockholder or
proposed transferee and any related persons specified, which statement or
affidavit shall be in the form prescribed by the Corporation for that purpose.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 10.12 of this
Article) (i) to protect the Corporation and the interests of its stockholders in
the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 10 of this Article, or in the case of an ambiguity in
any definition contained in Section 10 of this Article, the Board of Directors
shall have the power to determine the application of the provisions of this
Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
19
<PAGE> 90
10.8 EXCEPTIONS. The following exceptions shall apply or may be established
with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt
of a ruling from the Internal Revenue Service or an opinion of tax counsel or
other evidence or undertaking acceptable to it, may waive the application, in
whole or in part, of the Ownership Limit to a Person subject to the Ownership
Limit, if such person is not an individual for purposes of Section 542(a) of the
Code and is a corporation, partnership, estate or trust. In connection with any
such exemption, the Board of Directors may require such representations and
undertakings from such Person and may impose such other conditions as the Board
deems necessary, in its sole discretion, to determine the effect, if any, of the
proposed Transfer on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of
this Article, the pledge by the Initial Holder of all or any portion of the
Class D Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 10.1 of this Article and the pledgee shall
not be subject to the Ownership Limit with respect to the Class D Preferred
Stock so pledged to it either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days following the purchase of
Class D Preferred Stock by an underwriter that (i) is a corporation or a
partnership and (ii) participates in an offering of the Class D Preferred Stock,
such underwriter shall not be subject to the Ownership Limit with respect to the
Class D Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class D Preferred Stock purchased in connection
with market making activities.
10.9 LEGEND. Each certificate for Class D Preferred Stock shall bear the
following legend:
"The shares of Class D Cumulative Preferred Stock represented by
this certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class D Cumulative Preferred Stock in excess of
the Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Corporation's Charter
(including the Articles Supplementary setting forth the terms of the Class
D Cumulative Preferred Stock). Any Person that attempts to Beneficially Own
shares of Class D Cumulative Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All capitalized terms
in this legend have the meanings ascribed to such terms in the
Corporation's Charter (including the Articles Supplementary setting forth
the terms of the Class D Cumulative Preferred Stock), as the same may be
amended from time to time, a copy of which, including the restrictions on
transfer, will be sent
20
<PAGE> 91
without charge to each stockholder that so requests. If the restrictions on
transfer are violated, the shares of Class D Cumulative Preferred Stock
represented hereby will be either (i) void in accordance with the
Certificate or (ii) automatically transferred to a Trustee of a Trust for
the benefit of one or more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article or any application of
any such provision is determined in a final and unappealable judgment to be
void, invalid or unenforceable by any Federal or state court having jurisdiction
over the issues, the validity and enforceability of the remaining provisions
shall not be affected and other applications of such provision shall be affected
only to the extent necessary to comply with the determination of such court.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system.
FOURTH: The terms of the Class D Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XV of the Charter.
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<PAGE> 92
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Senior Vice President and Chief Financial
Officer and witnessed by its Secretary on February 17, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Leeann Morein /s/ Troy D. Butts
- --------------------------- ------------------------------
Leeann Morein, Troy D. Butts
Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Troy D. Butts
-----------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
<PAGE> 93
ARTICLES OF MERGER
BETWEEN
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(a Maryland corporation)
AND
AMBASSADOR APARTMENTS, INC.
(a Maryland corporation)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a corporation duly organized
and existing under the laws of the State of Maryland ("AIMCO"), and AMBASSADOR
APARTMENTS, INC., a corporation duly organized and existing under the laws of
the State of Maryland ("AAI"), do hereby certify that:
FIRST: AIMCO and AAI have agreed to merge.
SECOND: The name and place of incorporation of each party to these
Articles are APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland
corporation, and AMBASSADOR APARTMENTS, INC., a Maryland corporation. AIMCO
shall survive the merger and shall continue under the name "APARTMENT
INVESTMENT AND MANAGEMENT COMPANY" as a corporation of the State of Maryland.
THIRD: AIMCO has its principal office in Baltimore City, Maryland. AAI has
its principal office in Baltimore City, Maryland and does not own an interest
in land in the State of Maryland.
FOURTH: The terms and conditions of the transaction set forth in these
Articles were advised, authorized, and approved by each corporation party to
the Articles in the manner and by the vote required by its Charter and the laws
of the state of its incorporation. The manner of approval was as follows:
(a) The Board of Directors of AIMCO at meetings held on December 21,
1997 and May 7, 1998 adopted resolutions (by a vote of a majority of the entire
Board of Directors) which declared that the proposed merger was advisable on
substantially the terms and conditions set forth or referred to in the
resolutions and approved the proposed merger.
(b) The Board of Directors of AAI at meetings held on, or by
unanimous consents dated, December 23, 1997, March 9, 1998, and March 13, 1998
adopted resolutions (by a vote of a majority of the entire Board of Directors)
which declared that the proposed merger was advisable on substantially the
terms and conditions set forth or referred to in the resolutions and directed
that the proposed merger be submitted for consideration at a special meeting of
the stockholders of AAI.
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<PAGE> 94
(c) Notice which stated that a purpose of the meeting was to act on
the proposed merger was given by AAI to AAI's stockholders of record as
required by law.
(d) The proposed merger was approved by the stockholders of AAI at a
special meeting of stockholders held May 8, 1998, by the affirmative vote of
two-thirds of all the votes entitled to be cast on the matter.
FIFTH: No amendment to the Charter of AIMCO is to be effected as a part of
the merger. The merger does not reclassify or change the outstanding capital
stock of AIMCO. The number of shares of Class A Common Stock, par value $.01
per share, of AIMCO to be issued or delivered in the proposed merger is not
more than 20 percent of the number of shares of Class A Common Stock, par value
$.01 per share, of AIMCO outstanding immediately before the proposed merger
becomes effective.
SIXTH: (a) The total number of shares of capital stock of all classes
which AIMCO has authority to issue is 160,262,500 shares, currently classified
as follows:
150,000,000 shares of Class A Common Stock, par value $.01 per share;
262,500 shares of Class B Common Stock, par value $.01 per share;
1,890,000 shares of Preferred Stock, par value $.01 per share;
750,000 shares of Class B Cumulative Convertible Preferred Stock, par
value $.01 per share;
2,760,000 shares of Class C Cumulative Preferred Stock, par value
$.01 per share; and
4,600,000 shares of Class D Cumulative Preferred Stock, par value
$.01 per share.
The aggregate par value of all the shares of stock of all classes of AIMCO is
$1,602,625.00.
(b) The total number of shares of capital stock of all classes which
AAI has authority to issue is 240,000,000 shares, currently classified as
follows:
100,000,000 shares of Common Stock, par value $.01 per share;
18,648,649 shares of Preferred Stock, par value $.01 per share;
1,351,351 shares of Class A Senior Cumulative Convertible Preferred
Stock, par value $.01 per share;
100,000,000 shares of Excess Common Stock, par value $.01 per share;
18,648,649 shares of Excess Preferred Stock, par value $.01 per
share; and
1,351,351 shares of Excess Class A Preferred Stock, par value $.01 per
share.
-2-
<PAGE> 95
The aggregate par value of all the shares of stock of all classes of AAI is
$2,400,000.00.
SEVENTH: The merger does not increase the authorized stock of AIMCO.
EIGHTH: The manner and basis of converting or exchanging issued stock of
the merging corporations into different stock of a corporation, for other
consideration and the treatment of any issued stock of the merging corporations
not to be converted or exchanged are as follows:
(a) Each issued and outstanding share of the capital stock of AIMCO
at the effective time of the merger shall continue, without change as to class,
series or otherwise, to be an issued and outstanding share of capital stock of
AIMCO.
(b) Each issued and outstanding share of Common Stock, par value $.01
per share, of AAI at the effective time of the merger, other than shares of
Common Stock, par value $.01 per share, of AAI held by AAI or AIMCO, shall upon
effectiveness and without further act be converted into and become 0.553 shares
of Class A Common Stock, par value $.01 per share, of AIMCO. In lieu of
issuance of fractional shares of Class A Common Stock, par value $.01 per
share, of AIMCO, cash will be paid at the rate of $38.00 per share. Each issued
and outstanding share of Common Stock, par value $.01 per share, of AAI at the
effective time of the merger held by AAI or AIMCO shall upon effectiveness and
without further act be canceled. There will be no issued and outstanding shares
of Preferred Stock, par value $.01 per share, Class A Senior Cumulative
Convertible Preferred Stock, par value $.01 per share, Excess Common Stock, par
value $.01 per share, Excess Preferred Stock, par value $.01 per share, or
Excess Class A Preferred Stock, par value $.01 per share, of AAI at the
effective time of the merger.
(c) As soon as practicable following the effective time of the
merger, each holder of issued and outstanding shares of Common Stock, par value
$.01 per share, of AAI shall be entitled to surrender to AIMCO the certificates
representing the shares of Common Stock, par value $.01 per share, of AAI held
by such holder immediately prior to the effective time of the merger, and, upon
such surrender, shall be entitled to receive in exchange therefor a certificate
or certificates representing the number of whole shares of Class A Common
Stock, par value $.01 per share, of AIMCO deliverable in respect thereof,
together with cash, without interest, in lieu of any fractional shares of Class
A Common Stock, par value $.01 per share, of AIMCO and in respect of any
dividends withheld on Class A Common Stock, par value $.01 per share, of AIMCO
with record and payment dates after the effective time.
NINTH: The merger shall become effective upon acceptance for record by the
Maryland State Department of Assessments and Taxation.
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<PAGE> 96
IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY and
AMBASSADOR APARTMENTS, INC. have caused these presents to be signed in their
respective names and on their respective behalves by their respective
presidents or chairmen and witnessed by their respective secretaries on May 8,
1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
(a Maryland corporation)
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- --------------------------------- -------------------------------
Joel F. Bonder, Secretary Peter K. Kompaniez, President
WITNESS: AMBASSADOR APARTMENTS, INC.
(a Maryland corporation)
/s/ THOMAS J. COORSH By: /s/ DAVID M. GLICKMAN
- --------------------------------- -------------------------------
Thomas J. Coorsh, Secretary David M. Glickman, Chairman of the Board
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<PAGE> 97
THE UNDERSIGNED, the President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, who executed on behalf of the Corporation the foregoing Articles of
Merger of which this certificate is made a part, hereby acknowledges in the name
and on behalf of said Corporation the foregoing Articles of Merger to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
/s/ PETER K. KOMPANIEZ
----------------------------------------
Peter K. Kompaniez, President
THE UNDERSIGNED, the Chairman of the Board of AMBASSADOR APARTMENTS, INC.,
who executed on behalf of the Corporation the foregoing Articles of Merger of
which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Merger to be the corporate
act of said Corporation and hereby certifies that to the best of his knowledge,
information and belief the matters and facts set forth therein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
/s/ DAVID M. GLICKMAN
----------------------------------------
David M. Glickman, Chairman of the Board
-5-
<PAGE> 98
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLES OF AMENDMENT
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation,
having its principal office in Baltimore City, Maryland (which is hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Article IV, Section 1.1 of the Charter of the Corporation is hereby
amended in its entirety to read as follows:
1.1 CLASS AND NUMBER OF SHARES. The total number of shares of stock
that the Corporation from time to time shall have authority to issue is
510,750,000 shares of capital stock having a par value of $.01 per share
amounting to an aggregate par value of $5,107,500, consisting of 502,377,500
shares currently classified as Class A Common Stock, par value $.01 per share
(the "Class A Common Stock"), 262,500 shares currently classified as Class B
Common Stock, par value $.01 per share (the "Class B Common Stock") (the Class A
Common Stock and Class B Common Stock being referred to collectively herein as
"Common Stock"), 750,000 shares currently classified as Class B Cumulative
Convertible Preferred Stock, par value $.01 per share (the "Class B Preferred
Stock"), 2,760,000 shares currently classified as Class C Cumulative Preferred
Stock, par value $.01 per share (the "Class C Preferred Stock"), and 4,600,000
shares currently classified as Class D Cumulative Preferred Stock, par value
$.01 per share (the "Class D Preferred Stock")(the Class B Preferred Stock, the
Class C Preferred Stock, the Class D Preferred Stock, and all other classes or
series of preferred stock hereafter classified being referred to collectively
herein as the "Preferred Stock").
SECOND: (a) As of immediately before the amendment the total number of
shares of stock of all classes which the Corporation has authority to issue is
160,262,500(1) shares of capital stock, which are currently classified as
follows:
150,000,000 shares of Class A Common Stock, par value $.01 per share;
262.500 shares of Class B Common Stock, par value $.01 per share;(2)
- -----------------------
(1) The number of shares of authorized capital stock has been reduced since the
last amendment of the Charter of the Corporation from 160,750,000 shares to
160,262,500 shares through the cancellation of 487,500 shares of Class B
Common Stock, par value $.01 per share, that were converted into shares of
Class A Common Stock, par value $.01 per share.
-1-
<PAGE> 99
1,890,000 shares of Preferred Stock, par value $.01 per share;
750,000 shares of Class B Cumulative Convertible Preferred Stock, par value
$.01 per share;
2,760,000 shares of Class C Cumulative Preferred Stock, par value $.01 per
share; and
4,600,000 shares of Class D Cumulative Preferred Stock, par value $.01 per
share.
(b) As amended the total number of shares of stock of all classes which
the Corporation has authority to issue is 510,750,000 shares of capital stock,
which, as amended, are currently classified as follows:
502,377,500 shares of Class A Common Stock, par value $.01 per share;
262,500 shares of Class B Common Stock, par value $.01 per share;
750,000 shares of Class B Cumulative Convertible Preferred Stock, par
value $.01 per share;
2,760,000 shares of Class C Cumulative Preferred Stock, par value $.01 per
share; and
4,600,000 shares of Class D Cumulative Preferred Stock, par value $.01 per
share.
(c) The aggregate par value of all shares having a par value is
$1,602,625(3) before the amendment and $5,107,500 as amended.
(d) The shares of stock of the Corporation are divided into classes, but
the descriptions of each class of capital stock of the Corporation are not
changed by the amendment.
THIRD: The foregoing amendment to the Charter of the Corporation has been
advised by the Board of Directors and approved by the stockholders of the
Corporation.
- ------------------------------------------------------------------------------
(2) The number of shares of Class B Common Stock, par value $.01 per share, has
been reduced since the last amendment of the Charter of the Corporation from
750,000 shares to 262,500 shares through the cancellation of 487,500 shares of
Class B Common Stock, par value $.01 per share, that were converted into shares
of Class A Common Stock, par value $.01 per share.
(3) The aggregate par value of shares having a par value before the amendment
has been reduced since the last amendment of the Charter of the Corporation
from $1,607,500 to $1,602,625 through the cancellation of 487,500 shares of
Class B Common Stock, par value $.01 per share, that were converted into shares
of Class A Common Stock, par value $.01 per share.
-2-
<PAGE> 100
IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has caused
these presents to be signed in its name and on its behalf by its Chairman of
the Board and witnessed by its Secretary on June 16, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By:/s/ TERRY CONSIDINE
- ----------------------- ---------------------
Joel F. Bonder Terry Considine
Secretary Chairman of the Board
THE UNDERSIGNED, Chairman of the Board of APARTMENT INVESTMENT AND
MANAGEMENT COMPANY, who executed on behalf of the Corporation the foregoing
Articles of Amendment of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles of Amendment to be the corporate act of said Corporation and hereby
certifies that to the best of his knowledge, information, and belief the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
/s/ TERRY CONSIDINE
---------------------
Terry Considine
Chairman of the Board
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<PAGE> 101
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS G CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has
duly divided and classified 4,050,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class G Cumulative Preferred Stock, par
value $.01 per share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified as
Class G Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 4,050,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 502,377,500 shares immediately prior to
the reclassification to 498,327,500 shares immediately after the
reclassification.
THIRD: The terms of the Class G Cumulative Preferred Stock (including the
preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms
or conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class G Cumulative
Preferred Stock, par value $.01 per share (the "Class G Preferred Stock") and
Four Million Fifty Thousand (4,050,000) shall be the authorized number of
shares of such Class G Preferred Stock constituting such class.
<PAGE> 102
2. DEFINITIONS.
For purposes of the Class G Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity Stock,
the sum of the products of (i) the number of shares of each class of Equity
Stock within such block multiplied by (ii) the corresponding Market Price
of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of
Equity Stock directly owned by such Person, (ii) the number of shares of
Equity Stock indirectly owned by such Person (if such Person is an
"individual" as defined in Section 542(a)(2) of the Code) taking into
account the constructive ownership rules of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code, and (iii) the number of
shares of Equity Stock that such Person is deemed to beneficially own
pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such
Person pursuant to Section 318 of the Code, as modified by Section
856(d)(5) of the Code, provided that when applying this definition of
Beneficial Ownership to the Initial Holder, clause (iii) of this
definition, and clause (ii) of the definition of "Person" shall be
disregarded. The terms "Beneficial Owner,""Beneficially Owns" and
"Beneficially Owned" shall have the correlative meanings.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of
its responsibilities with respect to the Class G Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 10.3 of this Article, each of which shall
be an organization described in Section 170(b)(1)(A), 170(c)(2) and
501(c)(3) of the Code.
2
<PAGE> 103
"Class G Preferred Stock" shall have the meaning set forth in Section 1 of this
Article.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute thereto. Reference to any provision of the Code
shall mean such provision as in effect from time to time, as the same may be
amended, and any successor thereto, as interpreted by any applicable
regulations or other administrative pronouncements as in effect from time to
time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per share,
of the Corporation or such shares of the Corporation's capital stock into which
outstanding shares of Common Stock shall be reclassified.
"Dividend Payment Date" shall mean January 15, April 15, July 15 and October 15
of each year; provided, further, that if any Dividend Payment Date falls on any
day other than a Business Day, the dividend payment payable on such Dividend
Payment Date shall be paid on the Business Day immediately following such
Dividend Payment Date and no interest shall accrue on such dividend from such
date to such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each subsequent
quarterly dividend period commencing on and including January 15, April 15,
July 15 and October 15 of each year and ending on and including the day
preceding the first day of the next succeeding Dividend Period, other than the
Dividend Period during which any Class G Preferred Stock shall be redeemed
pursuant to Section 5 hereof, which shall end on and include the Redemption
Date with respect to the Class G Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital stock of
the Corporation.
"Excess Transfer" has the meaning set forth in Section 10.3(A) of this Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Issue Date" shall mean July 15, 1998.
"Initial Dividend Period" shall mean the period commencing on and including the
Issue Date and ending on and including October 15, 1998.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of Class G
Preferred Stock of the Corporation having an Aggregate Value not in excess of
the excess of (x) 15% of the Aggregate Value of all Outstanding shares of
3
<PAGE> 104
Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class G Preferred Stock that are Beneficially Owned by the Initial
Holder. From the Issue Date, the secretary of the Corporation, or such other
person as shall be designated by the Board of Directors, shall upon request
make available to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder Limit
applicable to the Initial Holder.
"Junior Stock" shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the shares of Class G Preferred
Stock have preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
"Look-Through Entity" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or
(ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class G Preferred Stock of the Corporation
having an Aggregate Value not in excess of the excess of (x) 15% of the
Aggregate Value of all Outstanding shares of Equity Stock over (y) by the
Aggregate Value of all shares of Equity Stock other than Class G Preferred
Stock that are Beneficially Owned by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of share of that class of Equity Stock on the Trading
Day immediately preceding such date. The term "Closing Price" on any date
shall mean that last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the NYSE or, if the Equity Stock is not listed or admitted to trading on the
NYSE, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Equity Stock is listed or admitted to trading or, if the Equity
Stock is not listed or admitted to trading on any national securities exchange,
the last quoted price, or if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or, if such
system is no longer in use, the principal other automated quotations system
that may then be in use or, if the Equity Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Equity Stock selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which
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the Equity Stock is listed or admitted to trading is open for the
transaction of business or, if the Equity Stock is not listed or admitted to
trading on any national securities exchange, shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock of the
Corporation, provided that for purposes of the application of the Ownership
Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any
Person, the term "Outstanding" shall be deemed to include the number of shares
of Equity Stock that such Person alone, at that time, could acquire pursuant to
any options or convertible securities.
"Ownership Limit" shall mean, for any Person other than the Initial Holder or a
Look-Through Entity, a number of the Outstanding shares of Class G Preferred
Stock of the Corporation having an Aggregate Value not in excess of the excess
of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock
over (y) the Aggregate Value of all shares of Equity Stock other than Class G
Preferred Stock that are Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit as applied
to Persons other than the Initial Holder or Look-Through Entities, the Initial
Holder Limit as applied to the Initial Holder and the Look-Through Ownership
Limit as applied to Look-Through Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of Section 7
of this Article. The Class B Preferred Stock, the Class C Preferred Stock and
the Class D Preferred Stock shall each be a Parity Stock.
"Person" shall mean (a) for purposes of Section 10 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association, private
foundation within the meaning of Section 509(a) of the Code, joint stock
company or other entity, and (ii) also includes a group as that term is used
for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the
remaining Sections of this Article, any individual, firm, partnership,
corporation or other entity and shall include any successor (by merger or
otherwise) of such entity.
"Prohibited Transferee" has the meaning set forth in Section 10.3(A) of this
Article.
"Redemption Date" shall have the meaning set forth in paragraph (b) of Section
5 of this Article.
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"REIT" shall mean a "real estate investment trust" as defined in Section 856 of
the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of Section 7
of this Article.
"set apart for payment" shall be deemed to include, without any action other
than the following, the recording by the Corporation in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of
the Corporation; provided, however, that if any funds for any class or series
of Junior Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or other
similar agent, then "set apart for payment" with respect to the Class G
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on which
such securities are listed or admitted or, if such securities are not listed or
admitted for trading on any national securities exchange, the NASDAQ National
Market or, if such securities are not listed or admitted for trading on the
NASDAQ National Market, in the securities market in which such securities are
traded.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class G Preferred Stock (including (i) the granting of
an option or any series of such options or entering into any agreement for the
sale, transfer or other disposition of Class G Preferred Stock or (ii) the
sale, transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Class G Preferred Stock), whether
voluntary or involuntary, whether of record or Beneficial Ownership, and
whether by operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in the
Beneficial Ownership of shares of Class G Preferred Stock). The term
"Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the Board of
Directors or their designee as the transfer agent for the Class G Preferred
Stock; provided, that if the Corporation has not designated a transfer agent
then the Corporation shall act as the transfer agent for the Class G Preferred
Stock.
"Trust" shall mean the trust created pursuant to Section 10.3 of this Article.
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"Trustee" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 8 of
this Article.
3. DIVIDENDS.
(a) The holders of Class G Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class G Preferred Stock equal to $2.34375 per annum. Such
dividends shall be cumulative from the Issue Date, whether or not in any
Dividend Period or Periods such dividends shall be declared or there shall be
funds of the Corporation legally available for the payment of such dividends,
and shall be payable quarterly in arrears on each Dividend Payment Date,
commencing on October 15, 1998. Each such dividend shall be payable in arrears
to the holders of record of the Class G Preferred Stock, as they appear on the
stock records of the Corporation at the close of business on the January 1,
April 1, July 1 or October 1, as the case may be, immediately preceding such
Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past
Dividend Periods may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to holders of record on such date, which date
shall not precede by more than 45 days the payment date thereof, as may be fixed
by the Board of Directors.
(b) Any dividend payable on the Class G Preferred Stock for any
partial dividend period shall be computed ratably on the basis of twelve 30-day
months and a 360-day year. Holders of Class G Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of cumulative dividends, as herein provided, on the Class G Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Class G Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class G Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment on the Class G Preferred
Stock for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Stock. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class G Preferred Stock and all
dividends declared upon any
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other class or series of Parity Stock shall be declared ratably in proportion
to the respective amounts of dividends accumulated, accrued and unpaid on the
Class G Preferred Stock and accumulated, accrued and unpaid on such Parity
Stock.
(d) So long as any of the shares of Class G Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Stock) shall be declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption
of any shares of any such stock), directly or indirectly, by the Corporation
(except by conversion into or exchange for shares of, or options, warrants or
rights to subscribe for or purchase shares of, Junior Stock), nor shall any
other cash or other property otherwise be paid or distributed to or for the
benefit of any holder of shares of Junior Stock in respect thereof, directly or
indirectly, by the Corporation unless in each case the full cumulative
dividends (including all accumulated, accrued and unpaid dividends) on all
outstanding shares of Class G Preferred Stock shall have been paid or such
dividends have been declared and set apart for payment for all past Dividend
Periods with respect to the Class G Preferred Stock.
Notwithstanding the provisions of this Section 3(d), the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii) or
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation
as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital or surplus) shall be made
to or set apart for the holders of Junior Stock, the holders of shares of Class
G Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per
share of Class G Preferred Stock (the "Liquidation Preference"), plus an amount
equal to all dividends (whether or not earned or declared) accumulated, accrued
and unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class G Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the
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Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Class G Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of Class G Preferred
Stock and any such other Parity Stock ratably in the same proportion as the
respective amounts that would be payable on such Class G Preferred Stock and
any such other Parity Stock if all amounts payable thereon were paid in full.
For the purposes of this Section 4, (i) a consolidation or merger of the
Corporation with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets, or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
G Preferred Stock and any Parity Stock, as provided in this Section 4, any other
series or class or classes of Junior Stock shall, subject to the respective
terms thereof, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Class G Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class G Preferred Stock shall not be redeemable by the
Corporation prior to July 15, 2008, except as set forth in Section 10.2 of this
Article. On and after July 15, 2008, the Corporation, at its option, may redeem
shares of Class G Preferred Stock, in whole or from time to time in part, at a
redemption price payable in cash equal to 100% of the Liquidation Preference
thereof, plus all accrued and unpaid dividends to the date fixed for redemption
(the "Redemption Date"). In connection with any redemption pursuant to this
Section 5(a), the redemption price of the Class G Preferred Stock (other than
any portion thereof consisting of accrued and unpaid dividends) shall be payable
solely with the proceeds from the sale by the Corporation or AIMCO Properties,
L.P., a Delaware limited Partnership (the "Operating Partnership"), of other
capital shares of the Corporation or the Operating Partnership (whether or not
such sale occurs concurrently with such redemption). For purposes of the
preceding sentence, "capital shares" means any common stock, preferred stock,
depositary shares, partnership or other interests, participations or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable at the option of the holder for
equity securities (unless and to the extent such debt securities are
subsequently converted into capital shares)) or options to purchase any of the
foregoing of or in the Corporation or the Operating Partnership.
(b) The Redemption Date shall be selected by the Corporation, shall
be specified in the notice of redemption and shall be not less than 30 days nor
more than 60 days after the date notice of redemption is sent by the
Corporation.
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(c) If full cumulative dividends on all outstanding shares of Class G
Preferred Stock have not been paid or declared and set apart for payment, no
shares of Class G Preferred Stock may be redeemed unless all outstanding shares
of Class G Preferred Stock are simultaneously redeemed and neither the
Corporation nor any affiliate of the Corporation may purchase or acquire shares
of Class G Preferred Stock, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of shares of Class G Preferred
Stock.
(d) If the Corporation shall redeem shares of Class G Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given to each holder of record of the shares to be redeemed. Such notice shall
be provided by first class mail, postage prepaid, at such holder's address as
the same appears on the stock records of the Corporation. Neither the failure
to mail any notice required by this paragraph (d), nor any defect therein or in
the mailing thereof to any particular holder, shall affect the sufficiency of
the notice of the validity of the proceedings for redemption with respect to
the other holders. Any notice which was mailed in the manner herein provided
shall be conclusively presumed to have been duly given on the date mailed
whether or not the holder receives the notice. Each such notice shall state,
as appropriate: (1) the Redemption Date; (2) the number of shares of Class G
Preferred Stock to be redeemed and, if fewer than all such shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; and (3) the place or places at which certificates for such shares are
to be surrendered for cash. Notice having been mailed as aforesaid, from and
after the Redemption Date (unless the Corporation shall fail to make available
the amount of cash necessary to effect such redemption), (i) except as
otherwise provided herein, dividends on the shares of Class G Preferred Stock
so called for redemption shall cease to accumulate or accrue on the shares of
Class G Preferred Stock called for redemption(except that, in the case of a
Redemption Date after a dividend record date and prior to the related Dividend
Payment Date, holders of Class G Preferred Stock on the dividend record date
will be entitled to such Dividend Payment Date to receive the dividend payable
on such shares), (ii) said shares shall no longer be deemed to be outstanding,
and (iii) all rights of the holders thereof as holders of Class G Preferred
Stock of the Corporation shall cease (except the rights to receive the cash
payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Corporation's obligation to make available the redemption
price in accordance with the preceding sentence shall be deemed fulfilled if, on
or before the Call Date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) that has, or is an
affiliate of a bank or trust company that has, a capital and surplus of at least
$50,000,000, such amount of cash as is necessary for such redemption, in trust,
with irrevocable instructions that such cash be applied to the redemption of the
shares of Class G Preferred Stock so called for redemption. No interest shall
accrue for the benefit of the holders of shares of Class G Preferred Stock to
be redeemed on any cash so set aside by the Corporation. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class G Preferred
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Stock so called for redemption shall look only to the general funds of the
Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class G Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) for which such shares have been
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class G Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class G
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class G Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If
fewer than all the shares of Class G Preferred Stock represented by any
certificate are redeemed, then a new certificate representing the unredeemed
shares shall be issued without cost to the holders thereof.
6. Status of Reacquired Stock.
All shares of Class G Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class G Preferred Stock.
7. Ranking.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class G Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class G Preferred Stock ("Senior Stock");
(b) on a parity with the Class G Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class G Preferred Stock, if the holders of such class of stock or series and
the Class G Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
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(c) junior to the Class G Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Class G Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series
("Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class G Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (if not already increased by reason
of similar types of provisions with respect to shares of Parity Stock of any
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class G Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class G
Preferred Stock and the Voting Preferred Stock called as hereinafter
provided. Whenever all arrears in dividends on the Class G Preferred Stock and
the Voting Preferred Stock then outstanding shall have been paid and dividends
thereon for the current quarterly dividend period shall have been paid or
declared and set apart for payment, then the right of the holders of the Class G
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages), and the
terms of office of all Persons elected as directors by the holders of the Class
G Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class G Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Class G Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Class G Preferred Stock and of the Voting Preferred Stock for the
election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Class G Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall hold
office until the next annual meeting of the stockholders or special meeting held
in lieu thereof if such office shall not have
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previously terminated as above provided. If any vacancy shall occur among the
directors elected by the holders of the Class G Preferred Stock and the Voting
Preferred Stock, a successor shall be elected by the Board of Directors, upon
the nomination of the then-remaining director elected by the holders of the
Class G Preferred Stock and the Voting Preferred Stock or the successor of such
remaining director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.
(b) So long as any shares of Class G Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class G
Preferred Stock voting as a single class with the holders of all other classes
or series of Preferred Stock entitled to vote on such matters, given in Person
or by proxy, either in writing without a meeting or by vote at any meeting
called for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary, the Charter or the By-Laws of the
Corporation that materially adversely affects the voting powers, rights or
preferences of the holders of the Class G Preferred Stock; provided, however,
that the amendment of the provisions of the Charter so as to authorize or
create, or to increase the authorized amount of, or issue any Junior Stock or
any shares of any class of Parity Stock shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the holders of
Class G Preferred Stock; or
(ii) The authorization, creation of, the increase in the
authorized amount of, or issuance of any shares of any class of Senior Stock or
any security convertible into shares of any class of Senior Stock (whether or
not such class of Senior Stock is currently authorized); provided, however, that
no such vote of the holders of Class G Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security
is to be made, as the case may be, provision is made for the redemption of all
shares of Class G Preferred Stock at the time outstanding to the extent such
redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class G Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock shall have the right to vote with the Class G Preferred Stock as a single
class on any matter, then the Class G Preferred Stock and such other class or
series shall have with respect to such matters one quarter of one(.25) vote per
$25 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the Class G Preferred Stock shall not
have any relative, participating, optional or other special voting rights and
powers other than as set forth herein, and the consent of the holders thereof
shall not be required for the taking of any corporate action.
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9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class G Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 10.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class G
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class G Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class G
Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or
automated inter-dealer quotation system) that, if effective, would result in
any Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class G Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class G Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class G Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided
in Section 10.8, from and after the Issue Date (and subject to Section 10.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class G Preferred Stock in excess
of the Initial Holder Limit shall be void ab initio as to the Transfer of such
shares of Class G Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class G Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Look-Through Entity Beneficially Owning shares of Class G Preferred Stock in
excess of the Look-Through Ownership limit shall be void ab initio as to the
Transfer of such shares of Class G
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Preferred Stock that would be otherwise Beneficially Owned by such Look-Through
Entity in excess of the Look-Through Ownership Limit and such Look-Through
Entity shall acquire no rights in such shares of Class G Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue
Date any Transfer that, if effective would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class G Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class G
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class G
Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class G Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class G Preferred Stock in the same or
any other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class G Preferred Stock in violation of Section 10.1 of this Article
(whether or not such violation is intended), the Board of Directors or a
committee thereof shall be empowered to take any action as it deems advisable
to refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such Transfer or
other event on the books of the Corporation, causing the Corporation to redeem
such shares at the then current Market Price and upon such terms and conditions
as may be specified by the Board of Directors in its sole discretion
(including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of
any distributions received in respect of shares of Class G Preferred Stock
acquired in violation of Section 10.1 of this Article or instituting
proceedings to enjoin such Transfer or to rescind such Transfer or attempted
Transfer; provided, however, that any Transfers or attempted Transfers (or in
the case of events other than a Transfer, Beneficial Ownership) in violation of
Section 10.1 of this Article, regardless of any action (or non-action) by the
Board of Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 10.3 of this
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Article; provided, further, that the provisions of this Section 10.2 shall be
subject to the provisions of Section 10.12 of this Article; provided, further,
that neither the Board of Directors nor any committee thereof may exercise such
authority in a manner that interferes with any ownership or transfer of Class G
Preferred Stock that is expressly authorized pursuant to Section 10.8(d) of
this Article.
10.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "Excess Transfer") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated interdealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Preferred Stock) or other event (including, but not limited to,
any acquisition of any share of Equity Stock) such that (a) any Person (other
than the Initial Holder or a Look-Through Entity) would Beneficially Own shares
of Class G Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class G Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class G Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class G Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "Prohibited Transferee"), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class G
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the business day prior to the Excess Transfer,
change in capital structure or another event giving rise to a potential
violation of the Ownership Limit, the Initial Holder Limit or the Look-Through
Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class G
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10.3(E), the Prohibited Transferee shall have no rights in the Class G
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
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(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights
and rights to dividends with respect to shares of Class G Preferred Stock held
in the Trust, which rights shall be exercised for the benefit of the Charitable
Beneficiary. Any dividend or distribution paid prior to the discovery by the
Corporation that the shares of Class G Preferred Stock have been transferred to
the Trustee shall be repaid to the Corporation upon demand, and any dividend or
distribution declared but unpaid shall be rescinded as void ab initio with
respect to such shares of Class G Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class G
Preferred Stock have been transferred to the Trustee will be rescinded as void
ab initio and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class G Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the
Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 10.3(E) or any application thereof is determined in a final judgement
to be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class G Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class G Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class G Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall
have the right to accept such offer for a period of 90 days after the later of
(i) the date of the Excess Transfer or other event resulting in a transfer to
the Trust and
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(ii) the date that the Board of Directors determines in good faith that an
Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class G Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class G Preferred Stock in violation of Section
10.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 10.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or attempted
Transfer or other event on the Corporations's status as a REIT. Failure to
give such notice shall not limit the rights and remedies of the Board of
Directors provided herein in any way.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class G
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class G Preferred Stock shall, within 30 days after January 1 of each
year, give written notice to the Corporation stating the name and address of
such record or Beneficial Owner, the number of shares of Class G Preferred
Stock Beneficially Owned, and a full description of how such shared are held.
Each such record or Beneficial Owner of Class G Preferred Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class G
Preferred Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (i) comply with the provisions of the Code
regarding the qualification of the Corporation as a REIT under the Code and
(ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class G Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to
obtain the written notice described in this Section 10.5 from the Beneficial
Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class G Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class G
Preferred Stock for a Beneficial
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Owner, and any proposed transferee of shares, shall provide such information as
the Corporation, in its sole discretion, may request in order to determine the
Corporation's status as a REIT, to comply with the requirements of any taxing
authority or other governmental agency, to determine any such compliance or to
ensure compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit, and shall provide a statement or affidavit to the
Corporation setting forth the number of shares of Class G Preferred Stock
already Beneficially Owned by such stockholder or proposed transferee and any
related persons specified, which statement or affidavit shall be in the form
prescribed by the Corporation for that purpose.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 10.12 of
this Article) (i) to protect the Corporation and the interests of its
stockholders in the preservation of the Corporation's status as a REIT and (ii)
to insure compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 10 of this Article, or in the case of an ambiguity
in any definition contained in Section 10 of this Article, the Board of
Directors shall have the power to determine the application of the provisions
of this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
10.8 EXPECTATIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of
Section 542(a) of the Code and is a corporation, partnership, estate or trust.
In connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person and may impose such other
conditions as the Board of Directors deems necessary, in its sole discretion,
to determine the effect, if any, of the proposed Transfer on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class G Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 10.1 of this Article and the
pledgee shall not be subject to the Ownership Limit with respect to the Class G
Preferred Stock so pledged to it either as a result of the pledge or upon
foreclosure.
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(C) UNDERWRITERS. For a period of 270 days following the purchase
of Class G Preferred Stock by an underwriter that (i) is a corporation or a
partnership and (ii) participates in an offering of the Class G Preferred
Stock, such underwriter shall not be subject to the Ownership Limit with
respect to the Class G Preferred Stock purchased by it as a part of or in
connection with such offering and with respect to any Class G Preferred Stock
purchased in connection with market making activities.
10.9 LEGEND. Each certificate for Class G Preferred Stock shall bear the
following legend:
"The shares of Class G Cumulative Preferred Stock
represented by this certificate are subject to restrictions on transfer.
No person may Beneficially Own shares of Class G Cumulative Preferred
Stock in excess of the Ownership Restrictions, as applicable, with certain
further restrictions and exceptions set forth in the Charter (including
the Articles Supplementary setting forth the terms of the Class G
Cumulative Preferred Stock). Any Person that attempts to Beneficially
Own shares of Class G Cumulative Preferred Stock in excess of the
applicable limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed to such terms
in the Charter (including the Articles Supplementary setting forth the
terms of the Class G Cumulative Preferred Stock), as the same may be
amended from time to time, a copy of which, including the restrictions on
transfer, will be sent without charge to each stockholder that so requests.
If the restrictions on transfer are violated (i) the transfer of the
shares of Class G Cumulative Preferred Stock represented hereby will be
void in accordance with the Charter (including the Articles Supplementary
setting forth the terms of the Class G Cumulative Preferred Stock) or (ii)
the shares of Class G Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit of one
or more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article or any
application of any such provision is determined in a final and unappealable
judgment to be void, invalid or unenforceable by any Federal or state court
having jurisdiction over the issues, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
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10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall
be interpreted to preclude the settlement of any transaction entered into
through the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class G Cumulative Preferred Stock set forth in
Article Third hereof shall become Article XVI of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Senior Vice President and Chief Financial
Officer and witnessed by its Secretary on July 13, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL BONDER /s/ TROY D. BUTTS
- ------------------------------ -----------------------------
Joel Bonder Troy D. Butts
Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a
part, hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
/s/ TROY D. BUTTS
-----------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
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ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS H CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has
duly divided and classified 2,300,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class H Cumulative Preferred Stock, par
value $.01 per share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class H Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 2,300,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 498,327,500 shares immediately prior to
the reclassification to 496,027,500 shares immediately after the
reclassification.
THIRD: The terms of the Class H Cumulative Preferred Stock (including
the preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms
or conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class H Cumulative
Preferred Stock, par value $.01 per share (the "Class H Preferred Stock") and
Two Million Three Hundred Thousand (2,300,000) shall be the authorized number
of shares of such Class H Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class H Preferred Stock, the following terms shall
have the meanings indicated:
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"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial
Holder, clause (iii) of this definition, and clause (a) (ii) of the
definition of "Person" shall be disregarded. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class H
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 10.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class H Preferred Stock" shall have the meaning set forth in Section
1 of this Article.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time
to time, as the same may be amended, and any successor thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation, and the Class B Common Stock, $.01 par
value per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such
Class A Common Stock or Class B Common Stock shall be reclassified.
"Dividend Payment Date" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business
Day immediately following such Dividend Payment Date and no interest
shall accrue on such dividend from such date to such Dividend Payment
Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
January 15, April 15, July 15 and October 15 of each year and ending
on and including the day preceding the first day of the next
succeeding Dividend Period, other than the Dividend Period during
which any Class H Preferred Stock shall be redeemed pursuant to
Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class H Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 10.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean August 14, 1998.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including October 14, 1998.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares
of Class H Preferred Stock of the Corporation having an Aggregate
Value not in excess of the excess of (x) 15% of the Aggregate Value of
all Outstanding shares of
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Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class H Preferred Stock that are Beneficially Owned
by the Initial Holder. From the Issue Date, the secretary of the
Corporation, or such other person as shall be designated by the Board
of Directors, shall upon request make available to the
representative(s) of the Initial Holder and the Board of Directors, a
schedule that sets forth the then-current Initial Holder Limit
applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 7 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through
Entity, a number of the Outstanding shares of Class H Preferred Stock
of the Corporation having an Aggregate Value not in excess of the
excess of (x) 15% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class H Preferred Stock that are Beneficially Owned
by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date. The term
"Closing Price," when used with respect to a share of any Equity Stock
and for any date, shall mean the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case, as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or, if such system is no longer in
use, the principal other automated quotations system that may then be
in use or, if the Equity Stock is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Equity Stock selected
by the Board of Directors of the Corporation. The term "Trading Day,"
when used with respect to the Closing Price of a share of any Equity
Stock, shall mean (i) if the Equity Stock is listed or admitted to
trading on the NYSE, a day on which the NYSE is open for the
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transaction of business, (ii) if the Equity Stock is not listed or
admitted to trading on the NYSE but is listed or admitted to trading
on another national securities exchange or automated quotation system,
a day on which the principal national securities exchange or automated
quotation system, as the case may be, on which the Equity Stock is
listed or admitted to trading is open for the transaction of business,
or (iii) if the Equity Stock is not listed or admitted to trading on
any national securities exchange or automated quotation system, any
day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by
law or executive order to close.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone,
at that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class H Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class H Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit as applied to the Initial Holder
and the Look-Through Ownership Limit as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 7 of this Article.
"Person" shall mean (a) for purposes of Section 10 of this Article,
(i) an individual, corporation, partnership, estate, trust (including
a trust qualifying under Section 401(a) or 501(c) of the Code),
association, private foundation within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) also
includes a group as that term is used for purposes of Section 13(d)(3)
of the Exchange Act and (b) for purposes of the remaining
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Sections of this Article, any individual, firm, partnership,
corporation or other entity and shall include any successor (by merger
or otherwise) of such entity.
"Prohibited Transferee" has the meaning set forth in Section 10.3(A)
of this Article.
"Redemption Date" shall have the meaning set forth in paragraph (a) of
Section 5 of this Article.
"REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 7 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other
distribution by the Board of Directors, the allocation of funds to be
so paid on any series or class of capital stock of the Corporation;
provided, however, that if any funds for any class or series of Junior
Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the
Class H Preferred Stock shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other
similar agent.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of a share of Class H Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of
Class H Preferred Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or
exchangeable for Class H Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class H Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class H Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class H Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 10.3 of this
Article.
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"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 8
of this Article.
3. DIVIDENDS.
(a) The holders of Class H Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors out of
funds legally available for that purpose, cumulative dividends payable in cash
in an amount per share of Class H Preferred Stock equal to $2.375 per annum
(equivalent to 9 1/2% per annum of the per share Liquidation Preference (as
hereinafter defined)). Such dividends shall be cumulative from the Issue Date,
whether or not in any Dividend Period or Periods such dividends shall be
declared or there shall be funds of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly in arrears on each
Dividend Payment Date, commencing on October 15, 1998. Each such dividend
shall be payable in arrears to the holders of record of the Class H Preferred
Stock, as they appear on the stock records of the Corporation at the close of
business on the January 1, April 1, July 1 or October 1, as the case may be,
immediately preceding such Dividend Payment Date. Accumulated, accrued and
unpaid dividends for any past Dividend Periods may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to holders of
record on such date, which date shall not precede by more than 45 days the
payment date thereof, as may be fixed by the Board of Directors.
(b) Any dividend payable on the Class H Preferred Stock
for any partial dividend period shall be computed ratably on the basis of
twelve 30-day months and a 360-day year. Holders of Class H Preferred Stock
shall not be entitled to any dividends, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided, on the Class
H Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Class H Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class H Preferred
Stock are outstanding, except as described in the immediately following
sentence, no dividends shall be declared or paid or set apart for payment by
the Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Parity Stock unless, in each case, dividends equal to the full
amount of accumulated, accrued and unpaid dividends on all outstanding shares
of Class H Preferred Stock have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof has been or
contemporaneously is set apart for payment of such dividends on the Class H
Preferred Stock for all Dividend Periods ending on or prior to the date such
dividend
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or distribution is declared, paid, set apart for payment or made, as the case
may be, with respect to such shares of Parity Stock. When dividends are not
paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class H Preferred Stock and all
dividends declared upon any shares of Parity Stock shall be declared ratably in
proportion to the respective amounts of dividends accumulated, accrued and
unpaid on the Class H Preferred Stock and accumulated, accrued and unpaid on
such Parity Stock.
(d) So long as any of the shares of Class H Preferred
Stock are outstanding, no dividends (other than dividends or distributions paid
in shares of, or options, warrants or rights to subscribe for or purchase
shares of, Junior Stock) shall be declared or paid or set apart for payment by
the Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption
of any shares of any such stock), directly or indirectly, by the Corporation
(except by conversion into or exchange for shares of, or options, warrants or
rights to subscribe for or purchase shares of, Junior Stock), nor shall any
other cash or other property otherwise be paid or distributed to or for the
benefit of any holder of shares of Junior Stock in respect thereof, directly or
indirectly, by the Corporation unless, in each case, dividends equal to the
full amount of all accumulated, accrued and unpaid dividends on all outstanding
shares of Class H Preferred Stock have been declared and paid, or such
dividends have been declared and a sum sufficient for the payment thereof has
been set apart for such payment, on all outstanding shares of Class H Preferred
Stock for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, redemption, purchase or other acquisition
is necessary in order to maintain the continued qualification of the
Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, before any
payment or distribution by
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the Corporation (whether of capital, surplus or otherwise) shall be made to or
set apart for the holders of Junior Stock, the holders of shares of Class H
Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per
share of Class H Preferred Stock (the "Liquidation Preference"), plus an amount
equal to all dividends (whether or not earned or declared) accumulated, accrued
and unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class H Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Class H
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series
of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class H Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that
would be payable on such Class H Preferred Stock and any such other Parity
Stock if all amounts payable thereon were paid in full. For the purposes of
this Section 4, (i) a consolidation or merger of the Corporation with one or
more corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed
to be a liquidation, dissolution or winding up, voluntary or involuntary, of
the Corporation.
(b) Upon any liquidation, dissolution or winding up of
the Corporation, after payment shall have been made in full to the holders of
Class H Preferred Stock and any Parity Stock, as provided in this Section 4,
any other series or class or classes of Junior Stock shall, subject to the
respective terms thereof, be entitled to receive any and all assets remaining
to be paid or distributed, and the holders of the Class H Preferred Stock and
any Parity Stock shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class H Preferred Stock shall not be
redeemable by the Corporation prior to August 14, 2003, except as set forth in
Section 10.2 of this Article. On and after August 14, 2003, the Corporation,
at its option, may redeem shares of Class H Preferred Stock, in whole or from
time to time in part, at a redemption price payable in cash equal to 100% of
the Liquidation Preference thereof, plus all accumulated, accrued and unpaid
dividends to the date fixed for redemption (the "Redemption Date"); provided,
however, that in the event of a redemption of shares of Class H Preferred
Stock, if the Redemption Date occurs after a dividend record date and on or
prior to the related Dividend Payment Date, the dividend payable on such
Dividend Payment Date in respect of such shares called for redemption shall be
payable on such Dividend Payment Date to the holders of record at the close of
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business on such dividend record date, and shall not be payable as part of the
redemption price for such shares. In connection with any redemption pursuant
to this Section 5(a), the redemption price of the Class H Preferred Stock
(other than any portion thereof consisting of accumulated, accrued and unpaid
dividends) shall be payable solely with the proceeds from the sale by the
Corporation or the Operating Partnership, of other capital shares of the
Corporation or the Operating Partnership (whether or not such sale occurs
concurrently with such redemption). For purposes of the preceding sentence,
"capital shares" means any common stock, preferred stock, depositary shares,
partnership or other interests, participations or other ownership interests
(however designated) and any rights (other than debt securities convertible
into or exchangeable at the option of the holder for equity securities (unless
and to the extent such debt securities are subsequently converted into capital
shares)) or options to purchase any of the foregoing of or in the Corporation
or the Operating Partnership.
(b) The Redemption Date shall be selected by the
Corporation, shall be specified in the notice of redemption and shall be not
less than 30 days nor more than 60 days after the date notice of redemption is
sent by the Corporation.
(c) If full cumulative dividends on all outstanding shares
of Class H Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class H Preferred Stock may be redeemed unless
all outstanding shares of Class H Preferred Stock are simultaneously redeemed
and neither the Corporation nor any affiliate of the Corporation may purchase
or acquire shares of Class H Preferred Stock, otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of shares of
Class H Preferred Stock.
(d) If the Corporation shall redeem shares of Class H
Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such
redemption shall be given to each holder of record of the shares to be
redeemed. Such notice shall be provided by first class mail, postage prepaid,
at such holder's address as the same appears on the stock records of the
Corporation. Neither the failure to mail any notice required by this paragraph
(d), nor any defect therein or in the mailing thereof to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which was mailed
in the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such notice shall state, as appropriate: (1) the Redemption Date; (2) the
number of shares of Class H Preferred Stock to be redeemed and, if fewer than
all such shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) the place or places at which
certificates for such shares are to be surrendered for cash; and (4) the
redemption price payable on such Redemption Date, including, without
limitation, a statement as to whether or not accumulated, accrued and unpaid
dividends will be (x) payable as part of the redemption price, or (y) payable
on the next Dividend Payment Date to the record holder at the close of business
on the relevant record date as described in the next succeeding sentence.
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Notice having been mailed as aforesaid, from and after the Redemption Date
(unless the Corporation shall fail to make available the amount of cash
necessary to effect such redemption), (i) dividends on the shares of Class H
Preferred Stock so called for redemption shall cease to accumulate or accrue on
the shares of Class H Preferred Stock called for redemption, (ii) said shares
shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class H Preferred Stock of the Corporation shall
cease except the rights to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required; provided, however, that if the Redemption Date for any shares
of Class H Preferred Stock occurs after any dividend record date and on or
prior to the related Dividend Payment Date, the full dividend payable on such
Dividend Payment Date in respect of such shares of Class H Preferred Stock
called for redemption shall be payable on such Dividend Payment Date to the
holders of record of such shares at the close of business on the corresponding
dividend record date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the redemption price in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the
applicable Redemption Date, the Corporation shall irrevocably deposit in trust
with a bank or trust company (which may not be an affiliate of the Corporation)
that has, or is an affiliate of a bank or trust company that has, a capital and
surplus of at least $50,000,000, such amount of cash as is necessary for such
redemption plus, if such Redemption Date occurs after any dividend record date
and on or prior to the related Dividend Payment Date, such amount of cash as is
necessary to pay the dividend payable on such Dividend Payment Date in respect
of such shares of Class H Preferred Stock called for redemption, with
irrevocable instructions that such cash be applied to the redemption of the
shares of Class H Preferred Stock so called for redemption and, if applicable,
the payment of such dividend. No interest shall accrue for the benefit of the
holders of shares of Class H Preferred Stock to be redeemed on any cash so set
aside by the Corporation. Subject to applicable escheat laws, any such cash
unclaimed at the end of two years from the Redemption Date shall revert to the
general funds of the Corporation, after which reversion the holders of shares
of Class H Preferred Stock so called for redemption shall look only to the
general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class H Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) for which such shares have been
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class H Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class H
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class H Preferred Stock held of record by each holder
of such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If
fewer than all the shares of Class H Preferred Stock represented by any
certificate are redeemed,
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then a new certificate representing the unredeemed shares shall be issued
without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class H Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class H Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Class H Preferred Stock, as to
the payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class H Preferred Stock ("Senior Stock");
(b) on a parity with the Class H Preferred Stock, as to
the payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class H Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, or Class G Cumulative Preferred Stock of
the Corporation, or (ii) the holders of such class of stock or series and the
Class H Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority of one over the other
(the capital stock referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class H Preferred Stock, as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, if (i) such capital stock or series shall be Common
Stock or (ii) the holders of Class H Preferred Stock shall be entitled to
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
shares of such class or series (the capital stock referred to in clauses (i)
and (ii) of this paragraph being hereinafter referred to, collectively, as
"Junior Stock").
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8. VOTING.
(a) If and whenever six quarterly dividends (whether or
not consecutive) payable on the Class H Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of similar types of provisions with respect to shares of Parity Stock of
any other class or series which is entitled to similar voting rights (the
"Voting Preferred Stock")) and the holders of shares of Class H Preferred
Stock, together with the holders of shares of all other Voting Preferred Stock
then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors
to serve on the Board of Directors at any annual meeting of stockholders or
special meeting held in place thereof, or at a special meeting of the holders
of the Class H Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever all arrears in dividends on the Class H
Preferred Stock and the Voting Preferred Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been declared and paid, or declared and set apart for payment, then the right
of the holders of the Class H Preferred Stock and the Voting Preferred Stock to
elect such additional two directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearages), and the terms of office of all persons elected as directors
by the holders of the Class H Preferred Stock and the Voting Preferred Stock
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class H Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class H Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Class H Preferred Stock and of the
Voting Preferred Stock for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that
provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class H Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors elected
at any such special meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu thereof if such office shall
not have previously terminated as above provided. If any vacancy shall occur
among the directors elected by the holders of the Class H Preferred Stock and
the Voting Preferred Stock, a successor shall be elected by the Board of
Directors, upon the nomination of the then-remaining director elected by the
holders of the Class H Preferred Stock and the Voting Preferred Stock or the
successor of such remaining director, to serve until the next annual meeting of
the stockholders or special meeting held in place thereof if such office shall
not have previously terminated as provided above.
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(b) So long as any shares of Class H Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66- 2/3% of the votes entitled to be cast by the holders of the Class H
Preferred Stock voting as a single class with the holders of all other classes
or series of Parity Stock entitled to vote on such matters, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of
the provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of
the Class H Preferred Stock; provided, however, that the amendment of the
provisions of the Charter so as to authorize or create, or to increase the
authorized amount of, or issue any Junior Stock or any shares of any class of
Parity Stock shall not be deemed to materially adversely affect the voting
powers, rights or preferences of the holders of Class H Preferred Stock; or
(ii) The authorization, creation of, increase in
the authorized amount of, or issuance of any shares of any class or series of
Senior Stock or any security convertible into shares of any class or series of
Senior Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class H Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration
or repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class H Preferred Stock
at the time outstanding to the extent such redemption is authorized by Section
5 of this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class H Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class
H Preferred Stock as a single class on any matter, then the Class H Preferred
Stock and such other class or series shall have with respect to such matters
one quarter of one (.25) vote per $25 of stated liquidation preference. Except
as otherwise required by applicable law or as set forth herein or in the
Charter, the Class H Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers other than as
set forth herein, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class H Preferred Stock as the true and lawful owner
thereof for all
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purposes, and neither the Corporation nor the Transfer Agent shall be affected
by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided
in Section 10.8, from and after the Issue Date, no Person (other than the
Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class
H Preferred Stock in excess of the Ownership Limit, the Initial Holder shall
not Beneficially Own shares of Class H Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class
H Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as
provided in Section 10.8, from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Person (other than the Initial Holder or a
Look-Through Entity) Beneficially Owning shares of Class H Preferred Stock in
excess of the Ownership Limit shall be void ab initio as to the Transfer of
such shares of Class H Preferred Stock that would be otherwise Beneficially
Owned by such Person in excess of the Ownership Limit, and the intended
transferee shall acquire no rights in such shares of Class H Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 10.8, from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in the Initial Holder Beneficially Owning shares of
Class H Preferred Stock in excess of the Initial Holder Limit shall be void ab
initio as to the Transfer of such shares of Class H Preferred Stock that would
be otherwise Beneficially Owned by the Initial Holder in excess of the Initial
Holder limit, and the Initial Holder shall acquire no rights in such shares of
Class H Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 10.8 from and after the Issue Date (and subject
to Section 10.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Look-Through Entity Beneficially Owning shares
of Class H Preferred Stock in excess of the Look-Through Ownership limit shall
be void ab initio as to the Transfer of such shares of Class H Preferred Stock
that would be otherwise Beneficially Owned by such Look-Through Entity in
excess of the Look- Through Ownership Limit and such Look-Through Entity shall
acquire no rights in such shares of Class H Preferred Stock.
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(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant
that is described in Section 856(d)(2)(B) of the Code if the income derived by
the Corporation from such tenant would cause the Corporation to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code) shall be
void ab initio as to the Transfer of shares of Class H Preferred Stock that
would cause the Corporation (i) to be "closely held" within the meaning of
Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the
case may be, and the intended transferee shall acquire no rights in such shares
of Class H Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class H Preferred Stock that is null and void under Sections 10.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class H Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation
being "closely held" within the meaning of Section 856(h) of the Code or (iii)
the Corporation otherwise failing to qualify as a REIT, shall not adversely
affect the validity of the Transfer of any other share of Class H Preferred
Stock in the same or any other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other
event has taken place in violation of Section 10.1 of this Article or that a
Person intends to acquire or has attempted to acquire Beneficial Ownership of
any shares of Class H Preferred Stock in violation of Section 10.1 of this
Article (whether or not such violation is intended), the Board of Directors or
a committee thereof shall be empowered to take any action as it deems advisable
to refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such Transfer or
other event on the books of the Corporation, causing the Corporation to redeem
such shares at the then current Market Price and upon such terms and conditions
as may be specified by the Board of Directors in its sole discretion
(including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of
any distributions received in respect of shares of Class H Preferred Stock
acquired in violation of Section 10.1 of this Article or instituting
proceedings to enjoin such Transfer or to rescind such Transfer or attempted
Transfer; provided, however, that any Transfers or attempted Transfers (or, in
the case of events other than a Transfer, Beneficial Ownership) in violation of
Section 10.1 of this Article, regardless of any action (or non-action) by the
Board of Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 10.3 of this Article;
provided, further, that the provisions of this Section 10.2 shall be subject to
the provisions of Section 10.12 of this Article; provided, further, that
neither the Board of Directors nor any committee thereof may
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exercise such authority in a manner that interferes with any ownership or
transfer of Class H Preferred Stock that is expressly authorized pursuant to
Section 10.8(C) of this Article.
10.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is
the result of transactions entered into through the facilities of the NYSE or
other securities exchange or an automated inter-dealer quotation system) or
other change in the capital structure of the Corporation (including, but not
limited to, any redemption of Equity Stock) or other event (including, but not
limited to, any acquisition of any share of Equity Stock) such that (a) any
Person (other than the Initial Holder or a Look-Through Entity) would
Beneficially Own shares of Class H Preferred Stock in excess of the Ownership
Limit, or (b) the Initial Holder would Beneficially Own shares of Class H
Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that
is a Look-Through Entity would Beneficially Own shares of Class H Preferred
Stock in excess of the Look-Through Ownership Limit (in any such event, the
Person, Initial Holder or Look-Through Entity that would Beneficially Own
shares of Class H Preferred Stock in excess of the Ownership Limit, the Initial
Holder Limit or the Look-Through Entity Limit, respectively, is referred to as
a "Prohibited Transferee"), then, except as otherwise provided in Section 10.8
of this Article, such shares of Class H Preferred Stock in excess of the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as the case may be, (rounded up to the nearest whole share) shall be
automatically transferred to a Trustee in his capacity as trustee of a Trust
for the exclusive benefit of one or more Charitable Beneficiaries. Such
transfer to the Trustee shall be deemed to be effective as of the close of
business on the Business Day prior to the Excess Transfer, change in capital
structure or another event giving rise to a potential violation of the
Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership
Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed
by the Corporation and shall be a Person unaffiliated with either the
Corporation or any Prohibited Transferee. The Trustee may be an individual or
a bank or trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class H
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10.3(E), the Prohibited Transferee shall have no rights in the Class H
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
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(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class H
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class H Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class H Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class H Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure
or other event giving rise to a potential violation of the Ownership Limit,
Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to
have given an irrevocable proxy to the Trustee to vote the shares of Class H
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the
Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 10.3(E) or any application thereof is determined in a final judgment to
be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class H Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class H Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE.
Shares of Class H Preferred Stock transferred to the Trustee shall be deemed to
have been offered for sale to the Corporation, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift,
the Market Price at the time of such devise or gift) and (ii) the Market Price
on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of
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90 days after the later of (i) the date of the Excess Transfer or other event
resulting in a transfer to the Trust and (ii) the date that the Board of
Directors determines in good faith that an Excess Transfer or other event
occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class H Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class H Preferred Stock in violation of Section
10.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 10.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or attempted
Transfer or other event on the Corporation's status as a REIT. Failure to give
such notice shall not limit the rights and remedies of the Board of Directors
provided herein in any way.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the
Issue Date certain record and Beneficial Owners and transferees of shares of
Class H Preferred Stock will be required to provide certain information as set
out below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class H Preferred Stock shall, within 30 days after January 1 of each
year, give written notice to the Corporation stating the name and address of
such record or Beneficial Owner, the number of shares of Class H Preferred
Stock Beneficially Owned, and a full description of how such shares are held.
Each such record or Beneficial Owner of Class H Preferred Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class H
Preferred Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (i) comply with the provisions of the Code
regarding the qualification of the Corporation as a REIT under the Code and
(ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class H Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to
obtain the written notice described in this Section 10.5 from the Beneficial
Owner.
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(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class H Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class H
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
shall provide such information as the Corporation, in its sole discretion, may
request in order to determine the Corporation's status as a REIT, to comply
with the requirements of any taxing authority or other governmental agency, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall
provide a statement or affidavit to the Corporation setting forth the number of
shares of Class H Preferred Stock already Beneficially Owned by such
stockholder or proposed transferee and any related persons specified, which
statement or affidavit shall be in the form prescribed by the Corporation for
that purpose.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 10.12 of
this Article) (i) to protect the Corporation and the interests of its
stockholders in the preservation of the Corporation's status as a REIT and (ii)
to insure compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of
any of the provisions of Section 10 of this Article, or in the case of an
ambiguity in any definition contained in Section 10 of this Article, the Board
of Directors shall have the power to determine the application of the
provisions of this Article with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
10.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of
Section 542(a) of the Code and is a corporation, partnership, estate or trust.
In connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person and may impose such other
conditions as the Board of Directors deems necessary, in its sole discretion,
to determine the effect, if any, of the proposed Transfer on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class H Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 10.1 of this Article and
the pledgee shall not be subject to the
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Ownership Limit with respect to the Class H Preferred Stock so pledged to it
either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold
allotment of Class H Preferred Stock) following the purchase of Class H
Preferred Stock by an underwriter that (i) is a corporation, partnership or
other legal entity and (ii) participates in an offering of the Class H
Preferred Stock, such underwriter shall not be subject to the Ownership Limit
with respect to the Class H Preferred Stock purchased by it as a part of or in
connection with such offering and with respect to any Class H Preferred Stock
purchased in connection with market making activities.
10.9 LEGEND. Each certificate for Class H Preferred Stock shall
bear substantially the following legend:
"The shares of Class H Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class H Cumulative
Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class H Cumulative Preferred Stock). Any Person that
attempts to Beneficially Own shares of Class H Cumulative Preferred
Stock in excess of the applicable limitation must immediately notify
the Corporation. All capitalized terms in this legend have the
meanings ascribed to such terms in the Charter (including the Articles
Supplementary setting forth the terms of the Class H Cumulative
Preferred Stock), as the same may be amended from time to time, a copy
of which, including the restrictions on transfer, will be sent without
charge to each stockholder that so requests. If the restrictions on
transfer are violated (i) the transfer of the shares of Class H
Cumulative Preferred Stock represented hereby will be void in
accordance with the Charter (including the Articles Supplementary
setting forth the terms of the Class H Cumulative Preferred Stock) or
(ii) the shares of Class H Cumulative Preferred Stock represented
hereby will automatically be transferred to a Trustee of a Trust for
the benefit of one or more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article or any
application of any such provision is determined in a final and unappealable
judgment to be void, invalid or unenforceable by any Federal or state court
having jurisdiction over the issues, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
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10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall
be interpreted to preclude the settlement of any transaction entered into
through the facilities of the NYSE or other securities exchange or an automated
inter- dealer quotation system.
FOURTH: The terms of the Class H Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XVII of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on August 12,
1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ KATHLEEN HARVEY /s/ TROY D. BUTTS
- ---------------------------------- -------------------------------------
Kathleen Harvey Troy D. Butts
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a
part, hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
/s/ TROY D. BUTTS
-------------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
<PAGE> 146
ARTICLES OF MERGER
MERGING
INSIGNIA FINANCIAL GROUP, INC.
(A CORPORATION OF THE STATE OF DELAWARE)
WITH AND INTO
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A CORPORATION OF THE STATE OF MARYLAND)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a corporation organized and
existing under the laws of the State of Maryland ("AIMCO"), and INSIGNIA
FINANCIAL GROUP, INC., a corporation organized and existing under the laws of
the State of Delaware ("IFG"), do hereby certify to the State Department of
Assessments and Taxation of Maryland (the "Department") as follows:
FIRST: AIMCO and IFG agree that IFG shall be merged with and into AIMCO and
AIMCO shall be the surviving corporation (the "Merger"). The terms and
conditions of the Merger and the mode of carrying the same into effect are as
hereinafter set forth.
SECOND: IFG was incorporated under the Delaware General Corporation Law
("DGCL") on July 20, 1990. IFG qualified to do business in the State of Maryland
on May 11, 1998.
THIRD: The principal office of each of AIMCO and IFG in the State of
Maryland is, and the principal office of AIMCO immediately following the
effective time of the Merger will be, located in the City of Baltimore.
FOURTH: IFG owns no interest in land located in the State of Maryland.
FIFTH: The charter of AIMCO (the "Charter") will be amended as a result of
the Merger as set forth in Article NINTH below, and the Charter, as amended,
shall continue in full force and effect until duly amended in accordance with
its terms and applicable law.
SIXTH: These Articles of Merger, which may be executed in counterparts,
shall become effective immediately upon the acceptance thereof for record by the
Department (the "Effective Time").
SEVENTH: The total number of shares of all classes of stock which each
corporation party to these Articles of Merger has the authority to issue, and
the number of shares of each class, are as follows:
(a) IFG
<PAGE> 147
The total number of shares of all classes of stock which IFG has authority
to issue is One Hundred Three Million (103,000,000) shares (the "IFG Stock"),
consisting of 100,000,000 shares of Class A Common Stock, par value $.01 per
share (the "IFG Common Stock"); 2,000,000 shares of Class B Common Stock, par
value $.01 per share; and 1,000,000 shares of preferred stock, par value $.01
per share, of which 15,000 shares have been designated as 7.5% Step- Up Rate
Convertible Preferred Stock. The aggregate par value of all classes of stock of
IFG having par value is One Million Thirty Thousand Dollars ($1,030,000).
(b) AIMCO
The total number of shares of all classes of stock which AIMCO has
authority to issue is Five Hundred Ten Million Seven Hundred Fifty Thousand
(510,750,000) shares, consisting of 486,027,500 shares of Class A Common Stock,
par value $.01 per share (the "AIMCO Common Stock"); 262,500 shares of Class B
Common Stock, par value $.01 per share; and 24,460,000 shares of Preferred
Stock, par value $.01 per share, of which 750,000 shares have been designated as
Class B Cumulative Convertible Preferred Stock, par value $.01 per share;
2,760,000 shares have been designated as Class C Cumulative Preferred Stock, par
value $.01 per share; 4,600,000 shares have been designated as Class D
Cumulative Preferred Stock, par value $.01 per share; 10,000,000 shares have
been designated as Class E Cumulative Convertible Preferred Stock, par value
$.01 per share (the "Class E Stock"); 4,050,000 shares have been designated as
Class G Cumulative Preferred Stock, par value $.01 per share; and 2,300,000
shares have been designated as Class H Cumulative Preferred Stock, par value
$.01 per share. The aggregate par value of all classes of stock of AIMCO having
par value is Five Million One Hundred Seven Thousand Five Hundred Dollars
($5,107,500).
EIGHTH: At the Effective Time, IFG shall be merged with and into AIMCO, and
thereupon, AIMCO shall possess any and all purposes and powers of IFG, and all
leases, licenses, property, rights, privileges and powers and assets of whatever
nature or description of IFG shall be transferred to, vest in and devolve on
AIMCO, without further act or deed, subject to all of the debts and obligations
of IFG.
NINTH: At the Effective Time, the Charter shall be amended by inserting the
following Article after Article XIX in the Charter:
ARTICLE XIX
In accordance with Section 15.4 of the Indenture, dated as of November 1,
1996, by and between Insignia Financial Group, Inc. ("Insignia"), a Delaware
corporation (as Issuer) and First Union National Bank of South Carolina (as
Trustee) (the "Indenture"), upon effectiveness of the Merger (as defined in the
Amended and Restated Agreement and Plan of Merger, dated as May 26, 1998, by and
among the Corporation, Insignia, Insignia/ESG Holdings, Inc., a Delaware
corporation, and AIMCO Properties, L.P., a Delaware limited partnership (the
"Merger Agreement")), the 6 1/2 % Convertible Subordinated Debentures due 2016
issued by Insignia (the "Convertible Debentures") will become convertible into
the same consideration received by holders of Class A Common Stock, par value
$.01 per share, of Insignia, pursuant to the Merger (i.e., shares of Class E
Cumulative Preferred Stock, par value $.01 per share, of AIMCO (the "AIMCO Class
E Preferred Stock"), (or shares of Class A Common Stock, par value $.01 per
share, of the Corporation
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(the "AIMCO Common Stock"), if such Convertible Debentures are converted after
the AIMCO Class E Preferred Stock has been converted into AIMCO Common Stock),
the Cash Amount (as defined in the Merger Agreement), if any, and cash in lieu
of fractional shares). Furthermore, the consideration to be received by holders
of Convertible Debentures who convert such Convertible Debentures subsequent to
the effectiveness of the Merger shall be adjusted as required by Article XV of
the Indenture.
TENTH: The issued and outstanding securities of IFG upon the Effective
Time shall be converted as follows:
(a) Subject to the provisions of Paragraph (f) below, at the Effective
Time each share of IFG Common Stock issued and outstanding immediately prior to
the Effective Time, other than shares of IFG Common Stock beneficially owned by
IFG, AIMCO or any wholly owned subsidiary of AIMCO or IFG, and shares of IFG
Common Stock owned by stockholders who have properly demanded appraisal rights
under Section 262 of the Delaware General Corporation Law ("Section 262") shall
be converted into and become the right to receive .262 shares of Class E Stock
(the "Stock Consideration"), and no ($0) Dollars (the "Cash Amount") (together,
the "Merger Consideration"), all as further described in that certain Amended
and Restated Agreement and Plan of Merger dated as of May 26, 1998, by and among
AIMCO, IFG, Insignia/ESG Holdings, Inc., a Delaware corporation, and AIMCO
Properties, L.P., a Delaware Limited Partnership (the "Merger Agreement").
(b) At the Effective Time, each 6 1/2 % Convertible Subordinated
Debenture (the "Convertible Debentures") issued by IFG pursuant to that certain
Indenture dated November 1, 1996 (the "Indenture"), by and between IFG (as
Issuer) and First Union National Bank of South Carolina (as Trustee) convertible
into shares of IFG Common Stock will become convertible, with such adjustments
as required by Article XV of the Indenture, into the Merger Consideration as
provided for and calculated pursuant to Paragraph (a) of this Article TENTH, as
further set forth in the Merger Agreement.
(c) At the Effective Time, each outstanding security issued by IFG or
any subsidiary thereof (excluding stock options issued under the Insignia 1992
Stock Incentive Plan, as amended, or the Insignia 1995 Non-Employee Director
Stock Option Plan (collectively, the "IFG Stock Plan") and the 6 1/2 % Trust
Convertible Preferred Securities issued by Insignia Financing I as described in
its prospectus dated January 22, 1997 (the "TOPRs")) which is exercisable,
convertible or exchangeable for or into a share or shares of IFG Common Stock
(the "IFG Convertible Securities"), shall be assumed by AIMCO and exercisable,
convertible or exchangeable, with such adjustments as provided by the terms of
each such security, into the Merger Consideration as provided for and calculated
pursuant to Paragraph (a) of this Article TENTH, as further set forth in the
Merger Agreement.
(d) At the Effective Time, each then outstanding, unexercised option
to purchase a share of IFG Common Stock, whether vested or unvested, granted
under the IFG Stock Plan shall be assumed by AIMCO and shall be converted into
an option to purchase .262 shares of AIMCO Common Stock, as further set forth
in the Merger Agreement.
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(e) At the Effective Time, each unvested restricted share of IFG
Common Stock awarded under the IFG Stock Plan shall entitle the holder thereof
to receive the Cash Amount and shall be assumed by AIMCO and shall be converted
into .262 restricted shares of AIMCO Common Stock, as further set forth in the
Merger Agreement.
(f) At the Effective Time, each outstanding certificate or
certificates which prior thereto represented shares of IFG Common Stock (other
than a certificate or certificates representing (i) shares of IFG Common Stock
owned by IFG or AIMCO directly or through wholly-owned subsidiaries and (ii)
shares of IFG Common Stock owned by stockholders who have properly demanded
appraisal rights under Section 262 (an "IFG Certificate") shall represent the
right to receive in exchange therefor, upon surrender of the same, certificates
representing that number of shares of Stock Consideration, and the Cash Amount,
if any, as provided for in and calculated pursuant to this Article TENTH,
together with the cash payable in respect of fractional shares or fractional
interests of the Stock Consideration as provided for and calculated pursuant to
Paragraph (g) of this Article TENTH. Until so surrendered, each IFG Certificate
outstanding prior to the Effective Time shall represent the ownership of the
Merger Consideration, which the holder of the shares of IFG Common Stock
represented by such IFG Certificates is entitled to receive in connection with
the Merger, except that, anything herein to the contrary notwithstanding, no
dividends or other distributions on the Merger Consideration shall be paid with
respect to any shares of IFG Common Stock represented by a IFG Certificate until
such IFG Certificate is surrendered for exchange as provided herein. Following
surrender of any such IFG Certificate, there shall be paid to the holder of the
certificates representing whole shares of Stock Consideration issued in
consideration therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of Stock
Consideration, less the amount of any withholding taxes which may be required
thereon, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of the Stock Consideration, less the amount of any withholding
taxes which may be required thereon.
(g) Notwithstanding any other provision hereof, no fractional shares
of Stock Consideration shall be issued in connection with the Merger. Instead,
each holder of an outstanding security of IFG giving rise to a fractional
interest in shares of Stock Consideration, upon the conversion or exchange of
such shares in connection with the Merger shall, at the time of surrender of its
IFG Certificate(s) in respect of such shares, be paid an amount in cash (without
interest) equal to the aggregate of the daily average (computed based on the sum
of the high and low sales prices of AIMCO Common Stock (as reported on the NYSE
Composite Transactions reporting System) as published in the Wall Street Journal
or, if not published therein, in another authoritative source, divided by two)
on each of the twenty consecutive NYSE trading days ending on the fifth NYSE
trading day immediately preceding the Effective Time, divided by twenty,
multiplied by the fraction of such share to which such holder would otherwise be
entitled. No such holder shall be entitled to dividends or other distributions,
voting rights or any other shareholder rights in respect of any fractional share
or interest.
(h) As of the Effective Time, all shares of capital stock of IFG shall
be canceled and retired and shall cease to exist and no Merger Consideration or
other consideration shall be issued or delivered in exchange therefor except as
set forth in this Article TENTH.
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ELEVENTH: IFG Certificates shall be exchanged for certificates representing
the Merger Consideration, and cash in lieu of fractional interests in shares of
Stock Consideration, as follows:
(a) As of the Effective Time, AIMCO shall deposit or shall cause to be
deposited with Bank Boston, N.A. (the "Exchange Agent"), for the benefit of the
holders of shares of IFG Common Stock for exchange in accordance with these
Articles of Merger, certificates representing the Stock Consideration, the Cash
Amount, if any, and cash in lieu of fractional interests in shares of Stock
Consideration, to be issued or delivered in connection with the Merger and in
exchange for outstanding shares of IFG Common Stock.
(b) Promptly after the Effective Time, AIMCO shall cause the Exchange
Agent to mail to each holder of record of IFG Certificate(s) (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the IFG Certificate(s) shall pass, only upon delivery of the
IFG Certificate(s) to the Exchange Agent and (ii) instructions for use in
effecting the surrender of the IFG Certificate(s) in exchange for Merger
Consideration, and cash in lieu of fractional interests in shares of Stock
Consideration. Upon surrender of a IFG Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the holder of such
certificate shall be entitled to receive in exchange therefor, and AIMCO will
cause the Exchange Agent to deliver to such holder, certificates representing
the number of whole shares of Stock Consideration into which the IFG Common
Stock is convertible in the Merger and a check representing the Cash Amount, if
any, and the amount of cash in lieu of fractional interests in shares of Stock
Consideration, if any, and unpaid dividends and distributions, if any, which
such holder has the right to receive in respect of the IFG Certificate(s)
surrendered, after giving effect to any required withholding tax, and the IFG
Certificate(s) so surrendered shall forthwith be canceled. No interest will be
paid or accrued on the Cash Amount, cash in lieu of fractional shares of Merger
Consideration, or unpaid dividends and distributions, if any, payable to the
holders of the IFG Certificate(s). In the event of a transfer of ownership of
IFG Common Stock which is not registered in the transfer records of IFG,
certificates representing the proper number of shares of Stock Consideration,
together with a check for the Cash Amount, and cash to be paid in lieu of
fractional interests in shares of Stock Consideration, may be issued to such
transferee if the IFG Certificate is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
together with evidence that any applicable stock transfer taxes have been paid.
(c) At and after the Effective Time, there shall be no transfers on
the stock transfer books of IFG of IFG Common Stock which was outstanding
immediately prior to the Effective Time. If, after the Effective Time, IFG
Certificate(s) are presented to AIMCO, they shall be canceled and exchanged for
certificates for whole shares of Stock Consideration, the Cash Amount and cash
in lieu of fractional interests in shares of Stock Consideration, if any, and
unpaid dividends and distributions deliverable in respect thereof, if any, in
accordance with the procedures set forth in the Agreement of Merger and these
Articles of Merger.
(d) Any portion of the Merger Consideration held by the Exchange Agent
(together with any Cash Amount or cash in lieu of fractional interests in shares
of Stock Consideration and the proceeds of any investments thereof) that remains
unclaimed by the former holders of securities of IFG one year after the
Effective Time shall be delivered to AIMCO. Any
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former holders of securities of IFG who have not theretofore complied with the
provisions hereof and Article 2 of the Merger Agreement shall thereafter look to
AIMCO for payment of their shares or receipts constituting the Merger
Consideration, cash in lieu of fractional interests in shares of Stock
Consideration and unpaid dividends and distributions on the Merger Consideration
deliverable in respect of each share of IFG Common Stock which such stockholder
holds, as determined pursuant to Article 2 of the Merger Agreement and these
Articles of Merger, in each case, without any interest thereon.
(e) None of AIMCO, IFG, the Exchange Agent or any other person shall
be liable to any former holder of securities of IFG for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) In the event any IFG Certificate shall have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
such to be lost, stolen or destroyed, and if required by AIMCO, the posting by
such person of a bond in such reasonable amount as AIMCO may direct as indemnity
against any claim that may be made against it with respect to such IFG
Certificate, the Exchange Agent or AIMCO will deliver in exchange for such lost,
stolen or destroyed certificate, the Merger Consideration and cash in lieu of
fractional interests in shares of Stock Consideration, and unpaid dividends and
distributions on shares of the Merger Consideration as provided in the Agreement
of Merger and these Articles of Merger, deliverable in respect thereof pursuant
hereto.
TWELFTH: The terms and conditions of the transaction described in these
Articles of Merger were duly advised, authorized and approved by IFG in the
manner and by the vote required by the laws of the State of Delaware and the
charter and bylaws of IFG, as follows:
(a) The Board of Directors of IFG, by vote of the members of the Board
of Directors thereof, at a meeting duly called and held, adopted a resolution
declaring that the terms and conditions of the Merger described herein were
advisable and directing that the proposed transaction be submitted for
consideration by the stockholders of IFG.
(b) The stockholders of IFG entitled to vote on the proposed Merger,
at a meeting duly called and held, adopted a resolution approving the Merger, in
all respects by the vote required by and in the manner prescribed under the DGCL
and the charter and bylaws of IFG.
The terms and conditions of the Merger were duly authorized and approved by
AIMCO in the manner and by the vote required by the laws of the State of
Maryland and the Charter and bylaws of AIMCO, as follows:
(a) The Board of Directors of AIMCO, by vote of the members of the
Board of Directors thereof, at a meeting duly called and held, adopted a
resolution declaring that the terms and
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conditions of the Merger described herein were advisable and directing that the
proposed Merger be submitted for consideration by the stockholders of AIMCO.
(b) The stockholders of AIMCO entitled to vote on the proposed Merger,
at a meeting duly called and held, adopted a resolution approving the Merger, in
all respects by the vote required by and in the manner prescribed under the MGCL
and the Charter and bylaws of AIMCO.
THIRTEENTH: Each undersigned President and Chairman of the Board
acknowledges these Articles of Merger to be the corporate act of the respective
corporate party on whose behalf he has signed, and further, as to all matters
and facts required to be verified under oath, each President and Chairman of the
Board acknowledges that to the best of his knowledge, information and belief,
these matters and facts relating to the corporation on whose behalf he has
signed are true in all material respects and that this statement is made under
the penalties for perjury.
IN WITNESS WHEREOF, these Articles of Merger have been duly executed on
behalf of Apartment Investment and Management Company by Peter Kompaniez, its
President, and acknowledged by Joel F. Bonder, its Secretary and these Articles
of Merger have been duly executed on behalf of Insignia Financial Group, Inc.,
by Andrew L. Farkas, its Chairman of the Board and acknowledged by Adam B.
Gilbert, its Secretary as of this 1st day of October, 1998.
ATTEST: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER KOMPANIEZ
- ----------------------- ---------------------------
Joel F. Bonder Name: Peter Kompaniez
Secretary Title: President
ATTEST: INSIGNIA FINANCIAL GROUP, INC.
/s/ ADAM B. GILBERT By: /s/ ANDREW L. FARKAS
- ------------------------ ---------------------------
Adam B. Gilbert Name: Andrew L. Farkas
Secretary Title: Chairman of the Board
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ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS E CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation (the "Charter"), the Board of Directors has duly divided and
classified 10,000,000 authorized but unissued shares of Common Stock into a
class designated as Class E Cumulative Convertible Preferred Stock, par value
$.01 per share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class E Cumulative Convertible Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 10,000,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Common Stock from 496,027,500 shares immediately
prior to the reclassification to 486,027,500 shares immediately after the
reclassification. The number of shares classified as Class E Cumulative
Convertible Preferred Stock will be decreased pursuant to Section 7 of Article
Third of these Articles Supplementary upon reacquisition thereof in any manner,
or by retirement thereof, by the Corporation.
THIRD: The terms of the Class E Cumulative Convertible Preferred Stock
(including the preferences, conversions or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class E
Cumulative Convertible Preferred Stock (the "Class E Preferred Stock") and ten
million (10,000,000) shall be the authorized number of shares of such Class E
Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class E Preferred Stock, the following terms shall
have the meanings indicated:
<PAGE> 154
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class E
Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Class E Preferred Stock" shall have the meaning set forth in Section
1 of this Article.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time
to time, as the same may be amended, and any successor thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation or such shares of the Corporation's capital
stock into which outstanding shares of Common Stock shall be
reclassified.
"Conversion Date" shall mean the date on which the Series E Preferred
Stock is converted into issued and outstanding Common Stock.
"Current Market Price" per share of Common Stock on any date shall
mean the average of the daily market prices of a share of Common Stock
for the five consecutive trading days preceding such date. The market
price for each such day shall mean the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the NYSE or, if
the Common Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Common Stock is listed or admitted to trading
or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price, or if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system
is no longer in use, the principal other automated quotations system
that may then be in use or, if the Common Stock is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Corporation.
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, (a) the date on which cash dividends are paid on the Common
Stock with respect to such Dividend Period, but excluding any such
dates after the Conversion Date; or (b) if such dividends have not
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been paid on the Common Stock by 9:00 a.m, New York City time, on the
sixtieth day from and including the last day of such Dividend Period,
then on such day; provided, further, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business
Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
January 1, April 1, July 1, and October 1 of each year and ending on
and including the day immediately preceding the last day of the
succeeding Dividend Period, other than the Dividend Period during
which any Class E Preferred Stock shall be redeemed pursuant to
Section 6 hereof, which shall end on and include the Call Date with
respect to the Class E Stock being redeemed.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean the Effective Time under the Merger Agreement.
"Initial Dividend" shall mean the first dividend paid to holders of
the Common Stock after the Issue Date.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including the record date
for the Initial Dividend.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article. The Common Stock issued by the Corporation
shall be Junior Stock.
"Merger Agreement" shall mean the Amended and Restated Agreement and
Plan of Merger, dated as of May 26, 1998, by and among the
Corporation, Insignia Financial Group, Inc., a Delaware corporation,
Insignia/ESG Holdings, Inc., a Delaware corporation, and AIMCO
Properties, L.P., a Delaware limited partnership.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Prohibited Transferee" has the meaning set forth in Section 11.3(A)
of this Article.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article. The Class B Cumulative Convertible
Preferred Stock, Class C 9% Cumulative Preferred Stock, Class D 8.75%
Cumulative Preferred Stock, Class G 9.375% Cumulative Preferred Stock
and Class H 9.50% Cumulative Preferred Stock previously issued by the
Corporation shall each be a Senior Stock.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or
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bookkeeping entry which indicates, pursuant to a declaration of
dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital
stock of the Corporation; provided, however, that if any funds for any
class or series of Parity Stock are placed in a separate account of
the Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class E
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Special Dividend" shall mean, if and when declared by the Board of
Directors, in its sole discretion, the distribution, whether in one or
more disbursements, of an amount per share of Class E Preferred Stock
equal to the Special Dividend Amount divided by the Series E
Conversion Ratio (each as defined in the Merger Agreement) (subject to
proportional adjustment upon the occurrence of any of the events
described in Section 5(b) hereof), to the holders of Class E Preferred
Stock.
"Special Dividend Date" shall mean any date on which the Special
Dividend, or any portion thereof, is paid to the holders of the Class
E Preferred Stock.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class E Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class E Preferred Stock.
3. DIVIDENDS AND THE SPECIAL DIVIDEND DISTRIBUTION.
(a) On every Dividend Payment Date, the holders of Class E
Preferred Stock shall be entitled to receive cumulative dividends payable in
cash in an amount per share of Class E Preferred Stock equal to the per share
dividend payable on Common Stock on such Dividend Payment Date. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly in arrears on the Dividend Payment Dates, commencing on the
first Dividend Payment Date after the Issue Date. Each such dividend shall be
payable in arrears to the holders of record of the Class E Preferred Stock as
they appear on the records of the Corporation at the close of business on the
record date fixed by the Board of Directors with respect to such Dividend
Payment Date which shall be not more than 60 days prior to the applicable
Dividend Payment Date and, within such 60 day period, shall be the same date as
the record date for the regular quarterly dividend payable with respect to the
Common Stock for the Dividend Period to which such Dividend Payment Date
relates (or, if there is no such record date for Common Stock, then such date
as the Board of Directors may fix). Accumulated, accrued and unpaid dividends
for any past Dividend Periods may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to holders of record on such
date, which date shall not precede by more than 45 days the payment date
thereof, as may be fixed by the Board of Directors.
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(b) The amount of dividends payable per share of Class E
Preferred Stock for the Initial Dividend Period, or any other period shorter
than a full Dividend Period, shall be computed ratably on the basis of twelve
30-day months and a 360-day year. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
the Class E Preferred Stock that may be in arrears.
(c) On any Special Dividend Date, the holders of Class E
Preferred Stock shall be entitled to receive the Special Dividend, or any
portion thereof, as determined by the Board of Directors, with respect to each
share of Class E Preferred Stock. The Special Dividend payment shall be payable
to the holders of record of the Class E Preferred Stock as they appear on the
records of the Corporation at the close of business on the record date fixed by
the Board of Directors with respect to such Special Dividend Date.
(d) After January 15, 1999, if any portion of the Special
Dividend or any other dividend payable pursuant to section 3(a) hereof has yet
to be declared and paid to the holders of Class E Preferred Stock, no dividends
shall be declared or paid or set apart for payment by the Corporation and no
other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Common
Stock, nor shall any shares of Common Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Common
Stock made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock), directly or indirectly, by the Corporation (except by conversion
into or exchange for shares of, or options, warrants or rights to subscribe for
or purchase shares of, Common Stock), nor shall any other cash or other
property otherwise be paid or distributed to or for the benefit of any holder
of shares of Common Stock in respect thereof, directly or indirectly, by the
Corporation.
4. LIQUIDATION.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the Corporation (whether capital or surplus) shall be made to
or set apart for the holders of Common Stock, the holders of shares of Class E
Preferred Stock shall be entitled to receive $1.00 per share of Class E
Preferred Stock plus the Special Dividend if such dividend is unpaid on the
date of final distribution to such holders, thereafter each share of Class E
Preferred Stock shall have the same rights with respect to assets of the
Corporation as one share of Common Stock.
5. CONVERSION.
(a) On the close of business on the day on which the Special
Dividend, or any remaining unpaid portion thereof, is paid to the holders of
the Class E Preferred Stock, each share of Class E Preferred Stock shall be
automatically converted into one share of Common Stock without any action on
the part of the Corporation or the holder of such share of Class E Preferred
Stock.
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(b) If the Corporation shall after the Issue Date (i) pay a
dividend or make a distribution on its Common Stock in shares of Common Stock,
(ii) subdivide its outstanding Common Stock into a greater number of shares,
(iii) combine its outstanding Common Stock into a smaller number of shares,
(iv) issue any shares of capital stock by reclassification of its outstanding
Common Stock, (v) issue rights, options or warrants to all holders of Common
Stock entitling them to subscribe for or purchase Common Stock or (vi) make a
distribution on its Common Stock other than in cash or shares of Common Stock
(including any distribution in securities (other than rights, options or
warrants described in clause (v) of this sentence)) then the Corporation shall
contemporaneously do the same with respect to the Class E Preferred Stock.
(c) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of effecting the conversion
of the Class E Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Class E Preferred
Stock.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the shares of Class E Preferred Stock shall be validly issued,
fully paid and nonassessable.
The Corporation shall list the shares of Common Stock required to be
delivered upon conversion of the shares of Class E Preferred Stock, prior to
such delivery, upon the NYSE and each other national securities exchange, if
any, upon which the outstanding shares of Common Stock are listed at the time
of such delivery.
(d) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock upon conversion of shares of Class E Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issue or delivery of shares of Common Stock in a name other than that of the
holder of the shares of Class E Preferred Stock to be converted, and no such
issue or delivery shall be made unless and until the Person requesting such
issue or delivery has paid to the Corporation the amount of any such tax or
established, to the reasonable satisfaction of the Corporation, that such tax
has been paid.
6. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class E Preferred Stock shall not be redeemable
by the Corporation prior to October 1, 2018. On or after October 1, 2018, the
Corporation, at its option, may redeem shares of Class E Preferred Stock, in
whole or from time to time in part, at a redemption price per share payable in
cash equal to the sum of (i) the greater of (A) the Current Market Price of the
Common Stock on the Call Date or (B) the AIMCO Index Price (as defined in the
Merger Agreement, but determined without giving effect to the proviso to the
definition thereof for this purpose), plus (ii) all accrued and unpaid
dividends to the Call Date.
(b) Shares of Class E Preferred Stock shall be redeemed by
the Corporation on the date specified in the notice to holders required under
paragraph (d) of this Section 6 (the "Call Date"). The Call Date shall be
selected by the Corporation, shall be specified in the notice of
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redemption and shall be not less than 30 days nor more than 60 days after the
date notice of redemption is sent by the Corporation.
(c) If full cumulative dividends on all outstanding shares of
Class E Preferred Stock and any other class or series of Parity Stock of the
Corporation have not been paid or declared and set apart for payment, no shares
of Class E Preferred Stock may be redeemed unless all outstanding shares of
Class E Preferred Stock are simultaneously redeemed and neither the Corporation
nor any affiliate of the Corporation may purchase or acquire shares of Class E
Preferred Stock, otherwise than pursuant to a purchase or exchange offer made
on the same terms to all holders of shares of Class E Preferred Stock.
(d) If the Corporation shall redeem shares of Class E
Preferred Stock pursuant to paragraph (a) of this Section 6, notice of such
redemption shall be given to each holder of record of the shares to be
redeemed. Such notice shall be provided by first class mail, postage prepaid,
at such holder's address as the same appears on the stock records of the
Corporation. Neither the failure to mail any notice required by this paragraph
(d), nor any defect therein or in the mailing thereof to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which was mailed
in the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such notice shall state, as appropriate: (1) the Call Date, (2) the number of
shares of Class E Preferred Stock to be redeemed and, if fewer than all such
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder and (3) the place or places at which certificates for
such shares are to be surrendered for cash. Notice having been mailed as
aforesaid, from and after the Call Date (unless the Corporation shall fail to
make available the amount of cash necessary to effect such redemption), (i)
except as otherwise provided herein, dividends on the shares of Class E
Preferred Stock so called for redemption shall cease to accumulate or accrue on
the shares of Class E Preferred Stock called for redemption (except that, in
the case of a Call Date after a dividend record date and prior to the related
Dividend Payment Date, holders of Class E Preferred Stock on the dividend
record date will be entitled on such Dividend Payment Date to receive the
dividend payable on such shares), (ii) said shares shall no longer be deemed to
be outstanding, and (iii) all rights of the holders thereof as holders of Class
E Preferred Stock of the Corporation shall cease (except the rights to receive
the cash payable upon such redemption, without interest thereon, upon surrender
and endorsement of their certificates if so required and to receive any
dividends payable thereon). The Corporation's obligation to make available the
redemption price in accordance with the preceding sentence shall be deemed
fulfilled if, on or before the Call Date, the Corporation shall deposit with a
bank or trust company (which may be an affiliate of the Corporation) that has,
or is an affiliate of a bank or trust company that has, a capital and surplus
of at least $50,000,000, such amount of cash as is necessary for such
redemption, in trust, with irrevocable instructions that such cash be applied
to the redemption of the shares of Class E Preferred Stock so called for
redemption. No interest shall accrue for the benefit of the holders of shares
of Class E Preferred Stock to be redeemed on any cash so set aside by the
Corporation. Subject to applicable escheat laws, any such cash unclaimed at the
end of two years from the Call Date shall revert to the general funds of the
Corporation, after which reversion the holders of shares of Class E Preferred
Stock so called for redemption shall look only to the general funds of the
Corporation for the payment of such cash.
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As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class E Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) for which such shares have been
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class E Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class E
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class E Preferred Stock held of record by each holder
of such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If
fewer than all the shares of Class E Preferred Stock represented by any
certificate are redeemed, than a new certificate representing the unredeemed
shares shall be issued without cost to the holders thereof.
7. STATUS OF REACQUIRED STOCK.
All shares of Class E Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be retired and cannot be
reissued.
8. RANKING.
Any class or series of capital stock of the Corporation shall be
deemed to rank:
(a) prior or senior to the Class E Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if (i) such class or series shall be Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock or Class
H Cumulative Preferred Stock, or (ii) the holders of such class or series of
capital stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of Class E Preferred Stock ("Senior
Stock");
(b) on a parity with the Class E Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof shall be different
from those of the Class E Preferred Stock, if the holders of such class or
series of capital stock and the Class E Preferred Stock shall be entitled to
the receipt of dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation preferences, without preference
or priority one over the other ("Parity Stock"); and
(c) junior to the Class E Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series of capital stock shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class E Preferred Stock ("Junior Stock").
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9. VOTING.
(a) Each share of Class E Preferred Stock shall entitle its
holder to one-half (1/2) of one vote with respect to all matters in which
holders of Common Stock shall be entitled to vote thereon.
(b) The holders of the Class E Preferred Stock and the
holders of Common Stock shall vote together as a single class with respect to
all matters, except for any matter relating to the liquidation, dissolution or
winding up of the Corporation or amendment of these Articles Supplementary, in
which case the holders of the Class E Preferred Stock shall vote as a single
class. Approval of two-thirds of the outstanding shares of Class E Preferred
Stock shall be required with respect to any proposed amendment which would
materially affect the existing terms of the Class E Preferred Stock.
(c) If any portion of the Special Dividend has yet to be
declared and paid to the holders of Class E Preferred Stock on January 15,
1999, or if the equivalent of six quarterly dividends payable on the Class E
Preferred Stock or any other class or series of preferred stock are in default,
the number of directors of the Company will be increased by two (without
duplication of any increase made pursuant to the terms of any other series of
preferred stock of the Company), and the holders of the Class E Preferred
Stock, voting as a single class with the holders of shares of any other class
of the Company's preferred stock ranking on a parity with the Class E Preferred
Stock either as to dividends or distribution of assets and upon which like
voting rights have been conferred and are exercisable, will be entitled to
elect such two directors to fill such newly-created directorships. Such right
shall continue until full cumulative dividends for all past dividend periods on
all preferred shares of the Company, including any shares of Class E Preferred
Stock, have been paid or declared and set apart for payment. Any such elected
directors shall serve until the Company's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class E Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
11. ADDITIONAL ISSUANCES.
The shares of Series E Preferred Stock designated by these Articles
Supplementary may not be issued other than pursuant to the terms of the Merger
Agreement.
FOURTH: The terms of the Class E Preferred Stock set forth in Article
Third hereof shall become Article XVIII of the Charter.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its President and Vice Chairman of the
Board and witnessed by its Secretary on October 1, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL BONDER /s/ PETER KOMPANIEZ
- --------------------------- ---------------------------------------------
Joel Bonder, Peter Kompaniez
Secretary President and Vice Chairman of the
Board
THE UNDERSIGNED, President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, who executed on behalf of the Corporation the Articles Supplementary
of which this Certificate is made a part, hereby acknowledges in the name and
on behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
/s/ PETER KOMPANIEZ
---------------------------------------------
Peter Kompaniez
President and Vice Chairman of the
Board
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ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS J CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has
duly divided and classified 2,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class J Cumulative Convertible Preferred
Stock, par value $.01 per share, and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified
as Class J Cumulative Convertible Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 2,000,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 486,027,500 shares
immediately prior to the reclassification to 484,027,500 shares immediately
after the reclassification.
THIRD: The terms of the Class J Cumulative Convertible Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions and
qualifications) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class J
Cumulative Convertible Preferred Stock, par value $.01 per share (the "Class J
Preferred Stock") and Two Million (2,000,000) shall be the authorized number of
shares of such Class J Preferred Stock constituting such class.
<PAGE> 164
2. DEFINITIONS.
For purposes of the Class J Preferred Stock, the following terms shall
have the meanings indicated:
"ABP Subscription Agreement" shall mean the Subscription Agreement
dated as of November 6, 1998 between the Corporation and Stichting
Pensioenfonds ABP.
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial
Holder, clause (iii) of this definition, and clause (a) (ii) of the
definition of "Person" shall be disregarded. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class J
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
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"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class E Articles Supplementary" shall have the meaning set forth in
Section 7.3 of this Article.
"Class J Preferred Stock" shall have the meaning set forth in Section
1 of this Article.
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case, as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the NYSE or, if
the Equity Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Equity Stock is listed or admitted to trading
or, if the Equity Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price, or if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if
such system is no longer in use, the principal other automated
quotations system that may then be in use or, if the Equity Stock is
not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a
market in the Equity Stock selected by the Board of Directors of the
Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time
to time, as the same may be amended, and any successor thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation, and the Class B Common Stock, $.01 par
value per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such
Class A Common Stock or Class B Common Stock shall be reclassified.
"Conversion Price" shall mean the conversion price per share of Class
A Common Stock for which each share of Class J Preferred Stock is
convertible,
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as such Conversion Price may be adjusted pursuant to Section 7 of this
Article. The initial Conversion Price shall be $40 (equivalent to a
conversion rate of 2.50 shares of Class A Common Stock for each share
of Class J Preferred Stock).
"Current Market Price" of a share of any Equity Stock shall mean the
closing price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices,
regular way, on such day, in either case as reported on the principal
national securities exchange on which such securities are listed or
admitted for trading, or, if such security is not quoted on any
national securities exchange, on the NASDAQ National Market or if such
security is not quoted on the NASDAQ National Market, the average of
the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for each
security on such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished by any
New York Stock Exchange or National Association of Securities Dealers,
Inc. member firm regularly making a market in such security selected
for such purpose by the Chief Executive Officer of the Corporation or
the Board of Directors of the Corporation or if any class or series of
securities are not publicly traded, the fair value of the shares of
such class as determined reasonably and in good faith by the Board of
Directors of the Corporation.
"distribution" shall have the meaning set forth in paragraph (a)(iii)
of Section 7.3 of this Article.
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, (a) the date that cash dividends are paid on the Class A
Common Stock with respect to such Dividend Period; or (b) if such
dividends have not been paid on the Class A Common Stock by 9:00 a.m.,
New York City time, on the sixtieth day from and including the last
day of such Dividend Period, then on such day; provided, that if any
Dividend Payment Date falls on any day other than a Business Day, the
dividend payment payable on such Dividend Payment Date shall be paid
on the Business Day immediately following such Dividend Payment Date
and no interest shall accrue on such dividend from such date to such
Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
February 15, May 15, August 15 and November 15 of each year and ending
on and including the day preceding the first day of the next
succeeding Dividend Period.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
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"Excess Transfer" has the meaning set forth in Section 11.3(a) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Class A Common Stock during five (5) consecutive
Trading Days selected by the Corporation commencing not more than
twenty (20) Trading Days before, and ending not later than, the
earlier of the day in question and the day before the "ex" date, if
any, with respect to any issuance or distribution requiring such
computation. The term "'ex' date," when used with respect to any
issuance or distribution, means the first day on which the share of
Class A Common Stock trades regular way, without the right to receive
such issuance or distribution, on the exchange or in the market, as
the case may be, used to determine that day's Current Market Price.
"Issue Date" shall mean the date on which shares of Class J Preferred
Stock are issued pursuant to the ABP Subscription Agreement and the OP
Subscription Agreement.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including November 14,
1998.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares
of Class J Preferred Stock of the Corporation having an Aggregate
Value not in excess of the excess of (x) 15% of the Aggregate Value of
all Outstanding shares of Equity Stock over (y) the Aggregate Value of
all shares of Equity Stock other than Class J Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make
available to the representative(s) of the Initial Holder and the Board
of Directors, a schedule that sets forth the then-current Initial
Holder Limit applicable to the Initial Holder.
"Internal Rate of Return" shall mean, as of any determination date,
the effective discount rate under which the present value of the
Inflows associated with an outstanding share of Class J Preferred
Stock equals the Outflow on the Issue Date associated with such share.
For purposes of calculation of Internal Rate of Return:
(i) "Inflows" shall mean (a) all dividends (whether paid in
cash, property or stock) that have been received on such share, (b)
any other distributions that have been received on such share, and (c)
as of the determination date, the average of the daily Current Market
Prices of a share
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of the Corporation's Class A Common Stock during the five most recent
Trading Days, such average multiplied by the Liquidation Preference
(excluding any accumulated, accrued and unpaid dividends) per share of
Class J Preferred Stock, and such product divided by the Conversion
Price. For purposes of calculating the amounts of any Inflows, all
dividends or distributions received in property or stock shall be
deemed to have a value equal to the fair market value of such
dividends or distributions as of the date such dividend or
distribution is received, as determined in good faith by the Board of
Directors. All Inflows shall be deemed to have taken place on the date
on which payment was actually received by the holder.
(ii) "Outflow" shall mean $100 plus an amount equal to one
one-millionth of any and all out-of-pocket costs of Stichting
Pensioenfonds ABP relating to the acquisition of 1,000,000 shares of
the Corporation's Class J Preferred Stock on the Issue Date. Outflow
shall be deemed to have taken place on the Closing Date of the ABP
Subscription Agreement and the OP Subscription Agreement, and
(iii) Neither the fact of any transfer of Class J Preferred
Stock nor the amount of any consideration received by the holder
thereof or paid by any successor holder in connection with any
transfer shall affect the calculation of Internal Rate of Return.
Schedule A attached hereto shows the calculation of Internal Rate of
Return at certain hypothetical dates of determination and given a
certain hypothetical aggregate purchase price, certain hypothetical
Inflows and certain hypothetical levels of the Current Market Price of
the Corporation's Class A Common Stock.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OP Subscription Agreement" shall mean the Stock Purchase Agreement
dated as of November 6, 1998 between the Corporation and AIMCO
Properties, L.P.
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"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit or the Initial Holder Limit to any Person, the
term "Outstanding" shall be deemed to include the number of shares of
Equity Stock that such Person alone, at that time, could acquire
pursuant to any options or convertible securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder, a number of the Outstanding shares of Class J Preferred Stock
of the Corporation having an Aggregate Value not in excess of the
excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class J Preferred Stock that are Beneficially Owned
by the Person.
"Ownership Restrictions" shall mean, collectively, the Ownership Limit
as applied to Persons other than the Initial Holder and the Initial
Holder Limit as applied to the Initial Holder.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article,
(i) an individual, corporation, partnership, estate, trust (including
a trust qualifying under Section 401(a) or 501(c) of the Code),
association, private foundation within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) also
includes a group as that term is used for purposes of Section 13(d)(3)
of the Exchange Act and (b) for purposes of the remaining Sections of
this Article, any individual, firm, partnership, corporation or other
entity and shall include any successor (by merger or otherwise) of
such entity.
"Prohibited Transferee" has the meaning set forth in Section 11.3(a)
of this Article.
"REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other
distribution by the Board of Directors, the allocation of funds to be
so paid on any series or class of capital stock of the Corporation;
provided, however, that if any funds for any class or series of
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Junior Stock or any class or series of Parity Stock are placed in a
separate account of the Corporation or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with
respect to the Class J Preferred Stock shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying
or other similar agent.
"Trading Day" shall mean, when used with respect to the Closing Price
of a share of any Equity Stock, (i) if the Equity Stock is listed or
admitted to trading on the NYSE, a day on which the NYSE is open for
the transaction of business, (ii) if the Equity Stock is not listed or
admitted to trading on the NYSE but is listed or admitted to trading
on another national securities exchange or automated quotation system,
a day on which the principal national securities exchange or automated
quotation system, as the case may be, on which the Equity Stock is
listed or admitted to trading is open for the transaction of business,
or (iii) if the Equity Stock is not listed or admitted to trading on
any national securities exchange or automated quotation system, any
day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by
law or executive order to close.
"Transaction" shall have the meaning set forth in Section 7.3 of this
Article.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of a share of Class J Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of
Class J Preferred Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or
exchangeable for Class J Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class J Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class J Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class J Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
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"Voting Preferred Stock" shall have the meaning set forth in Section 9
of this Article.
3. DIVIDENDS.
(a) The holders of Class J Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class J Preferred Stock equal to (i) 7% per annum of the per share
Liquidation Preference (as hereinafter defined) for the period beginning on and
including the Issue Date and lasting until November 15, 1998; (ii) 8% per annum
of the per share Liquidation Preference for the period beginning on and
including November 15, 1998 and lasting until November 15, 1999; (iii) 9% per
annum of the per share Liquidation Preference for the period beginning on and
including November 15, 1999 and lasting until November 15, 2000; and (iv) 9.5%
per annum of the per share Liquidation Preference thereafter. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly in arrears on each Dividend Payment Date, commencing on
November 15, 1998. Each such dividend shall be payable in arrears to the
holders of record of the Class J Preferred Stock, as they appear on the stock
records of the Corporation at the close of business on a record date fixed by
the Board of Directors which shall not be more than 60 days prior to the
applicable Dividend Payment Date and, within such 60 day period, shall be the
same date as the record date for the regular quarterly dividend payable with
respect to the Class A Common Stock for the Dividend Period to which such
Dividend Payment Date relates (or if there is no such record date for Class A
Common Stock, then such date as the Board of Directors may fix). Accumulated,
accrued and unpaid dividends for any past Dividend Periods may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to
holders of record on such date, which date shall not precede by more than 45
days the payment date thereof, as may be fixed by the Board of Directors.
(b) Any dividend payable on the Class J Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class J Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the Class J
Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Class J Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class J Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other
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distribution of cash or other property shall be declared or made, directly or
indirectly, by the Corporation with respect to any shares of Parity Stock
unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class J Preferred
Stock have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof has been or contemporaneously is set
apart for payment of such dividends on the Class J Preferred Stock for all
Dividend Periods ending on or prior to the date such dividend or distribution
is declared, paid, set apart for payment or made, as the case may be, with
respect to such shares of Parity Stock. When dividends are not paid in full or
a sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class J Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the
respective amounts of dividends accumulated, accrued and unpaid on the Class J
Preferred Stock and accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class J Preferred Stock
are outstanding, no dividends (other than dividends or distributions paid in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Junior Stock) shall be declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption
of any shares of any such stock), directly or indirectly, by the Corporation
(except by conversion into or exchange for shares of, or options, warrants or
rights to subscribe for or purchase shares of, Junior Stock), nor shall any
other cash or other property otherwise be paid or distributed to or for the
benefit of any holder of shares of Junior Stock in respect thereof, directly or
indirectly, by the Corporation unless, in each case, dividends equal to the
full amount of all accumulated, accrued and unpaid dividends on all outstanding
shares of Class J Preferred Stock have been declared and paid, or such
dividends have been declared and a sum sufficient for the payment thereof has
been set apart for such payment, on all outstanding shares of Class J Preferred
Stock for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) redeeming, purchasing
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or otherwise acquiring any Parity Stock, in each case, if such declaration,
payment, setting apart for payment, redemption, purchase or other acquisition
is necessary in order to maintain the continued qualification of the
Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise)
shall be made to or set apart for the holders of Junior Stock, the holders of
shares of Class J Preferred Stock shall be entitled to receive One Hundred
Dollars ($100) per share of Class J Preferred Stock (the "Liquidation
Preference"), plus an amount equal to all dividends (whether or not earned or
declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Class J Preferred Stock have been
paid the Liquidation Preference in full, plus an amount equal to all dividends
(whether or not earned or declared) accumulated, accrued and unpaid thereon to
the date of final distribution to such holders, no payment will be made to any
holder of Junior Stock upon the liquidation, dissolution or winding up of the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Class J Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of Class J Preferred
Stock and any such other Parity Stock ratably in the same proportion as the
respective amounts that would be payable on such Class J Preferred Stock and
any such other Parity Stock if all amounts payable thereon were paid in full.
For the purposes of this Section 4, (i) a consolidation or merger of the
Corporation with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets, or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
J Preferred Stock and any Parity Stock, as provided in this Section 4, any
other series or class or classes of Junior Stock shall, subject to the
respective terms thereof, be entitled to receive any and all assets remaining
to be paid or distributed, and the holders of the Class J Preferred Stock and
any Parity Stock shall not be entitled to share therein.
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5. REDEMPTION.
The Class J Preferred Stock is not redeemable, other than as
specified in Section 11.2 hereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class J Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation (including without limitation
shares of Class J Preferred Stock which have been surrendered for conversion
into Class A Common Stock) shall be returned to the status of authorized, but
unissued shares of Class J Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, holders of shares of
Class J Preferred Stock shall have the right to convert all or a portion of
such shares into shares of Class A Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of
this Section 7, a holder of shares of Class J Preferred Stock shall have the
right, at such holder's option, at any time on or after the Issue Date to
convert such shares, in whole or in part, into the number of fully paid and
non-assessable shares of authorized but previously unissued shares of Class A
Common Stock per each share of Class J Preferred Stock obtained by dividing the
Liquidation Preference (excluding any accumulated accrued and unpaid dividends)
per share of Class J Preferred Stock by the Conversion Price (as in effect at
the time and on the date provided for in subparagraph (b)(iv) of this Section
7.1) and by surrendering such shares to be converted, such surrender to be made
in the manner provided in paragraph (b) of this Section 7.1.
(b) (i) In order to exercise the conversion right, the holder
of each share of Class J Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof elects to convert
such share of Class J Preferred Stock. Unless the shares issuable on conversion
are to be issued in the same name as the name in which such share of Class J
Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
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evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
(ii) A holder of shares of Class J Preferred Stock shall,
as of the date of the conversion of such shares to shares of Class A Common
Stock, be entitled to receive cash payment in respect of any dividends (whether
or not earned or declared) that are accumulated, accrued and unpaid thereon as
of the time of such conversion, provided, however, that payment in respect of
any dividend on such shares that has been declared but for which the Dividend
Payment Date has not yet been reached shall be payable as of such Dividend
Payment Date. Except as provided above, the Corporation shall make no payment
or allowance for unpaid dividends, whether or not in arrears, on converted
shares.
(iii) As promptly as practicable after the surrender of
certificates for shares of Class J Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver at such office to such holder, or
send on such holder's written order, a certificate or certificates for the
number of full shares of Class A Common Stock issuable upon the conversion of
such shares of Class J Preferred Stock in accordance with provisions of this
Section 7, and any fractional interest in respect of a share of Class A Common
Stock arising upon such conversion shall be settled as provided in paragraph
(c) of this Section 7.1.
(iv) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which the
certificates for shares of Class J Preferred Stock shall have been surrendered
and such notice received by the Corporation as aforesaid, and the Person or
Persons in whose name or names any certificate or certificates for shares of
Class A Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby
at such time on such date and such conversion shall be at the Conversion Price
in effect at such time on such date unless the stock transfer books of the
Corporation shall be closed on that date, in which event such Person or Persons
shall be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date on which such shares shall have been surrendered and such notice received
by the Corporation. If the dividend payment record date for the Class J
Preferred Stock and Class A Common Stock do not coincide, and the preceding
sentence does not operate to ensure that a holder of shares of Class J
Preferred Stock whose shares are converted into Class A Common Stock does not
receive dividends on both the shares of Class J Preferred Stock and the Class A
Common Stock into which such shares are converted for the same Dividend Period,
then notwithstanding anything herein to the contrary, it is the intent, and the
Transfer Agent is authorized to ensure, that no conversion after the earlier of
such record dates will be accepted until after the latter of such record dates.
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(c) No fractional share of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of the shares of Class J Preferred Stock. Instead of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of shares of Class J Preferred Stock, the Corporation shall
pay to the holder of such share an amount in cash based upon the Current Market
Price of the Class A Common Stock on the Trading Day immediately preceding the
date of conversion. If more than one share shall be surrendered for conversion
at one time by the same holder, the number of full shares of Class A Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Class J Preferred Stock so surrendered.
7.2 MANDATORY CONVERSION.
(a) The Corporation shall have the right to require that all
or part of the issued and outstanding shares of Class J Preferred Stock be
converted into shares of Class A Common Stock under the following
circumstances:
(i) At any time on or prior to the fourth anniversary of
the Issue Date, in the event that the Internal Rate of Return exceeds 12.5%,
the Corporation shall have the right to require the issued and outstanding
shares of Class J Preferred Stock to be converted, in whole or in part, into
shares of Class A Common Stock as set forth in this Section 7.2.
(ii) At any time after the fourth anniversary of the
Issue Date, so long as the average of the daily Current Market Prices of the
issued and outstanding shares of Class A Common Stock during the five most
recent Trading Days is equal to or greater than $40, the Corporation shall have
the right to require the issued and outstanding shares of Class J Preferred
Stock to be converted, in whole or in part, into shares of Class A Common Stock
as set forth in this Section 7.2.
(b) Subject to and upon compliance with the provisions of
this Section 7, the Corporation shall have the right, under the circumstances
set forth in (a) (i) or (ii) above, to convert such shares, in whole or in
part, into the number of fully paid and non-assessable shares of authorized but
previously unissued shares of Class A Common Stock per each share of Class J
Preferred Stock obtained by dividing the Liquidation Preference (excluding any
accumulated accrued and unpaid dividends) per share of Class J Preferred Stock
by the Conversion Price (as in effect at the time and on the date provided for
in subparagraph (c)(v) of this Section 7.2).
(c) (i) In order to exercise the conversion right, the
Corporation shall, promptly upon the occurrence of an event described in (a)(i)
or (ii) above, and in no event later than the close of business on the next
succeeding business day, give notice of such conversion to each holder of
record of the shares to be converted. Such
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notice shall be provided by facsimile or, if facsimile is not available, then
by first class mail, postage prepaid, at such holder's address as the same
appears on the stock records of the Corporation. Any notice which was
transmitted or mailed in the manner herein provided shall be conclusively
presumed to have been duly given on the date received by the holder. Each such
notice shall state, as appropriate: (1) the date of conversion, which date may
be any date within one business day following the date on which the notice is
transmitted or mailed; (2) the number of shares of Class J Preferred Stock to
be converted and, if fewer than all such shares held by such holder are to be
converted, the number of such shares to be converted; (3) the event which gave
rise to the conversion right; and (4) the then current Conversion Price.
(ii) Upon receiving such notice of conversion, each such
holder shall promptly surrender the certificates representing such shares of
Class J Preferred Stock as are being converted on the conversion date, duly
endorsed or assigned to the Corporation or in blank, at the office of the
Transfer Agent; provided, however, that the failure to so surrender any such
certificates shall not in any way affect the validity of the conversion of the
underlying shares of Class J Preferred Stock into shares of Class A Common
Stock. Unless the shares issuable on conversion are to be issued in the same
name as the name in which such shares of Class J Preferred Stock are
registered, each such share surrendered following conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
(iii) A holder of shares of Class J Preferred Stock
shall, as of the date of the conversion of such shares to shares of Class A
Common Stock, be entitled to receive cash payment in respect of any dividends
(whether or not earned or declared) that are accumulated, accrued and unpaid
thereon as of the time of such conversion, provided, however, that payment in
respect of any dividend on such shares that has been declared but for which the
Dividend Payment Date has not yet been reached shall be payable as of such
Dividend Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares.
(iv) As promptly as practicable after the surrender of
certificates for shares of Class J Preferred Stock as aforesaid, and in any
event no later than three business days after the date of such surrender, the
Corporation shall issue and shall deliver at such office to such holder, or
send on such holder's written order, a certificate or certificates for the
number of full shares of Class A Common Stock issuable upon the conversion of
such shares of Class J Preferred Stock in accordance with the provisions of
this Section 7.2, and any fractional interest in respect of a share of Class A
Common Stock arising upon such conversion shall be settled as provided in
paragraph (d) of this Section 7.2.
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(v) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date identified as the
conversion date in the notice of conversion sent by the Corporation as
aforesaid, and the Person or Persons in whose name or names any certificate or
certificates for shares of Class A Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of
the shares represented thereby at such time on such date and such conversion
shall be at the Conversion Price in effect at such time on such date unless the
stock transfer books of the Corporation shall be closed on that date, in which
event such Person or Persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date identified as the conversion date in the
notice of conversion sent by the Corporation as aforesaid. If the dividend
payment record dates for the Class J Preferred Stock and Class A Common Stock
do not coincide, and the preceding sentence does not operate to ensure that a
holder of shares of Class J Preferred Stock whose shares are converted into
Class A Common Stock does not receive dividends on both the shares of Class J
Preferred Stock and the Class A Common Stock into which such shares are
converted for the same Dividend Period, then notwithstanding anything herein to
the contrary, it is the intent, and the Transfer Agent is authorized to ensure,
that no conversion after the earlier of such record dates will be accepted
until after the latter of such record dates.
(d) No fractional share of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of the shares of Class J Preferred Stock. Instead of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of shares of Class J Preferred Stock, the Corporation shall
pay to the holder of such share an amount of cash based upon the Current Market
Price of the Class A Common Stock on the Trading Day immediately preceding the
date of conversion. If more than one of any holder's shares shall be converted
at one time, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class J Preferred Stock so surrendered.
7.3 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to time
as follows:
(i) If the Corporation shall after the Issue Date (A) pay
a dividend or make a distribution on its capital stock in shares of Class A
Common Stock, (B) subdivide its outstanding Class A Common Stock into a greater
number of shares, (C) combine its outstanding Class A Common Stock into a
smaller number of shares or (D) issue any shares of capital stock by
reclassification of its outstanding Class A Common Stock, the Conversion Price
in effect at the opening of business on
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the day following the date fixed for the determination of stockholders entitled
to receive such dividend or distribution or at the opening of business on the
day following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted so
that the holder of any share of Class J Preferred Stock thereafter converted
shall be entitled to receive the number of shares of Class A Common Stock (or
fraction of a share of Class A Common Stock) that such holder would have owned
or have been entitled to receive after the happening of any of the events
described above had such share of Class J Preferred Stock been converted
immediately prior to the record date in the case of a dividend or distribution
or the effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this paragraph (a)(i) of this
Section 7.3 shall become effective immediately after the opening of business on
the day next following the record date (except as provided in paragraph (e)
below) in the case of a dividend or distribution and shall become effective
immediately after the opening of business on the day next following the
effective date in the case of a subdivision, combination or reclassification.
(ii) If the Corporation shall, after the Issue Date,
issue rights, options or warrants to all holders of Class A Common Stock
entitling them (for a period expiring within 45 days after the record date
described below in this paragraph (a)(ii) of this Section 7.3) to subscribe for
or purchase Class A Common Stock at a price per share less than the Fair Market
Value per share of the Class A Common Stock on the record date for the
determination of stockholders entitled to receive such rights, options or
warrants, then the Conversion Price in effect at the opening of business on the
day next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately prior
to the opening of business on the day following the date fixed for such
determination by (B) a fraction, the numerator of which shall be the sum of (X)
the number of shares of Class A Common Stock outstanding on the close of
business on the date fixed for such determination and (Y) the number of shares
that could be purchased at such Fair Market Value from the aggregate proceeds
to the Corporation from the exercise of such rights, options or warrants for
Class A Common Stock, and the denominator of which shall be the sum of (XX) the
number of shares of Class A Common Stock outstanding on the close of business
on the date fixed for such determination and (YY) the number of additional
shares of Class A Common Stock offered for subscription or purchase pursuant to
such rights, options or warrants. Such adjustment shall become effective
immediately after the opening of business on the day next following such record
date (except as provided in paragraph (e) below). In determining whether any
rights, options or warrants entitle the holders of Class A Common Stock to
subscribe for or purchase Class A Common Stock at less than such Fair Market
Value, there shall be taken into account any consideration received by the
Corporation upon issuance and upon exercise of such rights, options or
warrants, the value of such consideration, if other than cash, to be determined
in good faith by the Board of Directors.
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(iii) If the Corporation shall after the Issue Date make
a distribution on its Class A Common Stock other than in cash or shares of
Class A Common Stock (including any distribution in securities (other than
rights, options or warrants referred to in paragraph (a)(ii) of this Section
7.3)) (each of the foregoing being referred to herein as a "distribution"),
then the Conversion Price in effect at the opening of business on the next day
following the record date for determination of stockholders entitled to receive
such distribution shall be adjusted to equal the price determined by
multiplying (A) the Conversion Price in effect immediately prior to the opening
of business on the day following the record date by (B) a fraction, the
numerator of which shall be the difference between (X) the number of shares of
Class A Common Stock outstanding on the close of business on the record date
and (Y) the number of shares determined by dividing (aa) the aggregate value of
the property being distributed by (bb) the Fair Market Value per share of Class
A Common Stock on the record date, and the denominator of which shall be the
number of shares of Class A Common Stock outstanding on the close of business
on the record date. Such adjustment shall become effective immediately after
the opening of business on the day next following such record date (except as
provided below). The value of the property being distributed shall be as
determined in good faith by the Board of Directors; provided, however, if the
property being distributed is a publicly traded security, its value shall be
calculated in accordance with the procedure for calculating the Fair Market
Value of a share of Class A Common Stock (calculated for a period of five
consecutive Trading Days commencing on the twentieth Trading Day after the
distribution). Neither the issuance by the Corporation of rights, options or
warrants to subscribe for or purchase securities of the Corporation nor the
exercise thereof shall be deemed a distribution under this paragraph.
(iv) No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price: provided, however, that any adjustments that by
reason of this paragraph (a)(iv) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in accordance
with the provisions of this Section 7.3 (other than this paragraph (a)(iv)) not
later than such time as may be required in order to preserve the tax-free
nature of a distribution to the holders of shares of Class A Common Stock.
Notwithstanding any other provisions of this Section 7, the Corporation shall
not be required to make any adjustment of the Conversion Price for the issuance
of (A) any shares of Class A Common Stock pursuant to any plan providing for
the reinvestment of dividends or interest payable on securities of the
Corporation and the investment of optional amounts in shares of Class A Common
Stock under such plan or (B) any options, rights or shares of Class A Common
Stock pursuant to any stock option, stock purchases or other stock-based plan
maintained by the Corporation. All calculations under this Section 7 shall be
made to the nearest cent ($.005 being rounded upward) or to the nearest
one-tenth of a share (with .05 of a share being rounded upward), as the case
may be. Anything in this paragraph (a) of this Section 7 to the contrary
notwithstanding, the Corporation
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shall be entitled, to the extent permitted by law, to make such reductions in
the Conversion Price, in addition to those required by this paragraph (a), as
it in its discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or combination of shares,
distribution of rights or warrants to purchase stock or securities, or a
distribution of other assets (other than cash dividends) hereafter made by the
Corporation to its stockholders shall not be taxable, or if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event.
(b) If the Corporation shall be a party to any transaction
(including with limitation a merger, consolidation, statutory share exchange,
sale of all or substantially all of the Corporation's assets or
recapitalization of the Class A Common Stock, but excluding any transaction as
to which paragraph (a)(i) of this Section 7.3 applies) (each of the foregoing
being referred to herein as a "Transaction"), in each case as a result of which
shares of Class A Common Stock shall be converted into the right to receive
stock, securities or other property (including cash or any combination
thereof), each share of Class J Preferred Stock which is not converted into the
right to receive stock, securities or other property in connection with such
Transaction shall thereupon be convertible into the kind and amount of shares
of stock, securities and other property (including cash or any combination
thereof) receivable upon such consummation by a holder of that number of shares
of Class A Common Stock into which one share of Class J Preferred Stock was
convertible immediately prior to such Transaction. The Corporation shall not be
a party to any Transaction unless the terms of such Transaction are consistent
with the provisions of this paragraph (b), and it shall not consent or agree to
the occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Class J Preferred Stock that will contain
provisions enabling the holders of the Class J Preferred Stock that remain
outstanding after such Transaction to convert into the consideration received
by holders of Class A Common Stock at the Conversion Price in effect
immediately apply to successive Transactions:
(c) If:
(i) the Corporation shall declare a dividend (or any
other distribution) on the Class A Common Stock (other than cash dividends and
cash distributions); or
(ii) the Corporation shall authorize the granting to all
holders of the Class A Common Stock of rights or warrants to subscribe for or
purchase any shares of any class or series of capital stock or any other rights
or warrants; or
(iii) there shall be any reclassification of the
outstanding Class A Common Stock or any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of the
Corporation is required, or a statutory share exchange, or the sale or transfer
of all or substantially all of the assets of the Corporation as an entirety; or
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(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Class J Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, a notice stating (A) the record date for the payment of such
dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Class A Common Stock of record
to be entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Class A Common Stock of record shall be entitled to
exchange their shares of Class A Common Stock for securities or other property,
if any, deliverable upon such reclassification, consolidation, merger, statutory
share exchange, sale, transfer, liquidation, dissolution or winding up. Failure
to give or receive such notice or any defect therein shall not affect the
legality or validity of the proceedings described in this Section 7.
(d) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment
which certificate shall be conclusive evidence of the correctness of such
adjustment absent manifest error. Promptly after delivery of such certificate,
the Corporation shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder of shares of Class J Preferred Stock at
such holder's address as shown on the stock record of the Corporation.
(e) In any case in which paragraph (a) of this Section 7.3
provides that an adjustment shall become effective on the day next following
the record date for an event, the Corporation may defer until the occurrence of
such event (A) issuing to the holder of any share of Class J Preferred Stock
converted after such record date and before the occurrence of such event the
additional Class A Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Class A Common Stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of any fraction pursuant to
Section 7.2(d) or Section 7.1(c).
(f) There shall be no adjustment of the Conversion Price in
case of the issuance of any capital stock of the Corporation except as
specifically set forth in
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this Section 7. In addition, notwithstanding any other provision contained
in this Section 7, there shall be no adjustment of the Conversion Price upon
the payment of any cash dividends or distributions on any capital stock of the
Corporation, including, without limitation, the Special Dividend (as such term
is defined in the Class E Articles Supplementary) on the Corporation's Class E
Preferred Stock or upon the automatic conversion of the shares of such
Preferred Stock into shares of Class A Common Stock, as provided in the Class E
Articles Supplementary.
(g) If the Corporation shall take any action affecting the
Class A Common Stock, other than action described in this Section 7, that in
the opinion of the Board of Directors would materially adversely affect the
conversion rights of the holders of Class J Preferred Stock, the Conversion
Price for the Class J Preferred Stock may be adjusted, to the extent permitted
by law in such manner, if any, and at such time as the Board of Directors, in
its sole discretion, may determine to be equitable under the circumstances.
(h) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Class A Common Stock solely for the purpose of effecting
conversion of the Class J Preferred Stock, the full number of shares of Class A
Common Stock deliverable upon the conversion of all outstanding shares of Class
J Preferred Stock not theretofore converted into Class A Common Stock. For
purposes of this paragraph (h), the number of shares of Class A Common Stock
that shall be deliverable upon the conversion of all outstanding shares of
Class J Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single holder (and without regard to the
Ownership Limit).
The Corporation covenants that any shares of Class A Common Stock
issued upon conversion of the shares of Class J Preferred Stock shall be
validly issued, fully paid and nonassessable.
The Corporation shall use its best efforts to list the shares of Class
A Common Stock required to be delivered upon conversion of the shares of Class
J Preferred Stock, prior to such delivery, upon each national securities
exchange, if any, upon which the outstanding shares of Class A Common Stock are
listed at the time of such delivery.
(i) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Class A Common Stock or other securities or property on conversion of
shares of Class J Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issue or delivery of shares of Class A Common
Stock or other securities or property in a name other than that of the holder
of the shares of Class J Preferred Stock to be converted, and no such issue or
delivery shall be made unless
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and until the Person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
(j) In addition to any other adjustment required hereby, to
the extent permitted by law, the Corporation from time to time may decrease the
Conversion Price by any amount, permanently or for a period of at least twenty
Business Days, if the decrease is irrevocable during the period.
(k) Notwithstanding anything to the contrary contained in
this Section 7, conversion of Class J Preferred Stock pursuant to this Section
7 shall be permitted only to the extent that such conversion would not result
in a violation of the Ownership Restrictions (as defined in the Charter), after
taking into account any waiver of such limitation granted to any holder of the
shares of Class J Preferred Stock.
8. RANKING.
Any class or series of capital stock of the Corporation shall be
deemed to rank:
(a) prior or senior to the Class J Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class J Preferred Stock ("Senior Stock");
(b) on a parity with the Class J Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or liquidation prices per share thereof be different from those of the
Class J Preferred Stock, if (i) such capital stock is Class B Cumulative
Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D
Cumulative Preferred Stock, Class G Cumulative Preferred Stock, or Class H
Cumulative Preferred Stock of the Corporation, or (ii) the holders of such
class of stock or series and the Class J Preferred Stock shall be entitled to
the receipt of dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation preferences, without preference
or priority of one over the other (the capital stock referred to in clauses (i)
and (ii) of this paragraph being hereinafter referred to, collectively, as
"Parity Stock"); and
(c) junior to the Class J Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Common Stock, (ii)
such capital stock is Class E Cumulative Convertible Preferred Stock or (iii)
the holders of Class J
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Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series (the
capital stock referred to in clauses (i), (ii) and (iii) of this paragraph
being hereinafter referred to, collectively, as "Junior Stock").
9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class J Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of similar types of provisions with respect to shares of Parity Stock of
any other class or series which is entitled to similar voting rights (the
"Voting Preferred Stock")) and the holders of shares of Class J Preferred
Stock, together with the holders of shares of all other Voting Preferred Stock
then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors
to serve on the Board of Directors at any annual meeting of stockholders or
special meeting held in place thereof, or at a special meeting of the holders
of the Class J Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever all arrears in dividends on the Class J
Preferred Stock and the Voting Preferred Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been declared and paid, or declared and set apart for payment, then the right
of the holders of the Class J Preferred Stock and the Voting Preferred Stock to
elect such additional two directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearages), and the terms of office of all persons elected as directors
by the holders of the Class J Preferred Stock and the Voting Preferred Stock
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class J Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class J Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Class J Preferred Stock and of the
Voting Preferred Stock for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that
provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class J Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors elected
at any such special meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu
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<PAGE> 186
thereof if such office shall not have previously terminated as above provided.
If any vacancy shall occur among the directors elected by the holders of the
Class J Preferred Stock and the Voting Preferred Stock, a successor shall be
elected by the Board of Directors, upon the nomination of the then-remaining
director elected by the holders of the Class J Preferred Stock and the Voting
Preferred Stock or the successor of such remaining director, to serve until the
next annual meeting of the stockholders or special meeting held in place
thereof if such office shall not have previously terminated as provided above.
(b) So long as any shares of Class J Preferred Stock are
outstand ing, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class J
Preferred Stock voting as a single class with the holders of all other classes
or series of Parity Stock entitled to vote on such matters, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of
the Class J Preferred Stock; provided, however, that the amendment of or
supplement to the provisions of the Charter so as to authorize or create, or to
increase or decrease the authorized amount of, or to issue any Junior Stock,
Class J Preferred Stock or any shares of any class of Parity Stock shall not be
deemed to materially adversely affect the voting powers, rights or preferences
of the holders of Class J Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of
Senior Stock or any security convertible into shares of any class or series of
Senior Stock (whether or not such class or series of Senior Stock is currently
authorized).
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class J Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class
J Preferred Stock as a single class on any matter, then the Class J Preferred
Stock and such other class or series shall have with respect to such matters
one quarter of one (.25) vote per $25 of stated liquidation preference. Except
as otherwise required by applicable law or as set forth herein or in the
Charter, the Class J Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers other than as
set forth herein, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
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<PAGE> 187
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class J Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
11. OWNERSHIP AND TRANSFERS.
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(a) Limitation on Beneficial Ownership. Except as
provided in Section 11.8, from and after the Issue Date, no Person (other than
the Initial Holder) shall Beneficially Own shares of Class J Preferred Stock in
excess of the Ownership Limit and the Initial Holder shall not Beneficially Own
shares of Class J Preferred Stock in excess of the Initial Holder Limit.
(b) Transfers in Excess of Ownership Limit. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Person (other than the Initial Holder)
Beneficially Owning shares of Class J Preferred Stock in excess of the
Ownership Limit shall be void ab initio as to the Transfer of such shares of
Class J Preferred Stock that would be otherwise Beneficially Owned by such
Person in excess of the Ownership Limit, and the intended transferee shall
acquire no rights in such shares of Class J Preferred Stock.
(c) Transfers in Excess of Initial Holder Limit. Except
as provided in Section 11.8, from and after the Issue Date (and subject to
Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in the Initial Holder Beneficially Owning shares of
Class J Preferred Stock in excess of the Initial Holder Limit shall be void ab
initio as to the Transfer of such shares of Class J Preferred Stock that would
be otherwise Beneficially Owned by the Initial Holder in excess of the Initial
Holder limit, and the Initial Holder shall acquire no rights in such shares of
Class J Preferred Stock.
(d) Transfers Resulting in "Closely Held" Status. From
and after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant
that is described in Section
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856(d)(2)(B) of the Code if the income derived by the Corporation from such
tenant would cause the Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code) shall be void ab initio as to the
Transfer of shares of Class J Preferred Stock that would cause the Corporation
(i) to be "closely held" within the meaning of Section 856(h) of the Code or
(ii) otherwise fail to qualify as a REIT, as the case may be, and the intended
transferee shall acquire no rights in such shares of Class J Preferred Stock.
(e) Severability on Void Transactions. A Transfer of a
share of Class J Preferred Stock that is null and void under Sections 11.1(b),
(c) or (d) of this Article because it would, if effective, result in (i) the
ownership of Class J Preferred Stock in excess of the Initial Holder Limit or
the Ownership Limit, (ii) the Corporation being "closely held" within the
meaning of Section 856(h) of the Code or (iii) the Corporation otherwise
failing to qualify as a REIT, shall not adversely affect the validity of the
Transfer of any other share of Class J Preferred Stock in the same or any other
related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a
committee thereof shall at any time determine in good faith that a Transfer or
other event has taken place in violation of Section 11.1 of this Article or
that a Person intends to acquire or has attempted to acquire Beneficial
Ownership of any shares of Class J Preferred Stock in violation of Section 11.1
of this Article (whether or not such violation is intended), the Board of
Directors or a committee thereof shall be empowered to take any action as it
deems advisable to refuse to give effect to or to prevent such Transfer or
other event, including, but not limited to, refusing to give effect to such
Transfer or other event on the books of the Corporation, causing the
Corporation to redeem such shares at the then Current Market Price and upon
such terms and conditions as may be specified by the Board of Directors in its
sole discretion (including, but not limited to, by means of the issuance of
long-term indebtedness for the purpose of such redemption), demanding the
repayment of any distributions received in respect of shares of Class J
Preferred Stock acquired in violation of Section 11.1 of this Article or
instituting proceedings to enjoin such Transfer or to rescind such Transfer or
attempted Transfer; provided, however, that any Transfers or attempted
Transfers (or, in the case of events other than a Transfer, Beneficial
Ownership) in violation of Section 11.1 of this Article, regardless of any
action (or non-action) by the Board of Directors or such committee, (a) shall
be void ab initio or (b) shall automatically result in the transfer described
in Section 11.3 of this Article; provided, further, that the provisions of this
Section 11.2 shall be subject to the provisions of Section 11.12 of this
Article; provided, further, that neither the Board of Directors nor any
committee thereof may exercise such authority in a manner that interferes with
any ownership or transfer of Class J Preferred Stock that is expressly
authorized pursuant to Section 11.8(c) of this Article.
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<PAGE> 189
11.3 TRANSFER IN TRUST.
(a) Establishment of Trust. If, notwithstanding the
other provisions contained in this Article, at any time after the Issue Date
there is a purported Transfer (an "Excess Transfer") (whether or not such
Transfer is the result of transactions entered into through the facilities of
the NYSE or other securities exchange or an automated inter-dealer quotation
system) or other change in the capital structure of the Corporation (including,
but not limited to, any redemption of Equity Stock) or other event (including,
but not limited to, any acquisition of any share of Equity Stock) such that (a)
any Person (other than the Initial Holder) would Beneficially Own shares of
Class J Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class J Preferred Stock in excess of
the Initial Holder Limit (in either such event, the Person or Initial Holder
that would Beneficially Own shares of Class J Preferred Stock in excess of the
Ownership Limit or the Initial Holder Limit, respectively, is referred to as a
"Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of
this Article, such shares of Class J Preferred Stock in excess of the Ownership
Limit or the Initial Holder Limit, as the case may be, (rounded up to the
nearest whole share) shall be automatically transferred to a Trustee in his
capacity as trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be
effective as of the close of business on the Business Day prior to the Excess
Transfer, change in capital structure or another event giving rise to a
potential violation of the Ownership Limit or the Initial Holder Limit.
(b) Appointment of Trustee. The Trustee shall be
appointed by the Corporation and shall be a Person unaffiliated with either the
Corporation or any Prohibited Transferee. The Trustee may be an individual or a
bank or trust company duly licensed to conduct a trust business.
(c) Status of Shares Held by the Trustee. Shares of
Class J Preferred Stock held by the Trustee shall be issued and outstanding
shares of capital stock of the Corporation. Except to the extent provided in
Section 11.3(e), the Prohibited Transferee shall have no rights in the Class J
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
(d) Dividend and Voting Rights. The Trustee shall have
all voting rights and rights to dividends with respect to shares of Class J
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class J Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class J Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable
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<PAGE> 190
Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by
the Corporation that the shares of Class J Preferred Stock have been
transferred to the Trustee will be rescinded as void ab initio and shall be
recast in accordance with the desires of the Trustee acting for the benefit of
the Charitable Beneficiary. The owner of the shares at the time of the Excess
Transfer, change in capital structure or other event giving rise to a potential
violation of the Ownership Limit or the Initial Holder Limit shall be deemed to
have given an irrevocable proxy to the Trustee to vote the shares of Class J
Preferred Stock for the benefit of the Charitable Beneficiary.
(e) Restrictions on Transfer. The Trustee of the Trust
may sell the shares held in the Trust to a Person, designated by the Trustee,
whose ownership of the shares will not violate the Ownership Restrictions. If
such a sale is made, the interest of the Charitable Beneficiary shall terminate
and proceeds of the sale shall be payable to the Prohibited Transferee and to
the Charitable Beneficiary as provided in this Section 11.3(e). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the
Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 11.3(e) or any application thereof is determined in a final judgment to
be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class J Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class J Preferred Stock on behalf of the Corporation.
(f) Purchase Right in Stock Transferred to the Trustee.
Shares of Class J Preferred Stock transferred to the Trustee shall be deemed to
have been offered for sale to the Corporation, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift,
the Market Price at the time of such devise or gift) and (ii) the Market Price
on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of 90 days
after the later of (i) the date of the Excess Transfer or other event resulting
in a transfer to the Trust and (ii) the date that the Board of Directors
determines in good faith that an Excess Transfer or other event occurred.
(g) Designation of Charitable Beneficiaries. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class J Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii)
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<PAGE> 191
each Charitable Beneficiary is an organization described in Sections
170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires
or attempts to acquire shares of Class J Preferred Stock in violation of
Section 11.1 of this Article, or any Person that is a Prohibited Transferee
such that stock is transferred to the Trustee under Section 11.3 of this
Article, shall immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as the Corporation
may request in order to determine the effect, if any, of such Transfer or
attempted Transfer or other event on the Corporation's status as a REIT.
Failure to give such notice shall not limit the rights and remedies of the
Board of Directors provided herein in any way.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after
the Issue Date certain record and Beneficial Owners and transferees of shares
of Class J Preferred Stock will be required to provide certain information as
set out below.
(a) Annual Disclosure. Every record and Beneficial Owner
of more than 5% (or such other percentage between 0.5% and 5%, as provided in
the applicable regulations adopted under the Code) of the number of Outstanding
shares of Class J Preferred Stock shall, within 30 days after January 1 of each
year, give written notice to the Corporation stating the name and address of
such record or Beneficial Owner, the number of shares of Class J Preferred
Stock Beneficially Owned, and a full description of how such shares are held.
Each such record or Beneficial Owner of Class J Preferred Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class J
Preferred Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (i) comply with the provisions of the Code
regarding the qualification of the Corporation as a REIT under the Code and
(ii) ensure compliance with the Ownership Limit or the Initial Holder Limit, as
applicable. Each stockholder of record, including without limitation any Person
that holds shares of Class J Preferred Stock on behalf of a Beneficial Owner,
shall take all reasonable steps to obtain the written notice described in this
Section 11.5 from the Beneficial Owner.
(b) Disclosure at the Request of the Corporation. Any
Person that is a Beneficial Owner of shares of Class J Preferred Stock and any
Person (including the stockholder of record) that is holding shares of Class J
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
shall provide such information as the Corporation, in its sole discretion, may
request in order to determine the Corporation's status as a REIT, to comply
with the requirements of any taxing authority or other governmental agency, to
determine any such compliance or to ensure compliance with the Ownership Limit
and the Initial Holder Limit, and shall provide a statement or affidavit to the
Corporation setting forth the number of shares of Class J Preferred Stock
already Beneficially Owned by such stockholder or
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<PAGE> 192
proposed transferee and any related persons specified, which statement or
affidavit shall be in the form prescribed by the Corporation for that purpose.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article
shall limit the authority of the Board of Directors to take such other action
as it deems necessary or advisable (subject to the provisions of Section 11.12
of this Article) (i) to protect the Corporation and the interests of its
stockholders in the preservation of the Corporation's status as a REIT and (ii)
to insure compliance with the Ownership Limit and the Initial Holder Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of Section 11 of this Article, or in the
case of an ambiguity in any definition contained in Section 11 of this Article,
the Board of Directors shall have the power to determine the application of the
provisions of this Article with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may
be established with respect to the limitations of Section 11.1 of this Article.
(a) Waiver of Ownership Limit. The Board of Directors,
upon receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may, but shall not
be required to, waive the application, in whole or in part, of the Ownership
Limit to a Person subject to the Ownership Limit, if such person is not an
individual for purposes of Section 542(a) of the Code and is a corporation,
partnership, estate or trust. In connection with any such exemption, the Board
of Directors may require such representations and undertakings from such Person
and may impose such other conditions as the Board of Directors deems necessary,
in its sole discretion.
(b) Pledge by Initial Holder. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class J Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and
the pledgee shall not be subject to the Ownership Limit with respect to the
Class J Preferred Stock so pledged to it either as a result of the pledge or
upon foreclosure.
(c) Underwriters. For a period of 270 days (or such
longer period of time as any underwriter described below shall hold an unsold
allotment of Class J Preferred Stock) following the purchase of Class J
Preferred Stock by an underwriter that (i) is a corporation, partnership or
other legal entity and (ii) participates in an offering of the Class J
Preferred Stock, such underwriter shall not be subject to the Ownership Limit
with respect to the Class J Preferred Stock purchased by it as a part of or in
connection with such offering and with respect to any Class J Preferred Stock
purchased in connection with market making activities.
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<PAGE> 193
11.9 LEGEND. Each certificate for Class J Preferred Stock
shall bear substantially the following legend:
"The shares of Class J Cumulative Convertible Preferred
Stock represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class J Cumulative
Convertible Preferred Stock in excess of the Ownership Restrictions,
as applicable, with certain further restrictions and exceptions set
forth in the Charter (including the Articles Supplementary setting
forth the terms of the Class J Cumulative Convertible Preferred
Stock). Any Person that attempts to Beneficially Own shares of Class J
Cumulative Convertible Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All capitalized
terms in this legend have the meanings ascribed to such terms in the
Charter (including the Articles Supplementary setting forth the terms
of the Class J Cumulative Convertible Preferred Stock), as the same
may be amended from time to time, a copy of which, including the
restrictions on transfer, will be sent without charge to each
stockholder that so requests. If the restrictions on transfer are
violated (i) the transfer of the shares of Class J Cumulative
Convertible Preferred Stock represented hereby will be void in
accordance with the Charter (including the Articles Supplementary
setting forth the terms of the Class J Cumulative Convertible
Preferred Stock) or (ii) the shares of Class J Cumulative Convertible
Preferred Stock represented hereby will automatically be transferred
to a Trustee of a Trust for the benefit of one or more Charitable
Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article or any
application of any such provision is determined in a final and unappealable
judgment to be void, invalid or unenforceable by any Federal or state court
having jurisdiction over the issues, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article
to the contrary notwithstanding, the Board of Directors shall be entitled to
take or omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit
and the Initial Holder Limit in the event of a change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article
shall be interpreted to preclude the settlement of any transaction entered into
through the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
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FOURTH: The terms of the Class J Cumulative Convertible Preferred
Stock set forth in Article Third hereof shall become Article XX of the Charter.
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<PAGE> 195
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on November 6, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LUCY CORDOVA /s/ TROY D. BUTTS
- ------------------------- ---------------------------------------------
Lucy Cordova Troy D. Butts
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a
part, hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
/s/ TROY D. BUTTS
---------------------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
<PAGE> 196
CERTIFICATE OF CORRECTION
to
ARTICLES OF AMENDMENT AND RESTATEMENT
of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(a Maryland corporation)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(the "Corporation"), having its principal office in Baltimore City, Maryland,
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: Articles of Amendment and Restatement, dated July 13, 1994, of
the Corporation were filed with the State Department of Assessments and
Taxation of Maryland on July 15, 1994, at 3:03 p.m. (as corrected by the
Certificate of Correction to Articles of Amendment and Restatement of the
Corporation, dated November 6, 1997 and filed with the State Department of
Assessment and Taxation of Maryland on November 6, 1997) and said Articles of
Amendment and Restatement require correction as permitted by Section 1-207 of
the Corporations and Associations Article of the Annotated Code of Maryland.
SECOND: Section 3.4.9 of ARTICLE IV of the Articles of Amendment and
Restatement as previously filed and to be corrected hereby reads as follows:
3.4.9 Legend. Each certificate for Class A Common Stock shall
bear the following legend:
"The shares of Class A Common Stock represented by this
certificate are subject to restrictions on transfer. No person may Beneficially
Own shares of Class A Common Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth in the
Corporation's Amended and Restated Certificate of Incorporation
("Certificate"). Any Person that attempts to Beneficially Own shares of Class A
Common Stock in excess of the applicable limitation must immediately notify the
Corporation. All capitalized terms in this legend have the meanings ascribed to
such terms in the Corporation's Certificate, as the same may be amended from
time to time, a copy of which, including the restrictions on transfer, will be
sent without charge to each shareholder that so requests. If the restrictions
on transfer are violated, the shares of Class A Common Stock represented hereby
will be either (i) void in accordance with the Certificate or (ii)
automatically transferred to a Trustee of a Trust for the benefit of one or
more Charitable Beneficiaries."
<PAGE> 197
THIRD: Section 3.4.9 of ARTICLE IV of the Articles of Amendment and
Restatement as corrected hereby is as follows:
3.4.9 Legend. Each certificate for Class A Common Stock shall
bear the following legend:
"The shares of Class A Common Stock represented by this
certificate are subject to restrictions on transfer. No person may Beneficially
Own shares of Class A Common Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth in the
Charter. Any Person that attempts to Beneficially Own shares of Class A Common
Stock in excess of the applicable limitation must immediately notify the
Corporation. All capitalized terms in this legend have the meanings ascribed to
such terms in the Charter, as the same may be amended from time to time, a copy
of which, including the restrictions on transfer, will be sent without charge
to each stockholder that so requests. If the restrictions on transfer are
violated, (i) the transfer of the shares of Class A Common Stock represented
hereby will be void in accordance with the Charter or (ii) the shares of Class
A Common Stock represented hereby will automatically be transferred to a
Trustee of a Trust for the benefit of one or more Charitable Beneficiaries."
FOURTH: The inaccuracy or defect in the legend contained in Section
3.4.9 of ARTICLE IV of the Articles of Amendment and Restatement as previously
filed is that the legend contains an inaccurate description of the effects of
an improper transfer as set forth elsewhere in the Charter.
2
<PAGE> 198
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its
behalf by its Vice Chairman and President and witnessed by its Secretary on
October 21, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- ------------------------------- -----------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Certificate of Correction to be
the act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
By: /s/ PETER K. KOMPANIEZ
-------------------------------
Peter K. Kompaniez,
Vice Chairman and President
3
<PAGE> 199
CERTIFICATE OF CORRECTION
to
ARTICLES SUPPLEMENTARY
Class C Cumulative Preferred Stock
(Par Value $.01 Per Share)
of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(a Maryland corporation)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(the "Corporation"), having its principal office in Baltimore City, Maryland,
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: Articles Supplementary, dated December 22, 1997, of the
Corporation were filed with the State Department of Assessments and Taxation of
Maryland on December 22, 1997, at 1:38 p.m. (as corrected by the Certificate of
Correction to Articles Supplementary of the Corporation, dated February 17,
1998 and filed with the State Department of Assessments and Taxation of
Maryland on February 18, 1998) and said Articles Supplementary require
correction as permitted by Section 1-207 of the Corporations and Associations
Article of the Annotated Code of Maryland.
SECOND: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as
previously filed and to be corrected hereby reads as follows:
10.9 Legend. Each certificate for Class C Preferred Stock
shall bear the following legend:
"The shares of Class C Cumulative Preferred Stock
represented by this certificate are subject to restrictions
on transfer. No person may Beneficially Own shares of Class C
Cumulative Preferred Stock in excess of the Ownership
Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Corporation's
Charter (including the Articles Supplementary setting forth
the terms of the Class C Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class C
Cumulative Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed
to such terms in the Corporation's Charter (including the
Articles Supplementary setting forth the terms of the Class C
Cumulative Preferred Stock), as the same may be amended from
time to time, a copy of which, including the restrictions on
transfer, will be sent without charge to each stockholder
that so requests. If the restrictions on transfer are
violated, the shares of Class C Cumulative Preferred Stock
represented hereby will be either (i)
<PAGE> 200
void in accordance with the Certificate or (ii) automatically
transferred to a Trustee of a Trust for the benefit of one or
more Charitable Beneficiaries."
THIRD: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as
corrected hereby is as follows:
10.9 Legend. Each certificate for Class C Preferred Stock
shall bear the following legend:
"The shares of Class C Cumulative Preferred Stock
represented by this certificate are subject to restrictions
on transfer. No person may Beneficially Own shares of Class C
Cumulative Preferred Stock in excess of the Ownership
Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter
(including the Articles Supplementary setting forth the terms
of the Class C Cumulative Preferred Stock). Any Person that
attempts to Beneficially Own shares of Class C Cumulative
Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in
this legend have the meanings ascribed to such terms in the
Charter (including the Articles Supplementary setting forth
the terms of the Class C Cumulative Preferred Stock), as the
same may be amended from time to time, a copy of which,
including the restrictions on transfer, will be sent without
charge to each stockholder that so requests. If the
restrictions on transfer are violated (i) the transfer of the
shares of Class C Cumulative Preferred Stock represented
hereby will be void in accordance with the Charter (including
the Articles Supplementary setting forth the terms of the
Class C Cumulative Preferred Stock) or (ii) the shares of
Class C Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the
benefit of one or more Charitable Beneficiaries."
FOURTH: The inaccuracy or defect in the legend contained in Section
10.9 of ARTICLE THIRD of the Articles Supplementary as previously filed is
that the legend contains an inaccurate description of the effects of an
improper transfer as set forth elsewhere in the Charter.
2
<PAGE> 201
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its
behalf by its Vice Chairman and President and witnessed by its Secretary on
October 21, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- ------------------------------- -----------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Certificate of Correction to be
the act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
By: /s/ PETER K. KOMPANIEZ
--------------------------------
Peter K. Kompaniez,
Vice Chairman and President
3
<PAGE> 202
CERTIFICATE OF CORRECTION
to
ARTICLES SUPPLEMENTARY
Class D Cumulative Preferred Stock
(Par Value $.01 Per Share)
of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(a Maryland corporation)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(the "Corporation"), having its principal office in Baltimore City, Maryland,
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: Articles Supplementary, dated February 17, 1998, of the
Corporation were filed with the State Department of Assessments and Taxation of
Maryland on February 18, 1998, at 1:40 p.m. and said Articles Supplementary
require correction as permitted by Section 1-207 of the Corporations and
Associations Article of the Annotated Code of Maryland.
SECOND: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as
previously filed and to be corrected hereby reads as follows:
10.9 Legend. Each certificate for Class D Preferred Stock
shall bear the following legend:
"The shares of Class D Cumulative Preferred Stock
represented by this certificate are subject to restrictions
on transfer. No person may Beneficially Own shares of Class D
Cumulative Preferred Stock in excess of the Ownership
Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Corporation's
Charter (including the Articles Supplementary setting forth
the terms of the Class D Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class D
Cumulative Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed
to such terms in the Corporation's Charter (including the
Articles Supplementary setting forth the terms of the Class D
Cumulative Preferred Stock), as the same may be amended from
time to time, a copy of which, including the restrictions on
transfer, will be sent without charge to each stockholder
that so requests. If the restrictions on transfer are
violated, the shares of Class D Cumulative Preferred Stock
represented hereby will be either (i) void in accordance with
the Certificate or (ii) automatically transferred to a
Trustee of a Trust for the benefit of one or more Charitable
Beneficiaries."
<PAGE> 203
THIRD: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as
corrected hereby is as follows:
10.9 Legend. Each certificate for Class D Preferred Stock
shall bear the following legend:
"The shares of Class D Cumulative Preferred Stock
represented by this certificate are subject to restrictions
on transfer. No person may Beneficially Own shares of Class D
Cumulative Preferred Stock in excess of the Ownership
Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter
(including the Articles Supplementary setting forth the terms
of the Class D Cumulative Preferred Stock). Any Person that
attempts to Beneficially Own shares of Class D Cumulative
Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in
this legend have the meanings ascribed to such terms in the
Charter (including the Articles Supplementary setting forth
the terms of the Class D Cumulative Preferred Stock), as the
same may be amended from time to time, a copy of which,
including the restrictions on transfer, will be sent without
charge to each stockholder that so requests. If the
restrictions on transfer are violated (i) the transfer of
shares of Class D Cumulative Preferred Stock represented
hereby will be void in accordance with the Charter (including
the Articles Supplementary setting forth the terms of the
Class D Cumulative Preferred Stock) or (ii) the shares of
Class D Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the
benefit of one or more Charitable Beneficiaries.
FOURTH: The inaccuracy or defect in the legend contained in Section
10.9 of ARTICLE THIRD of the Articles Supplementary as previously filed is that
the legend contains an inaccurate description of the effects of an improper
transfer as set forth elsewhere in the Charter.
2
<PAGE> 204
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its
behalf by its Vice Chairman and President and witnessed by its Secretary on
October 21, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- ------------------------------- -----------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Certificate of Correction to be
the act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
By: /s/ PETER K. KOMPANIEZ
--------------------------------
Peter K. Kompaniez,
Vice Chairman and President
3
<PAGE> 205
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS K CONVERTIBLE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has
duly divided and classified 5,750,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class K Convertible Cumulative Preferred
Stock, par value $.01 per share, and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified
as Class K Convertible Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 5,750,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 484,027,500 shares
immediately prior to the reclassification to 478,277,500 shares immediately
after the reclassification.
THIRD: The terms of the Class K Convertible Cumulative Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class K
Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class K
Preferred Stock"), and Five Million Seven Hundred Fifty Thousand (5,750,000)
shall be the authorized number of shares of such Class K Preferred Stock
constituting such class.
2. DEFINITIONS.
For purposes of the Class K Preferred Stock, the following terms shall
have the meanings indicated:
<PAGE> 206
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial
Holder, clause (iii) of this definition, and clause (a) (ii) of the
definition of "Person" shall be disregarded. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class K
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 9 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Cash Redemption Price" shall mean, with respect to any shares of
Class K Preferred Stock to be redeemed, (i) if the Redemption Date
occurs during the period from and including February 20, 2002, to but
excluding February 18, 2003, 102% of the Liquidation Preference
thereof, and (ii) if the Redemption Date occurs on or after February
18, 2003, 100% of the Liquidation Preference thereof, plus, in the
case of clause (i) or (ii), all accumulated, accrued and unpaid
dividends (whether or not earned or declared), if any, to the
Redemption Date.
2
<PAGE> 207
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class K Preferred Stock" shall have the meaning set forth in Section
1 of this Article.
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case, as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the NYSE or, if
the Equity Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Equity Stock is listed or admitted to trading
or, if the Equity Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price, or if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system
is no longer in use, the principal other automated quotation system
that may then be in use or, if the Equity Stock is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Equity
Stock selected by the Board of Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time
to time, as the same may be amended, and any successor thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation, and the Class B Common Stock, $.01 par
value per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such
Class A Common Stock or Class B Common Stock shall be reclassified.
"Conversion Price" shall mean the conversion price per share of Class
A Common Stock for which each share of Class K Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section 7 of this Article. The initial Conversion Price shall be
$42.00 (equivalent to a
3
<PAGE> 208
conversion rate of 0.59524 shares of Class A Common Stock for each
share of Class K Preferred Stock).
"Dividend Payment Date" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business
Day immediately following such Dividend Payment Date and no interest
shall accrue on such dividend from such date to such Dividend Payment
Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
February 18, May 18, August 18 and November 18 of each year and ending
on and including the day preceding the first day of the next
succeeding Dividend Period, other than the Dividend Period during
which any Class K Preferred Stock shall be redeemed pursuant to
Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class K Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 11.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean February 18, 1999.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including May 17, 1999.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares
of Class K Preferred Stock of the Corporation having an Aggregate
Value not in excess of the excess of (x) 15% of the Aggregate Value of
all Outstanding shares of Equity Stock over (y) the Aggregate Value of
all shares of Equity Stock other than Class K Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make
available to the representative(s) of the Initial Holder and the Board
of Directors, a schedule that sets forth the then-current Initial
Holder Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
4
<PAGE> 209
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through
Entity, a number of the Outstanding shares of Class K Preferred Stock
of the Corporation having an Aggregate Value not in excess of the
excess of (x) 15% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class K Preferred Stock that are Beneficially Owned
by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone,
at that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class K Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class K Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
5
<PAGE> 210
"Person" shall mean (a) for purposes of Section 11 of this Article,
(i) an individual, corporation, partnership, estate, trust (including
a trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section
509(a) of the Code, joint stock company or other entity, and (ii) a
"group," as that term is used for purposes of Section 13(d)(3) of the
Exchange Act, and (b) for purposes of the remaining Sections of this
Article, any individual, firm, partnership, corporation or other
entity, including any successor (by merger or otherwise) of such
entity.
"Prohibited Transferee" has the meaning set forth in Section 11.3(A)
of this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of
Section 3 of this Article.
"Redemption Market Price" shall mean, with respect to any redemption
of shares of Class K Preferred Stock, the lesser of (i) the average of
the daily Closing Prices of the Class A Common Stock for the 20
consecutive Trading Days immediately preceding the first Business Day
immediately preceding the date of the applicable redemption notice and
(ii) the Closing Price of the Class A Common Stock on the Trading Day
immediately preceding the first Business Day immediately preceding the
date of the applicable redemption notice.
"Redemption Date" shall mean, in the case of any redemption of any
shares of Class K Preferred Stock, the date fixed for redemption of
such shares.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other
distribution by the Board of Directors, the allocation of funds to be
so paid on any series or class of capital stock of the Corporation;
provided, however, that if any funds for any class or series of Junior
Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the
Class K Preferred Stock shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other
similar agent.
6
<PAGE> 211
"Trading Day" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE,
a day on which the NYSE is open for the transaction of business, (ii)
if the Equity Stock is not listed or admitted to trading on the NYSE
but is listed or admitted to trading on another national securities
exchange or automated quotation system, a day on which the principal
national securities exchange or automated quotation system, as the
case may be, on which the Equity Stock is listed or admitted to
trading is open for the transaction of business, or (iii) if the
Equity Stock is not listed or admitted to trading on any national
securities exchange or automated quotation system, any day other than
a Saturday, a Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of a share of Class K Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of
Class K Preferred Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or
exchangeable for Class K Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class K Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class K Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class K Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 9
of this Article.
3. DIVIDENDS.
(a) The holders of Class K Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of funds
legally available for that purpose, quarterly cash dividends on the Class K
Preferred Stock in an amount per share equal to (i) during the period from the
Issue Date through and including
7
<PAGE> 212
February 17, 2002, the greater of $0.50 or the quarterly cash dividend paid or
payable (determined on each Dividend Payment Date) on the number of shares of
Class A Common Stock (or portion thereof) into which a share of Class K
Preferred Stock is convertible, and (ii) during the period from and after
February 18, 2002, the greater of $0.625 or the quarterly cash dividend paid or
payable (determined on each Dividend Payment Date) on the number of shares of
Class A Common Stock (or portion thereof) into which a share of Class K
Preferred Stock is convertible. Such dividends shall be cumulative from the
Issue Date, whether or not in any Dividend Period or Periods such dividends
shall be declared or there shall be funds of the Corporation legally available
for the payment of such dividends, and shall be payable quarterly in arrears on
each Dividend Payment Date, commencing on May 18, 1999. Each such dividend
shall be payable in arrears to the holders of record of the Class K Preferred
Stock, as they appear on the stock records of the Corporation at the close of
business on the February 1, May 1, August 1 or November 1 (each a "Record
Date"), as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, which date shall not precede
by more than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) Any dividend payable on the Class K Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class K Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the Class K
Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Class K Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class K Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class K Preferred
Stock have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof has been or contemporaneously is set
apart for payment of such dividends on the Class K Preferred Stock for all
Dividend Periods ending on or prior to the date such dividend or distribution
is declared, paid, set apart for payment or made, as the case may be, with
respect to such shares of Parity Stock. When dividends are not paid in full or
a sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class K Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the
respective amounts of dividends accumulated, accrued and unpaid on the Class K
Preferred Stock and accumulated, accrued and unpaid on such Parity Stock.
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(d) So long as any of the shares of Class K Preferred Stock
are outstanding, no dividends (other than dividends or distributions paid in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Junior Stock) shall be declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption
of any shares of any such stock), directly or indirectly, by the Corporation
(except by conversion into or exchange for shares of, or options, warrants or
rights to subscribe for or purchase shares of, Junior Stock), nor shall any
other cash or other property otherwise be paid or distributed to or for the
benefit of any holder of shares of Junior Stock in respect thereof, directly or
indirectly, by the Corporation unless, in each case, dividends equal to the
full amount of all accumulated, accrued and unpaid dividends on all outstanding
shares of Class K Preferred Stock have been declared and paid, or such
dividends have been declared and a sum sufficient for the payment thereof has
been set apart for such payment, on all outstanding shares of Class K Preferred
Stock for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, redemption, purchase or other acquisition
is necessary in order to maintain the continued qualification of the
Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise)
shall be made to or set apart for the holders of Junior Stock, the holders of
shares of Class K Preferred Stock shall be entitled to receive Twenty-Five
Dollars ($25) per share of Class K Preferred Stock (the "Liquidation
Preference"), plus an amount equal to all dividends (whether or not earned or
declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Class K Preferred Stock have been
paid the Liquidation Preference in full, plus an amount equal to all dividends
(whether or not
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earned or declared) accumulated, accrued and unpaid thereon to the date of
final distribution to such holders, no payment will be made to any holder of
Junior Stock upon the liquidation, dissolution or winding up of the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Class K Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of Class K Preferred
Stock and any such other Parity Stock ratably in the same proportion as the
respective amounts that would be payable on such Class K Preferred Stock and
any such other Parity Stock if all amounts payable thereon were paid in full.
For the purposes of this Section 4, (i) a consolidation or merger of the
Corporation with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets, or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
K Preferred Stock and any Parity Stock, as provided in Section 4(a), any other
series or class or classes of Junior Stock shall, subject to the respective
terms thereof, be entitled to receive any and all assets remaining to be paid
or distributed, and the holders of the Class K Preferred Stock and any Parity
Stock shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class K Preferred Stock shall not be redeemable
by the Corporation prior to February 20, 2002, except as set forth in Section
11.2 of this Article. During the period beginning on February 20, 2002, the
Corporation, at its option, may redeem shares of Class K Preferred Stock, in
whole or from time to time in part, at a redemption price payable in cash equal
to the Cash Redemption Price applicable thereto. On and after February 20,
2002, the Corporation, at its option, may redeem shares of Class K Preferred
Stock, in whole or from time to time in part, in exchange for a number of
shares of Class A Common Stock equal to (i) 105% of the applicable Cash
Redemption Price, divided by (ii) the Redemption Market Price applicable to
such redemption. In lieu of any fractional shares of Class A Common Stock which
would otherwise be issuable upon any redemption of Class K Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional interest
in an amount in cash (computed to the nearest cent) equal to the applicable
Redemption Market Price multiplied by the fractional interest (computed to the
nearest 1/100th of a percent) that otherwise would have been deliverable upon
such redemption of Class K Preferred Stock. In the event of a redemption of
shares of Class K Preferred Stock, if the Redemption Date occurs after a
dividend record date and on or prior to the related Dividend Payment Date, the
dividend payable on such Dividend Payment Date in respect of such shares called
for redemption shall be payable on such Dividend Payment Date to the holders of
record at the close of business on such dividend record
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date notwithstanding the redemption of such shares, and shall not be payable as
part of the redemption price for such shares. In connection with any redemption
for cash pursuant to this Section 5(a), the redemption price of the Class K
Preferred Stock (other than any portion thereof consisting of accumulated,
accrued and unpaid dividends) shall be payable solely with the proceeds from
the sale by the Corporation or the Operating Partnership of other capital
shares of the Corporation or the Operating Partnership (whether or not such
sale occurs concurrently with such redemption). For purposes of the preceding
sentence, "capital shares" means any common stock, preferred stock, depositary
shares, partnership or other interests, participations or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable at the option of the holder for equity
securities (unless and to the extent such debt securities are subsequently
converted into capital shares)) or options to purchase any of the foregoing of
or in the Corporation or the Operating Partnership.
(b) The Redemption Date shall be selected by the Corporation,
shall be specified in the notice of redemption and shall be not less than 30
days nor more than 60 days after the date notice of redemption is sent by the
Corporation.
(c) If full cumulative dividends on all outstanding shares of
Class K Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class K Preferred Stock may be redeemed unless
all outstanding shares of Class K Preferred Stock are simultaneously redeemed,
and neither the Corporation nor any affiliate of the Corporation may purchase
or acquire shares of Class K Preferred Stock, otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of shares of
Class K Preferred Stock.
(d) If the Corporation shall redeem shares of Class K
Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such
redemption shall be given to each holder of record of the shares to be
redeemed. Such notice shall be provided by first class mail, postage prepaid,
at such holder's address as the same appears on the stock records of the
Corporation. Neither the failure to mail any notice required by this paragraph
(d), nor any defect therein or in the mailing thereof to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which has been
mailed in the manner herein provided shall be conclusively presumed to have
been duly given on the date mailed whether or not the holder receives the
notice. Each such notice shall state, as appropriate: (i) the Redemption Date;
(ii) the number of shares of Class K Preferred Stock to be redeemed and, if
fewer than all such shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (iii) the place or places at
which certificates for such shares are to be surrendered for cash or shares of
Class A Common Stock; and (iv) the redemption price payable on such Redemption
Date (whether in cash or shares of Class A Common Stock), including, without
limitation, a statement as to whether or not accumulated, accrued and unpaid
dividends will be payable as part of the redemption price, or payable on the
next Dividend
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Payment Date to the record holder at the close of business on the relevant
record date as described in the next succeeding sentence. Notice having been
mailed as aforesaid, from and after the Redemption Date (unless the Corporation
shall fail to make available the amount of cash necessary to effect such
redemption), (i) dividends on the shares of Class K Preferred Stock so called
for redemption shall cease to accumulate or accrue on the shares of Class K
Preferred Stock called for redemption, (ii) said shares shall no longer be
deemed to be outstanding, and (iii) all rights of the holders thereof as
holders of Class K Preferred Stock of the Corporation shall cease except the
right to receive the cash payable, or shares of Class A Common Stock issuable,
upon such redemption, without interest thereon, upon surrender of their
certificates if so required; provided, however, that if the Redemption Date for
any shares of Class K Preferred Stock occurs after any dividend record date and
on or prior to the related Dividend Payment Date, the full dividend payable on
such Dividend Payment Date in respect of such shares of Class K Preferred Stock
called for redemption shall be payable on such Dividend Payment Date to the
holders of record of such shares at the close of business on the corresponding
dividend record date notwithstanding the prior redemption of such shares. At
the close of business on the Redemption Date, without any further action, each
holder of shares of Class K Preferred Stock redeemed for shares of Class A
Common Stock shall be deemed a holder of the number of shares of Class A Common
Stock for which such Class K Convertible Preferred Stock has been redeemed
(unless the Corporation defaults on its obligation to deliver shares of Class A
Common Stock or cash). The Corporation's obligation to make available the cash
necessary to effect such redemption in accordance with the preceding sentence
shall be deemed fulfilled if, on or before the applicable Redemption Date, the
Corporation shall irrevocably deposit in trust with a bank or trust company
(which may not be an affiliate of the Corporation) that has, or is an
affiliate of a bank or trust company that has, a capital and surplus of at
least $50,000,000, such amount of cash as is necessary for such redemption
plus, if such Redemption Date occurs after any dividend record date and on or
prior to the related Dividend Payment Date, such amount of cash as is necessary
to pay the dividend payable on such Dividend Payment Date in respect of such
shares of Class K Preferred Stock called for redemption, with irrevocable
instructions that such cash be applied to the redemption of the shares of Class
K Preferred Stock so called for redemption and, if applicable, the payment of
such dividend. No interest shall accrue for the benefit of the holders of
shares of Class K Preferred Stock to be redeemed on any cash so set aside by
the Corporation. Subject to applicable escheat laws, any such cash unclaimed at
the end of two years from the Redemption Date shall revert to the general funds
of the Corporation, after which reversion the holders of shares of Class K
Preferred Stock so called for redemption shall look only to the general funds
of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class K Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) or shares of Class A Common Stock
for which such shares have been
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redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class K Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class K
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class K Preferred Stock held of record by each holder
of such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If
fewer than all the shares of Class K Preferred Stock represented by any
certificate are redeemed, then a new certificate representing the unredeemed
shares shall be issued without cost to the holders thereof.
(e) All shares of Class A Common Stock that may be issued
upon redemption of shares of Class K Preferred Stock shall be duly and validly
issued and fully paid and non-assessable, and prior to giving any notice of
redemption the Corporation shall take any corporate action necessary therefor.
6. STATUS OF REACQUIRED STOCK.
All shares of Class K Preferred Stock that have been issued and
reacquired in any manner by the Corporation (including, without limitation,
shares of Class K Preferred Stock which have been surrendered for conversion)
shall be returned to the status of authorized but unissued shares of Class K
Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, holders of shares of Class K
Preferred Stock shall have the right to convert all or a portion of such shares
into shares of Class A Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of
this Section 7, each share of Class K Preferred Stock shall, at the option of
the holder thereof, be convertible at any time (unless such share is called for
redemption, then to and including but not after the close of business on the
date immediately prior to the Redemption Date, unless the Corporation shall
default in payment due upon redemption thereof), into that number of fully paid
and non-assessable shares of Class A Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing $25 by the
Conversion Price in effect at such time and by surrender of the certificate
representing such shares to be converted in the manner provided in subsection
(b) of this Section 7.1.
(b) In order to convert shares of Class K Preferred Stock,
the holder of the shares to be converted shall surrender the certificate
representing such shares at any office or agency maintained by the Corporation
for such purpose, accompanied by
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the funds, if any, required by the last paragraph of this subsection (b), and
shall give written notice of conversion in the form provided on such
certificate representing shares of Class K Preferred Stock (or such other
notice as is acceptable to the Corporation) to the Corporation at such office
or agency that the holder elects to convert the shares of Class K Preferred
Stock specified in such notice. Such notice shall also state the name or names,
together with address or addresses, in which the certificate or certificates
for shares of Class A Common Stock which shall be issuable in such conversion
shall be issued. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Class K Preferred Stock is
registered, each certificate representing a share of Class K Preferred Stock
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax.
As promptly as practicable after the surrender of
certificates representing such shares of Class K Preferred Stock and the
receipt of such notice, instruments of transfer and funds, if any, as
aforesaid, the Corporation shall issue and shall deliver at such office or
agency to such holder, or as designated in such holder's written instructions,
a certificate or certificates for the number of full shares of Class A Common
Stock issuable upon the conversion of such share or shares of Class K Preferred
Stock in accordance with provisions of this Section 7, and a check or cash in
respect of any fractional interest in a share of Class A Common Stock arising
upon such conversion, as provided in paragraph (c) of this Section 7.1.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which certificates
representing such shares of Class K Preferred Stock shall have been surrendered
and such notice (and any applicable instruments of transfer and any required
taxes) received by the Corporation as aforesaid, and the Person or Persons in
whose name or names any certificate or certificates for shares of Class A
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby at
such time on such date, and such conversion shall be at the Conversion Price in
effect at such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such Person or Persons
shall be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date on which such shares shall have been surrendered and such notice received
by the Corporation.
Holders of Class K Preferred Stock at the close of business
on a Record Date will be entitled to receive an amount equal to the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following such Record Date and
prior to such Dividend Payment Date; provided, however, that Class K Preferred
Stock surrendered for conversion during the period between the close of
business on any Record Date and the opening of business
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on the corresponding Dividend Payment Date (except shares converted after the
issuance of a notice of redemption with respect to a Redemption Date during
such period or coinciding with such Dividend Payment Date, which will be
entitled to such dividend) must be accompanied by payment of an amount equal to
the dividend payable on such shares on such Dividend Payment Date. A holder of
Class K Preferred Stock on a Record Date who (or whose transferee) tenders any
such shares for conversion into shares of Class A Common Stock on such Dividend
Payment Date will receive the dividend payable by the Corporation on such
shares of Class K Preferred Stock on such date, and the converting holder need
not include payment of the amount of such dividend upon surrender of Class K
Preferred Stock for conversion. Except as provided herein, the Corporation will
make no payment or allowance for unpaid dividends, whether or not in arrears,
on converted shares or for dividends on the Class A Common Stock issued upon
such conversion.
(c) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class K Preferred Stock. If more than one share of
Class K Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class K Preferred Stock so surrendered. In lieu of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of any share of Class K Preferred Stock, the Corporation
shall pay to the holder of such shares an amount in cash (computed to the
nearest cent) equal to the Closing Price of the Class A Common Stock on the
Trading Day immediately preceding the date of conversion, multiplied by the
fractional interest that otherwise would have been deliverable upon conversion
of such share.
7.2 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to
time as follows:
(i) If the Corporation shall after the Issue Date
(A) pay a dividend or make a distribution on its Class A Common Stock in shares
of Class A Common Stock, (B) subdivide its outstanding shares of Class A Common
Stock into a greater number of shares, (C) combine its outstanding shares of
Class A Common Stock into a smaller number of shares or (D) issue any shares of
capital stock by reclassification of its outstanding Class A Common Stock,
then, in each such case, the Conversion Price in effect immediately prior to
such action shall be adjusted so that the holder of any share of Class K
Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Class A Common Stock or other capital stock of
the Corporation which such holder would have owned or been entitled to receive
immediately following such action had such share been converted immediately
prior to the occurrence of such event. An adjustment made pursuant to
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this subsection (i) of this Section 7.2(a) shall become effective immediately
after the record date, in the case of a dividend or distribution, or
immediately after the effective date, in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
subsection (i), the holder of any share of Class K Preferred Stock thereafter
surrendered for conversion shall become entitled to receive shares of two or
more classes of capital stock or shares of Class A Common Stock and other
capital stock of the Corporation, the Board of Directors (whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent) shall determine the allocation of the
adjusted Conversion Price between or among shares of such classes of capital
stock or shares of Class A Common Stock and other capital stock.
(ii) If the Corporation shall, after the Issue Date,
issue rights, options or warrants to all holders of its outstanding shares of
Class A Common Stock entitling them (for a period expiring within 45 days after
the record date described below) to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the current market price per share
(determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A
Common Stock (other than pursuant to any stock option, restricted stock or
other incentive or benefit plan or stock ownership or purchase plan for the
benefit of employees, directors or officers or any dividend reinvestment plan
of the Corporation in effect at the time hereof or any other similar plan
adopted or implemented hereafter), then the Conversion Price in effect
immediately prior thereto shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date by a fraction, the numerator of which shall be the sum of (A)
the number of shares of Class A Common Stock outstanding on the record date and
(B) the number of shares which the aggregate proceeds to the Corporation from
the exercise of such rights, options or warrants for Class A Common Stock would
purchase at such current market price, and the denominator of which shall be
the sum of (A) the number of shares of Class A Common Stock outstanding on the
record date and (B) the number of additional shares of Class A Common Stock
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall be made successively whenever any rights,
options or warrants are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
rights, options or warrants; provided, however, that if all of the shares of
Class A Common Stock offered for subscription or purchase are not delivered
upon the exercise of such rights, options or warrants, upon the expiration of
such rights, options or warrants, the Conversion Price shall be readjusted to
the Conversion Price which would have been in effect had the numerator and the
denominator of the foregoing fraction and the resulting adjustment been made
based upon the number of shares of Class A Common Stock actually delivered upon
the exercise of such rights, options or warrants rather than upon the number of
shares of Class A Common Stock offered for subscription or purchase. In
determining whether any rights, options or warrants entitle the holders to
subscribe for or purchase shares of Class A Common Stock at less than such
current market price, and in determining
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the aggregate offering price of such shares of Class A Common Stock, there
shall be taken into account any consideration received by the Corporation for
such rights, options or warrants, with the value of such consideration, if
other than cash, determined by the Board of Directors (whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent).
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its outstanding Class A Common Stock
any capital stock (other than Class A Common Stock), evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase
securities of the Corporation (excluding (A) those referred to in subsections
(i) and (ii) of this Section 7.2(a), (B) dividends and distributions paid in
cash out of the retained earnings of the Corporation, and (C) distributions
upon mergers or consolidations to which subsection (b) of this Section 7.2
applies), then, in each such case, the Conversion Price shall be adjusted to
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the record date of such distribution by a fraction, the
numerator of which shall be the current market price per share (determined
pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common
Stock, less the fair market value on such record date (determined by the Board
or Directors, whose determination shall be conclusive and shall be described in
a statement filed by the Corporation with the Transfer Agent) of the portion of
the capital stock or assets or the evidences of indebtedness or assets so
distributed to the holder of one share of Class A Common Stock or of such
subscription rights or warrants applicable to one share of Class A Common
Stock, and the denominator of which shall be such current market price per
share of Class A Common Stock. Such adjustment shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such distribution.
(iv) For the purpose of any computation under
subsections (ii) and (iii) of this Section 7.2(a), the current market price per
share of Class A Common Stock on any date shall be the average of the Closing
Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading
Days ending on the last full Trading Day prior to the Time of Determination or
(B) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such distribution
through such last full Trading Day prior to the Time of Determination. For
purposes of the foregoing, the term "Time of Determination" shall mean the time
and date of the earlier of (A) the record date for determining stockholders
entitled to receive the rights, warrants or distribution referred to in
subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of
"ex-dividend" trading on the exchange or market referred to in the definition
of "Closing Price."
(v) No adjustment in the Conversion Price shall
be required to be made unless such adjustment would require an increase or
decrease of at least one percent of such price; provided, however, that any
adjustment which by reason of this subsection (v) is not required to be made
shall be carried forward and taken into
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account in any subsequent adjustment. All calculations under this Section 7.2
shall be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be. Anything in this Section 7.2 to the contrary notwithstanding, the
Corporation shall be entitled to make such reduction in the Conversion Price,
in addition to those required by this Section 7.2, as it shall determine in its
discretion to be advisable in order that any stock dividend, subdivision of
shares, distribution of rights to purchase stock or securities, or distribution
of securities convertible into or exchangeable for stock hereafter made by the
Corporation to its stockholders shall not be taxable to the recipients. Except
as set forth in subsections (i), (ii) and (iii) above, the Conversion Price
shall not be adjusted for the issuance of Class A Common Stock, or any
securities convertible into or exchangeable for Class A Common Stock or
carrying the right to purchase any of the foregoing, in exchange for cash,
property or services.
(vi) The Corporation from time to time may decrease the
Conversion Price by any amount for any period of time if the period is at least
20 days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Corporation shall mail to holders of
record of shares of Class K Preferred Stock a notice of the decrease at least
15 days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be in
effect.
(b) Notwithstanding any other provision herein to the
contrary, in case of any merger or consolidation to which the Corporation is a
party (other than a merger or consolidation in which the Corporation is the
continuing entity and in which the Class A Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, or the
securities or other property of another entity), or in the case of any sale or
transfer of all or substantially all of the Corporation's property and assets
to another entity, there will be no adjustment of the Conversion Price, and
lawful provision shall be made by the entity formed by such consolidation or
the entity whose securities, cash or other property will immediately after the
merger or consolidation be owned, by virtue of the merger or consolidation, by
the holders of Class A Common Stock immediately prior to the merger or
consolidation, or the entity which shall have acquired such assets of the
Corporation, such that each share of Class K Preferred Stock then outstanding
will, without the consent of the holder thereof, become convertible into the
kind and amount of securities, cash or other property receivable upon such
merger, consolidation, sale or transfer by a holder of the number of shares of
Class A Common Stock into which such share of Class K Preferred Stock was
convertible immediately prior to such merger, consolidation, sale or transfer
assuming such holder of Class A Common Stock did not exercise his rights of
election, if any, as to the kind or amount of securities, cash or other
property receivable upon such merger, consolidation, sale or transfer. In the
case of a cash merger of the Corporation into another entity or any other cash
transaction of the type mentioned in this Section 7.2(b), each share of Class K
Preferred Stock will thereafter be convertible at the Conversion Price in
effect at such time into the same amount of cash per share into which each
share of Class K Preferred Stock would have been convertible had
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such share been converted into Class A Common Stock immediately prior to the
effective date of such cash merger or other transaction. The foregoing
provisions of this Section 7.2(b) shall similarly apply to successive mergers,
consolidations, sales or transfers.
(c) If (i) the Corporation shall take any action that would
require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the
Corporation shall authorize the granting to the holders of the Class A Common
Stock generally of rights or warrants to subscribe for or purchase any shares
of stock of any class or series or of any other rights or warrants; (iii) there
shall be any reorganization or reclassification of the Class A Common Stock
(other than an event to which subsection (i) of Section 7.2(a) applies) or any
consolidation or merger to which the Corporation is a party or any sale or
transfer of all or substantially all of the assets of the Corporation, in each
case, for which approval of any stockholders of the Corporation is required; or
(iv) there shall be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation; then, in each such case, the Corporation shall
cause to be given to the holders of shares of Class K Preferred Stock and the
Transfer Agent as promptly as possible, but in any event at least 15 days prior
to the applicable date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such action or granting of
rights or warrants, or, if a record is not to be taken, the date as of which
the holders of Class A Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (ii) the date on
which such reorganization, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective or occur, and the date as of which it is expected that holders of
Class A Common Stock of record shall be entitled to exchange their shares of
Class A Common Stock for securities, cash or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up. Failure to give such notice or any
defect therein shall not affect the legality or validity of the proceedings
described in this Section 7.2(c).
(d) Whenever the Conversion Price is adjusted as herein
provided, (i) the Corporation shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment and a
brief statement of the facts requiring such adjustment and the manner of
computing the same, which certificate shall be conclusive evidence of the
correctness of such adjustment, and (ii) the Corporation shall mail or cause to
be mailed by first class mail, postage prepaid, as soon as practicable to each
holder of record of shares of Class K Preferred Stock a notice stating that the
Conversion Price has been adjusted and setting forth the adjusted Conversion
Price.
(e) In any case in which paragraph (a) of this Section 7.2
shall require that an adjustment be made immediately following a record date or
an effective date, the Corporation may elect to defer (but only until the
filing by the Corporation with the Transfer Agent of the certificate required
by subsection 7.2(d)) (i) issuing to
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the holder of any share of Class K Preferred Stock converted after such record
date or effective date the shares of Class A Common Stock issuable upon such
conversion in excess of the shares of Class A Common Stock issuable upon such
conversion on the basis of the Conversion Price prior to adjustment, and (ii)
paying to such holder any amount of cash in lieu of a fractional share.
(f) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any
share of Class K Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares of
Class A Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any share of Class K Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A Common
Stock contained in this Section 7.2.
(g) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Class A Common Stock, for the purpose of effecting
conversion of shares of Class K Preferred Stock, the full number of shares of
Class A Common Stock deliverable upon the conversion of all outstanding shares
of Class K Preferred Stock not theretofore converted and on or before (and as a
condition of) taking any action that would cause an adjustment of the
Conversion Price resulting in an increase in the number of shares of Class A
Common Stock deliverable upon conversion in excess of the number thereof
previously reserved and available therefor, the Corporation shall take all such
action so required. For purposes of this paragraph (g), the number of shares of
Class A Common Stock which shall be deliverable upon the conversion of all
outstanding shares of Class K Preferred Stock shall be computed as if at the
time of computation all such outstanding shares of Class K Preferred Stock were
held by a single holder (and without regard to the Ownership Limit).
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Class A
Common Stock deliverable upon conversion of the shares of Class K Preferred
Stock, the Corporation shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and non-assessable shares of Class A Common Stock
at such adjusted Conversion Price.
(h) The Corporation will pay any and all documentary stamp,
issue or transfer taxes, and any other similar taxes, payable in respect of the
issue or delivery of shares of Class A Common Stock upon conversion of shares
of Class K Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issue or delivery of shares of Class A Common
Stock in a name other than that of the holder of the shares of Class K
Preferred Stock to be converted, and no such issue or delivery shall be made
unless and until the Person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
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(i) Notwithstanding anything to the contrary contained in
this Section 7, conversion of Class K Preferred Stock pursuant to this Section
7 shall be permitted only to the extent that such conversion would not result
in a violation of the Ownership Restrictions (as defined in the Charter).
8. RANKING.
Any class or series of capital stock of the Corporation shall be
deemed to rank:
(a) prior or senior to the Class K Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class K Preferred Stock ("Senior Stock");
(b) on a parity with the Class K Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class K Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock or Class J Cumulative Convertible Preferred Stock of
the Corporation, or (ii) the holders of such class of stock or series and the
Class K Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority of one over the other
(the capital stock referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class K Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Common Stock or
(ii) the holders of Class K Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
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9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class K Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of similar types of provisions with respect to shares of Parity Stock of
any other class or series which is entitled to similar voting rights (the
"Voting Preferred Stock")) and the holders of shares of Class K Preferred
Stock, together with the holders of shares of all other Voting Preferred Stock
then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors
to serve on the Board of Directors at any annual meeting of stockholders or
special meeting held in place thereof, or at a special meeting of the holders
of the Class K Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever all arrears in dividends on the Class K
Preferred Stock and the Voting Preferred Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been declared and paid, or declared and set apart for payment, then the right
of the holders of the Class K Preferred Stock and the Voting Preferred Stock to
elect such additional two directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearages), and the terms of office of all persons elected as directors
by the holders of the Class K Preferred Stock and the Voting Preferred Stock
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class K Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class K Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Class K Preferred Stock and of the
Voting Preferred Stock for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that
provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class K Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors elected
at any such special meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu thereof if such office shall
not have previously terminated as above provided. If any vacancy shall occur
among the directors elected by the holders of the Class K Preferred Stock and
the Voting Preferred Stock, a successor shall be elected by the Board of
Directors, upon the nomination of the then-remaining director elected by the
holders of the Class K Preferred Stock and the Voting Preferred Stock or the
successor of such remaining director, to serve until the next annual meeting of
the stockholders or special meeting held in place thereof if such office shall
not have previously terminated as provided above.
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(b) So long as any shares of Class K Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class K
Preferred Stock voting as a single class with the holders of all other classes
or series of Parity Stock entitled to vote on such matters, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any
of the provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of
the Class K Preferred Stock; provided, however, that the amendment of the
provisions of the Charter so as to authorize or create, or to increase the
authorized amount of, or issue any Junior Stock or any shares of any class of
Parity Stock shall not be deemed to materially adversely affect the voting
powers, rights or preferences of the holders of Class K Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of
Senior Stock or any security convertible into shares of any class or series of
Senior Stock (whether or not such class or series of Senior Stock is currently
authorized); provided, however, that no such vote of the holders of Class K
Preferred Stock shall be required if, at or prior to the time when such
amendment, alteration or repeal is to take effect, or when the issuance of any
such Senior Stock or convertible or exchangeable security is to be made, as the
case may be, provision is made for the redemption of all shares of Class K
Preferred Stock at the time outstanding to the extent such redemption is
authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class K Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class
K Preferred Stock as a single class on any matter, then the Class K Preferred
Stock and such other class or series shall have with respect to such matters
one quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class K Preferred Stock shall not have any relative, participating,
optional or other special voting rights and powers other than as set forth
herein, and the consent of the holders thereof shall not be required for the
taking of any corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class K Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
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11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class K
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class K Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class
K Preferred Stock in excess of the Look- Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Person (other than the Initial Holder or a
Look-Through Entity) Beneficially Owning shares of Class K Preferred Stock in
excess of the Ownership Limit shall be void ab initio as to the Transfer of
such shares of Class K Preferred Stock that would be otherwise Beneficially
Owned by such Person in excess of the Ownership Limit, and the intended
transferee shall acquire no rights in such shares of Class K Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in the Initial Holder Beneficially Owning shares of
Class K Preferred Stock in excess of the Initial Holder Limit shall be void ab
initio as to the Transfer of such shares of Class K Preferred Stock that would
be otherwise Beneficially Owned by the Initial Holder in excess of the Initial
Holder limit, and the Initial Holder shall acquire no rights in such shares of
Class K Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 11.8 from and after the Issue Date (and subject
to Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Look-Through Entity Beneficially Owning shares
of Class K Preferred Stock in excess of the Look- Through Ownership limit shall
be void ab initio as to the Transfer of such shares of Class K Preferred Stock
that would be otherwise Beneficially Owned by such Look- Through Entity in
excess of the Look-Through Ownership Limit and such Look- Through Entity shall
acquire no rights in such shares of Class K Preferred Stock.
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(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant
that is described in Section 856(d)(2)(B) of the Code if the income derived by
the Corporation from such tenant would cause the Corporation to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code) shall be
void ab initio as to the Transfer of shares of Class K Preferred Stock that
would cause the Corporation (i) to be "closely held" within the meaning of
Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the
case may be, and the intended transferee shall acquire no rights in such shares
of Class K Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class K Preferred Stock that is null and void under Sections 11.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class K Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation
being "closely held" within the meaning of Section 856(h) of the Code or (iii)
the Corporation otherwise failing to qualify as a REIT, shall not adversely
affect the validity of the Transfer of any other share of Class K Preferred
Stock in the same or any other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other
event has taken place in violation of Section 11.1 of this Article or that a
Person intends to acquire or has attempted to acquire Beneficial Ownership of
any shares of Class K Preferred Stock in violation of Section 11.1 of this
Article (whether or not such violation is intended), the Board of Directors or
a committee thereof shall be empowered to take any action as it deems advisable
to refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such Transfer or
other event on the books of the Corporation, causing the Corporation to redeem
such shares at the then current Market Price and upon such terms and conditions
as may be specified by the Board of Directors in its sole discretion
(including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of
any distributions received in respect of shares of Class K Preferred Stock
acquired in violation of Section 11.1 of this Article or instituting
proceedings to enjoin such Transfer or to rescind such Transfer or attempted
Transfer; provided, however, that any Transfers or attempted Transfers (or, in
the case of events other than a Transfer, Beneficial Ownership) in violation of
Section 11.1 of this Article, regardless of any action (or non-action) by the
Board of Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 11.3 of this Article;
provided, further, that the provisions of this Section 11.2 shall be subject to
the provisions of Section 11.12 of this Article; provided, further, that
neither the Board of Directors nor any committee thereof may exercise such
authority in a manner that interferes with any ownership or transfer of Class K
Preferred Stock that is expressly authorized pursuant to Section 11.8(C) of
this Article.
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11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is
the result of transactions entered into through the facilities of the NYSE or
other securities exchange or an automated inter-dealer quotation system) or
other change in the capital structure of the Corporation (including, but not
limited to, any redemption of Equity Stock) or other event (including, but not
limited to, any acquisition of any share of Equity Stock) such that (a) any
Person (other than the Initial Holder or a Look-Through Entity) would
Beneficially Own shares of Class K Preferred Stock in excess of the Ownership
Limit, or (b) the Initial Holder would Beneficially Own shares of Class K
Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that
is a Look-Through Entity would Beneficially Own shares of Class K Preferred
Stock in excess of the Look- Through Ownership Limit (in any such event, the
Person, Initial Holder or Look- Through Entity that would Beneficially Own
shares of Class K Preferred Stock in excess of the Ownership Limit, the Initial
Holder Limit or the Look-Through Entity Limit, respectively, is referred to as
a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8
of this Article, such shares of Class K Preferred Stock in excess of the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as the case may be, (rounded up to the nearest whole share) shall be
automatically transferred to a Trustee in his capacity as trustee of a Trust
for the exclusive benefit of one or more Charitable Beneficiaries. Such
transfer to the Trustee shall be deemed to be effective as of the close of
business on the Business Day prior to the Excess Transfer, change in capital
structure or another event giving rise to a potential violation of the
Ownership Limit, the Initial Holder Limit or the Look- Through Entity Ownership
Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class K
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
11.3(E), the Prohibited Transferee shall have no rights in the Class K
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
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(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class K
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class K Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class K Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class K Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure
or other event giving rise to a potential violation of the Ownership Limit,
Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to
have given an irrevocable proxy to the Trustee to vote the shares of Class K
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the
Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 11.3(E) or any application thereof is determined in a final judgment to
be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class K Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class K Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE.
Shares of Class K Preferred Stock transferred to the Trustee shall be deemed to
have been offered for sale to the Corporation, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift,
the Market Price at the time of such devise or gift) and (ii) the Market Price
on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of
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90 days after the later of (i) the date of the Excess Transfer or other event
resulting in a transfer to the Trust and (ii) the date that the Board of
Directors determines in good faith that an Excess Transfer or other event
occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class K Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class K Preferred Stock in violation of Section
11.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 11.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or attempted
Transfer or other event on the Corporation's status as a REIT. Failure to give
such notice shall not limit the rights and remedies of the Board of Directors
provided herein in any way.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class K
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class K Preferred Stock shall, within 30 days after January 1 of each
year, give written notice to the Corporation stating the name and address of
such record or Beneficial Owner, the number of shares of Class K Preferred
Stock Beneficially Owned, and a full description of how such shares are held.
Each such record or Beneficial Owner of Class K Preferred Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class K
Preferred Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (i) comply with the provisions of the Code
regarding the qualification of the Corporation as a REIT under the Code and
(ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or
the Look- Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class K Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to
obtain the written notice described in this Section 11.5 from the Beneficial
Owner.
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(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class K Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class K
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
shall provide such information as the Corporation, in its sole discretion, may
request in order to determine the Corporation's status as a REIT, to comply
with the requirements of any taxing authority or other governmental agency, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look- Through Ownership Limit, and shall
provide a statement or affidavit to the Corporation setting forth the number
of shares of Class K Preferred Stock already Beneficially Owned by such
stockholder or proposed transferee and any related persons specified, which
statement or affidavit shall be in the form prescribed by the Corporation for
that purpose.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 11.12 of
this Article) (i) to protect the Corporation and the interests of its
stockholders in the preservation of the Corporation's status as a REIT and
(ii) to insure compliance with the Ownership Limit, the Initial Holder Limit
and the Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 11 of this Article, or in the case of an ambiguity
in any definition contained in Section 11 of this Article, the Board of
Directors shall have the power to determine the application of the provisions
of this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of
Section 542(a) of the Code and is a corporation, partnership, estate or trust.
In connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person and may impose such other
conditions as the Board of Directors deems necessary, in its sole discretion,
to determine the effect, if any, of the proposed Transfer on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class K Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and
the pledgee shall not be subject to the Ownership Limit with respect to the
Class K Preferred Stock so pledged to it either as a result of the pledge or
upon foreclosure.
29
<PAGE> 234
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold
allotment of Class K Preferred Stock) following the purchase of Class K
Preferred Stock by an underwriter that (i) is a corporation, partnership or
other legal entity and (ii) participates in an offering of the Class K
Preferred Stock, such underwriter shall not be subject to the Ownership Limit
with respect to the Class K Preferred Stock purchased by it as a part of or in
connection with such offering and with respect to any Class K Preferred Stock
purchased in connection with market making activities.
11.9 LEGEND. Each certificate for Class K Preferred Stock shall bear
substantially the following legend:
"The shares of Class K Convertible Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class K Convertible
Cumulative Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class K Convertible Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class K Convertible
Cumulative Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter
(including the Articles Supplementary setting forth the terms of the
Class K Convertible Cumulative Preferred Stock), as the same may be
amended from time to time, a copy of which, including the restrictions
on transfer, will be sent without charge to each stockholder that so
requests. If the restrictions on transfer are violated (i) the
transfer of the shares of Class K Convertible Cumulative Preferred
Stock represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class K Convertible Cumulative Preferred Stock) or (ii) the shares of
Class K Convertible Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit
of one or more Charitable Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article or any
application of any such provision is determined in a final and unappealable
judgment to be void, invalid or unenforceable by any Federal or state court
having jurisdiction over the issues, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
30
<PAGE> 235
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of
a change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class K Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXI of the Charter.
31
<PAGE> 236
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on February 17,
1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LUCY CORDOVA /s/ TROY D. BUTTS
- ----------------------------- --------------------------------
Lucy Cordova Troy D. Butts
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a
part, hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
/s/ TROY D. BUTTS
--------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
32
<PAGE> 237
ARTICLES OF MERGER
BETWEEN
INSIGNIA PROPERTIES TRUST
AND
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Apartment Investment and Management Company, a corporation organized
and existing under the laws of the State of Maryland ("AIMCO"), and Insignia
Properties Trust, a real estate investment trust organized and existing under
the laws of the State of Maryland ("IPT"), do hereby certify to the State
Department of Assessments and Taxation of Maryland (the "SDAT") as follows:
FIRST: AIMCO and IPT agree that IPT shall be merged with and into AIMCO
(the "Merger").
SECOND: AIMCO shall be the surviving entity of the Merger (the
"Surviving Entity").
THIRD: These Articles of Merger, which may be executed in counter
parts, shall become effective at 5:00 p.m. EST on the date these Articles of
Merger are accepted for record by the SDAT (the "Effective Time").
FOURTH: Both AIMCO and IPT were organized and exist under the laws of
the State of Maryland.
FIFTH: The principal office of each of AIMCO and IPT in the State of
Maryland is, and the principal office of the Surviving Entity immediately
following the Effective Time will be, located in the City of Baltimore.
SIXTH: IPT owns no interest in land located in the State of Maryland.
SEVENTH: The charter of AIMCO will not be amended as a result of the
Merger.
<PAGE> 238
EIGHTH: The total number of shares of all classes of stock which each
entity party to these Articles of Merger has the authority to issue and the
number of shares of each class are as follows:
a. AIMCO
The total number of shares of all classes of stock which AIMCO
has authority to issue is 510,587,500 shares, consisting of 478,277,500 shares
of Class A Common Stock, par value $.01 per share (the "AIMCO Common Stock");
100,000 shares of Class B Common Stock, par value $.01 per share; and 32,210,000
shares of Preferred Stock, par value $.01 per share, of which 750,000 shares
have been designated as Class B Cumulative Convertible Preferred Stock, par
value $.01 per share; 2,760,000 shares have been designated as Class C
Cumulative Preferred Stock, par value $.01 per share; 4,600,000 shares have been
designated as Class D Cumulative Preferred Stock, par value $.01 per share;
10,000,000 shares have been designated as Class E Cumulative Convertible
Preferred Stock, par value $.01 per share; 4,050,000 shares have been designated
as Class G Cumulative Preferred Stock, par value $.01 per share; 2,300,000
shares have been designated as Class H Cumulative Preferred Stock, par value
$.01 per share; 2,000,000 shares have been designated as Class J Cumulative
Convertible Preferred Stock, par value $.01 per share; and 5,750,000 shares have
been designated as Class K Cumulative Convertible Preferred Stock, par value
$.01 per share. The aggregate par value of all classes of stock of AIMCO having
par value is $5,105,875.
b. IPT
The total number of shares of beneficial interest (the "IPT
Shares") which IPT has authority to issue is 500,000,000 shares, consisting of
400,000,000 common shares of beneficial interest, par value $.01 per share (the
"IPT Common Shares"); and 100,000,000 preferred shares of beneficial interest,
par value $.01 per share. The aggregate par value of the IPT Shares is
$5,000,000.
NINTH: At the Effective Time, IPT shall be merged with and into AIMCO;
and thereupon, the Surviving Entity shall possess any and all purposes and
powers of IPT; and all leases, licenses, property, rights, privileges and powers
of whatever nature and description of IPT shall be transferred to, vested in and
devolved upon the Surviving Entity, without further act or deed, subject to all
of the debts and obligations of IPT.
2
<PAGE> 239
TENTH: The issued and outstanding securities of IPT shall be converted
at the Effective Time as follows:
a. Subject to Article TENTH paragraph (c), each IPT Common Share issued
and outstanding immediately prior to the Effective Time, other than IPT Common
Shares cancelled according to Article TENTH paragraph (b) (the "Out standing IPT
Common Shares"), shall be converted into and become the right to receive 0.3601
shares of AIMCO Common Stock (together with cash in lieu of fractional interests
pursuant to paragraph (e) of Article TENTH, the "Merger Consideration"), all as
further described in that certain Second Amended and Restated Agreement and Plan
of Merger, dated as of January 22, 1999 (the "Merger Agreement"), by and
between AIMCO and IPT.
b. Each IPT Common Share owned, directly or indirectly, by AIMCO, IPT,
or any of their respective subsidiaries immediately prior to the Effective Time
shall, at the Effective Time, automatically be cancelled and retired and shall
cease to exist, and no Merger Consideration or other consideration shall be
issued or delivered in exchange therefor.
c. Each restricted IPT Common Share awarded under the Insignia
Properties Trust 1997 Share Incentive Plan (the "IPT Share Plan") which is
outstanding and unvested at the Effective Time (each a "Restricted Share") shall
be converted, at the Effective Time, into 0.3601 restricted shares of AIMCO
Common Stock ("AIMCO Restricted Shares"). Each such AIMCO Restricted Share shall
have, and be subject to, the same terms and conditions (including rights to
Dividend Equivalents (as defined in the IPT Share Plan)) set forth in the IPT
Share Plan and the applicable restricted share agreement, each as in effect
immediately prior to the Effective Time.
d. All of the Outstanding IPT Common Shares, when so converted in
accordance with this Article TENTH and the Merger Agreement, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate (an "IPT Certificate") which,
immediately prior to the Effective Time, evidenced Outstanding IPT Common Shares
shall cease to have any rights with respect thereto, except (i) the right to
receive any dividend or other distribution on IPT Common Shares with a record
date prior to the Effective Time and (ii) upon surrender of such IPT
Certificate, (x) the right to receive the Merger Consideration and (y) any
dividend or other distribution on the AIMCO Common
3
<PAGE> 240
Stock with a record date on or after the date on which the Effective Time
occurs and paid prior to the time such IPT Certificate is surrendered.
e. (i) No scrip or fractional share certificate for AIMCO Common
Stock will be issued upon the surrender for exchange of IPT Certificates, and an
outstanding fractional share interest will not entitle the owner thereof to
vote, to receive dividends or to any rights of a stockholder of AIMCO or of the
Surviving Entity with respect to such fractional share interest.
(ii) In lieu of any fractional shares of AIMCO Common Stock,
each holder of an IPT Common Share that otherwise would be entitled to a
fractional share of AIMCO Common Stock shall receive a cash payment in lieu of
such fractional share of AIMCO Common Stock equal to such shareholder's
proportionate interest in a share of AIMCO Common Stock multiplied by $38.0656.
f. As of the Effective Time, all other shares of beneficial interest of
IPT shall be cancelled and retired and shall cease to exist, and no Merger
Consideration or other consideration shall be issued or delivered in exchange
therefor.
ELEVENTH: The terms and conditions of the transaction described in
these Articles of Merger were duly authorized and approved by IPT in the manner
and by the vote required by the laws of the State of Maryland and the
declaration of trust of IPT and the bylaws of IPT, as follows:
a. The Board of Trustees of IPT, at a meeting of the IPT Board of
Trustees duly called and held, adopted a resolution deeming the Merger advisable
and in the best interest of IPT and directing that the Merger, the Merger
Agreement and the transactions contemplated by the Merger Agreement be submitted
for consideration by the shareholders of IPT.
b. The shareholders of IPT entitled to vote on the Merger, Merger
Agreement and the transactions contemplated by the Merger Agreement, at a
meeting duly called and held, adopted a resolution approving the Merger, the
Merger Agreement and the transactions contemplated by the Merger Agreement, and
such resolution was filed with the records of meetings of the shareholders of
IPT.
4
<PAGE> 241
TWELFTH: The terms and conditions of the Merger were duly authorized
and approved by AIMCO in the manner and by the vote required by the laws of the
State of Maryland and the charter and bylaws of AIMCO, as follows:
a. The Board of Directors of AIMCO adopted a resolution deeming the
Merger advisable and in the best interest of AIMCO.
b. Pursuant to Section 3-105(a)(5)(i) of the Maryland General
Corporation Law, no vote of the stockholders of AIMCO was required or obtained
to approve the Merger.
THIRTEENTH: Each undersigned President acknowledges these Articles of
Merger to be the act of the respective party on whose behalf he has signed, and
further, as to all matters and facts required to be verified under oath, each
undersigned President acknowledges, that to the best of his knowledge,
information and belief, the matters and facts relating to the entity on whose
behalf he has signed are true in all material respects and that this statement
is made under the penalties for perjury.
5
<PAGE> 242
IN WITNESS WHEREOF, these Articles of Merger have been duly executed on behalf
of the parties hereto this 26th day of February, 1999.
<TABLE>
<S> <C>
ATTEST: INSIGNIA PROPERTIES TRUST
/s/ JEFFREY P. COHEN By: /s/ PETER K. KOMPANIEZ
- ------------------------------------ ------------------------------------
Jeffrey P. Cohen Name: Peter K. Kompaniez
Secretary Title: President
ATTEST: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- ------------------------------------ ------------------------------------
Joel F. Bonder Name: Peter K. Kompaniez
Secretary Title: President
</TABLE>
<PAGE> 243
CERTIFICATE OF CORRECTION
TO
"ARTICLES OF MERGER
MERGING
INSIGNIA FINANCIAL GROUP, INC.
(A CORPORATION OF THE STATE OF DELAWARE)
WITH AND INTO
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A CORPORATION OF THE STATE OF MARYLAND)"
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(the "CORPORATION"), having its principal office in Baltimore City, Maryland,
hereby for itself and as successor by merger to INSIGNIA FINANCIAL GROUP, INC.,
a Delaware corporation ("INSIGNIA"), having its principal office in the State of
Maryland in Baltimore City, Maryland certifies to the State Department of
Assessments and Taxation of Maryland (the "MSDAT") that:
FIRST: The Articles of Merger, merging Insignia with and into the
Corporation, dated October l, 1998, were filed with the MSDAT on October 1,
1998 at 3:00 p.m. and said Articles of Merger require correction as permitted by
Section 1-207 of the Corporations and Associations Article of flee Annotated
Code of Maryland.
SECOND: Article NINTH of the Articles of Merger previously filed and to
be corrected hereby reads as follows:
NINTH: At the Effective Time, the Charter shall be amended by
inserting the following Article after XIX in the Charter:
ARTICLE XIX
In accordance with Section 15.4 of the Indenture, dated as of November
1, 1996, by and between Insignia Financial Group, Inc. ("Insignia"), a
Delaware corporation (as Issuer) and First Union National Bank of South
Carolina (as Trustee) (the "Indenture"), upon effectiveness of the
Merger (as defined in the Amended and Restated Agreement and Plan of
Merger, dated as May 26, 1998, by and among the Corporation, Insignia,
Insignia/ESG Holdings, Inc., a Delaware corporation, and AIMCO
Properties, L.P., a Delaware limited partnership (the "Merger
<PAGE> 244
Agreement")), the 6 1/2% Convertible Subordinated Debentures due 2016
issued by Insignia (the "Convertible Debentures") will become
convertible into the same consideration received by holders of Class A
Common Stock, par value $.01 per share, of Insignia, pursuant to the
Merger (i.e., shares of Class E Cumulative Preferred Stock par value
$.01 per share, of AIMCO (the "AIMCO Class E Preferred Stock"), (or
shares of Class A Common Stock par value $.01 per share, of the
Corporation (the "AIMCO Common Stock"), if such Convertible Debentures
are converted after the AIMCO Class E Preferred Stock has been
converted into AIMCO Common Stock), the Cash Amount (as defined in the
Merger Agreement), if any and cash in lieu of fractional shares).
Furthermore, the consideration to be received by holders of Convertible
Debentures who convert such Convertible Debentures subsequent to the
effectiveness of the Merger shall be adjusted as required by Article XV
of the Indenture.
THIRD: Article NINTH of the Articles of Merger, as corrected hereby is
as follows:
NINTH: At the effective Time, the Charter shall be amended by
inserting the following Article after XVIII in the Charter:
ARTICLE XIX
In accordance with Section 15.4 of the Indenture, dated as of November
1, 1996, by and between Insignia Financial Group, Inc. (" Insignia"), a
Delaware corporation (as Issuer) and First Union National Bank of South
Carolina (as Trustee) (the "Indenture"), upon effectiveness of the
Merger (as defined in the Amended and Restated Agreement and Plan of
Merger, dated as of May 26, 1998, by and among the Corporation,
Insignia, Insignia/ESG Holdings, Inc., a Delaware corporation, and
AIMCO Properties, L.P., a Delaware limited partnership (the "Merger
Agreement"), the 6 1/2% Convertible Subordinated Debentures due 2016
issued by Insignia (the "Convertible Debentures") will become
convertible into the same consideration received by holders of Class A
Common Stock par value $.01 per share, of Insignia, pursuant to the
Merger (i.e., shares of Class E Cumulative Preferred Stock par value
$.01 per share, of AIMCO (the "AIMCO Class E Preferred Stock"), (or
shares of Class A Common Stock par value $.01 per share, (of the
Corporation (the
2
<PAGE> 245
"AIMCO Common Stock"), if such Convertible Debentures are converted
after the AIMCO Class E Preferred Stock has been converted into AIMCO
Common Stock), the Cash Amount (as defined in the Merger Agreement), if
any and cash in lieu of fractional shares). Furthermore, the
consideration to be received by holders of Convertible Debentures who
convert such Convertible Debentures subsequent to the effectiveness of
the Merger shall be adjusted as required by Article XV of the
Indenture.
FOURTH: The inaccuracies or defects contained in Article NINTH of the
Articles of Merger, as previously filed are typographical errors in the
reference to "XIX" in the lead-in clause which should be to "XVIII" and the
omission of the word "of" before "May 26, 1998" in the text of ARTICLE XIX.
3
<PAGE> 246
IN WITNESS WHEREOF, Apartment Investment and Management Company, for
itself and as successor by merger to Insignia Financial Group, Inc., a Delaware
corporation, has caused this Certificate of Correction to be signed in its name
and on its behalf by its Vice Chairman and President and witnessed by its
Secretary on April 21, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY,
for itself and as successor by merger to
INSIGNIA FINANCIAL GROUP, INC.,
a Delaware corporation
/s/ JOEL F. BONDER By: /S/ PETER K. KOMPANIEZ
- ------------------------------ -------------------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, for itself and as successor by merger to INSIGNIA
FINANCIAL GROUP, INC., a Delaware corporation, with respect to the foregoing
Certificate of Correction of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Certificate of Correction to be the act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects, under the penalties of
perjury.
/S/ PETER K. KOMPANIEZ
----------------------------------------
Peter K. Kompaniez,
Vice Chairman and President
4
<PAGE> 247
CERTIFICATE OF CORRECTION
TO
"CERTIFICATE OF CORRECTION
TO
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A MARYLAND CORPORATION)"
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(the "CORPORATION"), having its principal office in Baltimore City, Maryland,
hereby certifies to the State Department of Assessments and Taxation of Maryland
(the "MSDAT") that:
FIRST: The Certificate of Correction to Articles of Amendment and
Restatement of the Corporation, dated November 6, 1997, was filed with the MSDAT
on November 6, 1997 at 1:35 p.m. and said Certificate of Correction to Articles
of Amendment and Restatement requires correction as permitted by Section 1-207
of the Corporations and Associations Article of the Annotated Code of Maryland.
SECOND: Paragraph (D) of Section 3.4.3 of ARTICLE IV of the Charter of
the Corporation found in ARTICLE SIXTH of the Certificate of Correction to
Articles of Amendment and Restatement (as heretofore amended by Articles of
Amendment of the Corporation, dated July 27, 1994, and filed with MSDAT on July
28, 1994 at 11:33 a.m.), as previously filed and to be corrected hereby reads as
follows:
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Common
Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution
paid prior to the discovery by the Corporation that the shares of
Common Stock have been transferred to the Trustee shall be repaid to
the Corporation upon demand, and any dividend or distribution declared
but unpaid shall be rescinded as void ab initio with respect to such
shares of Common Stock. Any dividends or distributions so disgorged or
rescinded shall be paid over to the Trustee and held in trust for the
Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior
to the discovery by the Corporation that the shares of Common Stock
have been transferred to the Trustee will be rescinded as ab initio and
shall be recast in accordance with the desires of the Trustee acting
for the benefit of the Charitable Beneficiary. The owner of the shares
at the time of the Excess Transfer, change in capital structure or
other event giving rise to a potential violation of the Ownership
Limit, Initial Holder Limit or Look-Through Entity
-1-
<PAGE> 248
Ownership Limit shall be deemed to have given an irrevocable proxy to
the Trustee to vote the shares of Common Stock for the benefit of the
Charitable Beneficiary.
THIRD: Paragraph (D) of Section 3.4.3 of ARTICLE IV of the Charter of
the Corporation found in ARTICLE SIXTH of the Certificate of Correction to
Articles of Amendment and Restatement (as heretofore amended by Articles of
Amendment of the Corporation, dated July 27, 1994, and filed with MSDAT on July
28, 1994 at 11:33 a.m.), as corrected hereby is as follows:
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Common
Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution
paid prior to the discovery by the Corporation that the shares of
Common Stock have been transferred to the Trustee shall be repaid to
the Corporation upon demand, and any dividend or distribution declared
but unpaid shall be rescinded as void ab initio with respect to such
shares of Common Stock. Any dividends or distributions so disgorged or
rescinded shall be paid over to the Trustee and held in trust for the
Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior
to the discovery by the Corporation that the shares of Common Stock
have been transferred to the Trustee will be rescinded as void ab
initio and shall be recast in accordance with the desires of the
Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital
structure or other event giving rise to a potential violation of the
Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership
Limit shall be deemed to have given an irrevocable proxy to the Trustee
to vote the shares of Common Stock for the benefit of the Charitable
Beneficiary.
FOURTH: The inaccuracy or defect contained in Paragraph (D) of Section
3.4.3 of ARTICLE IV of the Charter of the Corporation found in ARTICLE SIXTH of
the Certificate of Correction to Articles of Amendment and Restatement (as
heretofore amended by Articles of Amendment of the Corporation, dated July 27,
1994, and filed with MSDAT on July 28, 1994 at 11:33 a.m.), as previously filed
is a that there should have been the correction of an additional typographical
error in the omission of the word "void" before the words "ab initio" in the
fourth sentence thereof.
-2-
<PAGE> 249
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its behalf
by its Vice Chairman and President and witnessed by its Secretary on April 21,
1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER /s/ PETER K. KOMPANIEZ
- ------------------------------ ----------------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Certificate of Correction to be the
act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
/s/ PETER K. KOMPANIEZ
------------------------------------
Peter K. Kompaniez,
Vice Chairman and President
-3-
<PAGE> 250
CERTIFICATE OF CORRECTION
TO
"CERTIFICATE OF CORRECTION
TO
ARTICLES OF AMENDMENT
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A MARYLAND CORPORATION)"
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland
corporation (the "CORPORATION"), having its principal office in Baltimore City,
Maryland, hereby certifies to the State Department of Assessments and Taxation
of Maryland (the "MSDAT") that:
FIRST: The Certificate of Correction to Articles of Amendment of the
Corporation dated November 6, 1997, was filed with the MSDAT on November 6,
1997 at 1:37 p.m. and said Certificate of Correction to Articles of Amendment
requires correction as permitted by Section 1-207 of the Corporations and
Associations Article of the Annotated Code of Maryland.
SECOND: Section 3.4.2 of ARTICLE IV of the Charter of the Corporation
found in ARTICLE SECOND of the Certificate of Correction to Articles of
Amendment, as previously filed and to be corrected hereby reads as follows:
3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a
committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place in violation of Section 3.4.1
of this Article IV or that a Person intends to acquire or has
attempted to acquire Beneficial Ownership of any shares of Common
Stock in violation of Section 3.4.1 of this Article IV (whether or not
such violation is intended), the Board of Directors or a committee
thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such
Transfer or other event on the books of the Corporation, causing the
Corporation to redeem such shares at the then current Market Price and
upon such terms and conditions as may be specified by the Board of
Directors in its sole discretion (including, but not limited to, by
means of the issuance of long-term indebtedness for the purpose of
such redemption), demanding the repayment of any distributions
received in respect of shares of Common Stock acquired in violation of
Section 3.4.1 of this Article IV or initiating proceedings to enjoin
such Transfer or to rescind such Transfer or attempted Transfer;
provided, however, that any Transfers or attempted Transfers (or in
the case of events other than a Transfer, Beneficial Ownership) in
violation of Section 3.4.1 of this Article IV regardless of any action
(or non-action) by the Board of Directors of such committee, (a) shall
be void ab initio or (b) shall automatically result in the transfer
described in Section 3.4.3 of this Article IV provided, further,
- 1 -
<PAGE> 251
that the provisions of this Section 3.4.2 shall be subject to the
provisions of Section 3.4.12 of this Article IV; provided, further,
that neither the Board of Directors nor any committee thereof may
exercise such authority in a manner that interferes with any ownership
or transfer of Common Stock that is expressly authorized pursuant to
Section 3.4.8(d) of this Article IV.
THIRD: Section 3.4.2 of ARTICLE IV of the Charter of the Corporation
found in ARTICLE SECOND of the Certificate of Correction to Articles of
Amendment, as corrected hereby is as follows:
3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a
committee there of shall at any time determine in good faith that a
Transfer or other event has taken place in violation of Section 3.4.1
of this Article IV or that a Person intends to acquire or has
attempted to acquire Beneficial Ownership of any shares of Common
Stock in violation of Section 3.4.1 of this Article IV (whether or not
such violation is intended), the Board of Directors or a committee
thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such
Transfer or other event on the books of the Corporation, causing the
Corporation to redeem such shares at the then current Market Price and
upon such terms and conditions as may be specified by the Board of
Directors in its sole discretion (including, but not limited to, by
means of the issuance of long-term indebtedness for the purpose of
such redemption), demanding the repayment of any distributions
received in respect of shares of Common Stock acquired in violation of
Section 3.4.1 of this Article IV or instituting proceedings to enjoin
such Transfer or to rescind such Transfer or attempted Transfer;
provided, however, that any Transfers or attempted Transfers (or in
the case of events other than a Transfer, Beneficial Ownership) in
violation of Section 3.4.1 of this Article IV regardless of any action
(or non-action) by the Board of Directors of such committee, (a) shall
be void ab initio or (b) shall automatically result in the transfer
described in Section 3.4.3 of this Article IV; provided, further, that
the provisions of this Section 3.4.2 shall be subject to the
provisions of Section 3.4.12 of this Article IV; provided, further,
that neither the Board of Directors nor any committee thereof may
exercise such authority in a manner that interferes with any ownership
or transfer of Common Stock that is expressly authorized pursuant to
Section 3.4.8(D) of this Article IV.
FOURTH: The inaccuracy or defect contained in Section 3.4.2 of ARTICLE
IV of the Charter of the Corporation found in ARTICLE SECOND of the Certificate
of Correction to Articles of Amendment, as previously filed is a typographical
error in the failure to capitalize "(D)" in the cross reference to "Section
3.4.8(D)" in the last sentence thereof.
- 2 -
<PAGE> 252
FIFTH: Section 3.4.2 of ARTICLE IV of the Charter of the Corporation
found in ARTICLE THIRD of the Certificate of Correction to Articles of
Amendment, as previously filed and to be corrected hereby reads as follows:
3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a
committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place in violation of Section 3.4.1
of this Article IV or that a Person intends to acquire or has
attempted to acquire Beneficial Ownership of any shares of Common
Stock in violation of Section 3.4.1 of this Article IV (whether or not
such violation is intended), the Board of Directors or a committee
thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such
Transfer or other event on the books of the Corporation, causing the
Corporation to redeem such shares at the then current Market Price and
upon such terms and conditions as may be specified by the Board of
Directors in its sole discretion (including, but not limited to, by
means of the issuance of long-term indebtedness for the purpose of
such redemption), demanding the repayment of any distributions
received in respect of shares of Common Stock acquired in violation of
Section 3.4.1 of this Article IV or instituting proceedings to enjoin
such Transfer or to rescind such Transfer or attempted Transfer;
provided, however, that any Transfers or attempted Transfers (or in
the case of events other than a Transfer, Beneficial Ownership) in
violation of Section 3.4.1 of this Article IV regardless of any action
(or non-action) by the Board of Directors or such committee, (a) shall
be void ab initio or (b) shall automatically result in the transfer
described in Section 3.4.3 of this Article IV; provided, further, that
the provisions of this Section 3.4.2 shall be subject to the
provisions of Section 3.4.2 of this Article IV; provided, further,
that neither the Board of Directors nor any committee thereof may
exercise such authority in a manner that interferes with any ownership
or transfer of Common Stock that is expressly authorized pursuant to
Section 3.4.8(d) of this Article IV.
SIXTH: Section 3.4.2 of ARTICLE IV of the Charter of the Corporation
found in ARTICLE THIRD of the Certificate of Correction to Articles of
Amendment, as corrected hereby is as follows:
3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a
committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place in violation of Section 3.4.1
of this Article IV or that a Person intends to acquire or has
attempted to acquire Beneficial Ownership of any shares of Common
Stock in violation of Section 3.4.1 of this Article IV (whether or not
such violation is intended), the Board of Directors or a committee
thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, refusing to give effect to such
Transfer or other event on the books of the Corporation, causing the
Corporation to redeem
- 3 -
<PAGE> 253
such shares at the then current Market Price and upon such terms and
conditions as may be specified by the Board of Directors in its sole
discretion (including, but not limited to, by means of the issuance of
long-term indebtedness for the purpose of such redemption), demanding
the repayment of any distributions received in respect of shares of
Common Stock acquired in violation of Section 3.4.1 of this Article IV
or instituting proceedings to enjoin such Transfer or to rescind such
Transfer or attempted Transfer; provided, however, that any Transfers
or attempted Transfers (or in the case of events other than a Transfer,
Beneficial Ownership) in violation of Section 3.4.1 of this Article IV,
regardless of any action (or non-action) by the Board of Directors or
such committee, (a) shall be void ab initio or (b) shall automatically
result in the transfer described in Section 3.4.3 of this Article IV;
provided, further, that the provisions of this Section 3.4.2 shall be
subject to the provisions of Section 3.4.12 of this Article IV;
provided, further, that neither the Board of Directors nor any
committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Common Stock that is
expressly authorized pursuant to Section 3.4.8(D) of this Article IV.
SEVENTH: The inaccuracy or defect contained in Section 3.4.2 of
ARTICLE IV of the Charter of the Corporation found in ARTICLE THIRD of the
Certificate of Correction to Articles of Amendment, as previously filed is a
typographical error in the failure to capitalize "(D)" in the cross reference
to "Section 3.4.8(D)" in the last sentence thereof.
- 4 -
<PAGE> 254
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its
behalf by its Vice Chairman and President and witnessed by its Secretary on
April 21, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER /s/ PETER K. KOMPANIEZ
- -------------------------------- ----------------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Certificate of Correction to be
the act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
/s/ PETER K. KOMPANIEZ
---------------------------------
Peter K. Kompaniez,
Vice Chairman and President
- 5 -
<PAGE> 255
CERTIFICATE OF CORRECTION
TO
"CERTIFICATE OF CORRECTION
TO
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A MARYLAND CORPORATION)"
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a
Maryland corporation (the "CORPORATION"), having its principal office in
Baltimore City, Maryland, hereby certifies to the State Department of
Assessments and Taxation of Maryland (the "MSDAT") that:
FIRST: The Certificate of Correction to Articles of Amendment and
Restatement of the Corporation, dated October 21, 1998, were filed with the
MSDAT on November 30, 1998 at 1:22 p.m.) and said Certificate of Correction to
Articles of Amendment and Restatement, require correction as permitted by
Section 1-207 of the Corporations and Associations Article of the Annotated
Code of Maryland.
SECOND: The lead-in clause to the legend in Section 3.4.9 of ARTICLE
IV of the Charter of the Corporation found in both ARTICLE SECOND and ARTICLE
THIRD of the Certificate of Correction to Articles of Amendment and Restatement
(as heretofore amended by Articles of Amendment of the Corporation, dated July
27, 1994, and filed with MSDAT on July 28, 1994 at 11:33 a.m.), as previously
filed and to be corrected hereby reads as follows:
3.4.9 LEGEND. Each certificate for Class A Common Stock shall
bear the following legend:
THIRD: The lead-in clause to the legend in Section 3.4.9 of ARTICLE IV
of the Charter of the Corporation found in both ARTICLE SECOND and ARTICLE
THIRD of the Certificate of Correction to Articles of Amendment and Restatement
(as heretofore amended by Articles of Amendment of the Corporation, dated July
27, 1994, and filed with MSDAT on July 28, 1994 at 11:33 a.m.), as corrected
hereby is as follows:
<PAGE> 256
3.4.9 LEGEND. Each certificate for Common Stock shall bear
the following legend:
FORTH: The inaccuracy or defect contained in Section 3.4.9 of ARTICLE
IV of the Charter of the Corporation found in both ARTICLE SECOND and ARTICLE
THIRD of the Certificate of Correction to Articles of Amendment and Restatement
(as heretofore amended by Articles of Amendment of the Corporation, dated July
27, 1994, and filed with MSDAT on July 28, 1994 at 11:33 a.m.), as previously
filed is a typographical error in the reference to "Class A Common Stock" which
should be to "Common Stock".
2
<PAGE> 257
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its
behalf by its Vice Chairman and President and witnessed by its Secretary on
April 21, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- -------------------------- --------------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Certificate of Correction to be the
act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
/s/ PETER K. KOMPANIEZ
-----------------------------------
Peter K. Kompaniez
Vice Chairman and President
3
<PAGE> 258
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS I CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 10,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class I Cumulative Preferred Stock, par
value $.01 per share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class I Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 10,000,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 478,277,500 shares immediately prior to
the reclassification to 468,277,500 shares immediately after the
reclassification.
THIRD: The terms of the Class I Cumulative Preferred Stock (including
the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class I Cumulative
Preferred Stock, par value $.01 per share (the "Class I Preferred Stock") and
Ten Million (10,000,000) shall be the authorized number of shares of such Class
I Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class I Preferred Stock, the following terms shall
have the meanings indicated:
<PAGE> 259
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial Holder,
clause (iii) of this definition, and clause (a) (ii) of the definition
of "Person" shall be disregarded. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class I
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 10(c) of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class I Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
2
<PAGE> 260
"Closing Price," when used with respect to a share of any Equity Stock
and for any date, shall mean the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case, as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ") or, if such system is no
longer in use, the principal other automated quotations system that may
then be in use or, if the Equity Stock is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Equity
Stock selected by the Board of Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time
to time, as the same may be amended, and any successor thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation, and the Class B Common Stock, $.01 par value
per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such Class
A Common Stock or Class B Common Stock shall be reclassified.
"Dividend Payment Date" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
quarterly dividend period commencing on and including, January 15,
April 15, July 15 and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
I Preferred Stock shall be redeemed pursuant
3
<PAGE> 261
to Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class I Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 10(c)(i) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean the date on which shares of Class I Preferred
Stock are first issued.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including the day preceding
the first January 15, April 15, July 15, or October 15 to occur
thereafter.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class I Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class I Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
Secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 7 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class I Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the
4
<PAGE> 262
Aggregate Value of all shares of Equity Stock other than Class I
Preferred Stock that are Beneficially Owned by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone, at
that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class I Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class I Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit as applied to the Initial Holder and
the Look-Through Ownership Limit as applied to Look-Through Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 7 of this Article.
"Person" shall mean (a) for purposes of Section 10 of this Article, (i)
an individual, corporation, partnership, limited liability company,
estate, trust (including a trust qualifying under Section 401(a) or
501(c) of the Code), association, private foundation within the meaning
of Section 509(a) of the Code, joint stock company or other entity, and
(ii) also includes a group as that term is used for purposes of Section
13(d)(3) of the Exchange Act and (b) for purposes of the remaining
Sections of this Article, any individual, firm, partnership, limited
liability company, corporation or other entity and shall include any
successor (by merger or otherwise) of such entity.
5
<PAGE> 263
"Prohibited Transferee" has the meaning set forth in Section 10(c)(i)
of this Article.
"Redemption Date" shall have the meaning set forth in paragraph (a) of
Section 5 of this Article.
"REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 7 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class I
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day," when used with respect to the Closing Price of a share
of any Equity Stock, shall mean (i) if the Equity Stock is listed or
admitted to trading on the NYSE, a day on which the NYSE is open for
the transaction of business, (ii) if the Equity Stock is not listed or
admitted to trading on the NYSE but is listed or admitted to trading on
another national securities exchange or automated quotation system, a
day on which the principal national securities exchange or automated
quotation system, as the case may be, on which the Equity Stock is
listed or admitted to trading is open for the transaction of business,
or (iii) if the Equity Stock is not listed or admitted to trading on
any national securities exchange or automated quotation system, any day
other than a Saturday, a Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law or
executive order to close.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of a share of Class I Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
I Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class I Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
6
<PAGE> 264
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class I Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class I Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class I Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 10(c) of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 8
of this Article.
3. DIVIDENDS.
(a) The holders of Class I Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class I Preferred Stock equal to $2.00 per annum (equivalent to 8%
per annum of the per share Liquidation Preference (as hereinafter defined)). As
of any particular date, such dividends shall be cumulative from the later of (i)
the Issue Date or (ii) the first day after the most recent Dividend Period in
respective of which dividends have been paid or a sum sufficient for such
payment has been set apart for such payment, in each case, whether or not in any
Dividend Period or Dividend Periods such dividends shall be declared or there
shall be funds of the Corporation legally available for the payment of such
dividends. Dividends shall be payable quarterly in arrears on each Dividend
Payment Date. Each such dividend shall be payable in arrears to the holders of
record of the Class I Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on the January 1, April 1, July 1 or
October 1, as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors. All holders of record of shares of Class I Preferred Stock as of any
record date shall be entitled to receive the same per share dividend payment,
notwithstanding the fact that any of such shares were not outstanding during the
entire Dividend Period in respect of which such payment is made.
7
<PAGE> 265
(b) Any dividend payable on the Class I Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class I Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the Class I
Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Class I Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class I Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class I Preferred
Stock have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is set apart
for payment of such dividends on the Class I Preferred Stock for all Dividend
Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made, as the case may be, with respect
to such shares of Parity Stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class I Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the respective
amounts of dividends accumulated, accrued and unpaid on the Class I Preferred
Stock and accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class I Preferred Stock
are outstanding, no dividends (other than dividends or distributions paid in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Junior Stock) shall be declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock), directly or indirectly, by the Corporation (except by
conversion into or exchange for shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Stock), nor shall any other cash or
other property otherwise be paid or distributed to or for the benefit of any
holder of shares of Junior Stock in respect thereof, directly or indirectly, by
the Corporation unless, in each case, dividends equal to the full amount of all
accumulated, accrued and unpaid dividends on all outstanding shares of Class I
Preferred Stock have been declared and paid, or such dividends have been
declared and a sum sufficient for the payment thereof has been set apart for
such payment, on all outstanding shares of Class I Preferred Stock
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for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, setting apart for payment, redemption,
purchase or other acquisition is necessary in order to maintain the continued
qualification of the Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class I Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class I Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class I Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class I Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class I Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class I Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
I
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Preferred Stock and any Parity Stock, as provided in this Section 4, any other
series or class or classes of Junior Stock shall, subject to the respective
terms thereof, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Class I Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class I Preferred Stock shall not be redeemable
by the Corporation prior to March 1, 2005, except as set forth in Section 10(b)
of this Article. On and after March 1, 2005, the Corporation, at its option, may
redeem shares of Class I Preferred Stock, in whole or from time to time in part,
at a redemption price payable in cash equal to 100% of the Liquidation
Preference thereof, plus all accumulated, accrued and unpaid dividends to the
date fixed for redemption (the "Redemption Date"); provided, however, that in
the event of a redemption of shares of Class I Preferred Stock, if the
Redemption Date occurs after a dividend record date and on or prior to the
related Dividend Payment Date, the dividend payable on such Dividend Payment
Date in respect of such shares called for redemption shall be payable on such
Dividend Payment Date to the holders of record at the close of business on such
dividend record date, and shall not be payable as part of the redemption price
for such shares. In connection with any redemption pursuant to this Section
5(a), the redemption price of the Class I Preferred Stock (other than any
portion thereof consisting of accumulated, accrued and unpaid dividends) shall
be payable solely with the proceeds from the sale by the Corporation or the
Operating Partnership, of other capital shares of the Corporation or the
Operating Partnership (whether or not such sale occurs concurrently with such
redemption). For purposes of the preceding sentence, "capital shares" means any
common stock, preferred stock, depositary shares, partnership or other
interests, participations or other ownership interests (however designated) and
any rights (other than debt securities convertible into or exchangeable at the
option of the holder for equity securities (unless and to the extent such debt
securities are subsequently converted into capital shares)) or options to
purchase any of the foregoing of or in the Corporation or the Operating
Partnership.
(b) The Redemption Date shall be selected by the Corporation,
shall be specified in the notice of redemption and shall be not less than 30
days nor more than 60 days after the date notice of redemption is sent by the
Corporation.
(c) If full cumulative dividends on all outstanding shares of
Class I Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class I Preferred Stock may be redeemed unless
all outstanding shares of Class I Preferred Stock are simultaneously redeemed
and neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Class I Preferred Stock, otherwise than pursuant to a purchase
or exchange offer made on the same terms to all holders of shares of Class I
Preferred Stock.
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(d) If the Corporation shall redeem shares of Class I
Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such
redemption shall be given to each holder of record of the shares to be redeemed.
Such notice shall be provided by first class mail, postage prepaid, at such
holder's address as the same appears on the stock records of the Corporation.
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state, as appropriate: (1) the Redemption Date; (2) the number of shares
of Class I Preferred Stock to be redeemed and, if fewer than all such shares
held by such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (3) the place or places at which certificates for such shares
are to be surrendered for cash; and (4) the redemption price payable on such
Redemption Date, including, without limitation, a statement as to whether or not
accumulated, accrued and unpaid dividends will be (x) payable as part of the
redemption price, or (y) payable on the next Dividend Payment Date to the record
holder at the close of business on the relevant record date as described in the
next succeeding sentence. Notice having been mailed as aforesaid, from and after
the Redemption Date (unless the Corporation shall fail to make available the
amount of cash necessary to effect such redemption), (i) dividends on the shares
of Class I Preferred Stock so called for redemption shall cease to accumulate or
accrue on the shares of Class I Preferred Stock called for redemption, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class I Preferred Stock of the Corporation shall
cease except the rights to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required; provided, however, that if the Redemption Date for any shares of
Class I Preferred Stock occurs after any dividend record date and on or prior to
the related Dividend Payment Date, the full dividend payable on such Dividend
Payment Date in respect of such shares of Class I Preferred Stock called for
redemption shall be payable on such Dividend Payment Date to the holders of
record of such shares at the close of business on the corresponding dividend
record date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the redemption price in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the
applicable Redemption Date, the Corporation shall irrevocably deposit in trust
with a bank or trust company (which may not be an affiliate of the Corporation)
that has, or is an affiliate of a bank or trust company that has, a capital and
surplus of at least $50,000,000, such amount of cash as is necessary for such
redemption plus, if such Redemption Date occurs after any dividend record date
and on or prior to the related Dividend Payment Date, such amount of cash as is
necessary to pay the dividend payable on such Dividend Payment Date in respect
of such shares of Class I Preferred Stock called for redemption, with
irrevocable instructions that such cash be applied to the redemption of the
shares of Class I Preferred Stock so called for redemption and, if applicable,
the payment of such dividend. No interest shall accrue for the benefit of the
holders of shares of Class
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I Preferred Stock to be redeemed on any cash so set aside by the Corporation.
Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Redemption Date shall revert to the general funds of the
Corporation, after which reversion the holders of shares of Class I Preferred
Stock so called for redemption shall look only to the general funds of the
Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class I Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) for which such shares have been
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class I Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class I
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class I Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If fewer
than all the shares of Class I Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class I Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class I Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Class I Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class I Preferred Stock ("Senior Stock");
(b) on a parity with the Class I Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class I Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock or
Class K Convertible Cumulative Preferred Stock of the
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Corporation, or (ii) the holders of such class of stock or series and the Class
I Preferred Stock shall be entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up in proportion to
their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority of one over the other
(the capital stock referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class I Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Common Stock or (ii)
the holders of Class I Preferred Stock shall be entitled to receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of shares of such class or
series (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class I Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (if not already increased by reason
of similar types of provisions with respect to shares of Parity Stock of any
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class I Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class I
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class I Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been declared and paid, or
declared and set apart for payment, then the right of the holders of the Class I
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages), and the
terms of office of all persons elected as directors by the holders of the Class
I Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class I Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of
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Class I Preferred Stock (addressed to the Secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of the Class I
Preferred Stock and of the Voting Preferred Stock for the election of the two
directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the stockholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of any such request, then any holder of Class I
Preferred Stock may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock books of the Corporation. The
directors elected at any such special meeting shall hold office until the next
annual meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Class I
Preferred Stock and the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the then-remaining director
elected by the holders of the Class I Preferred Stock and the Voting Preferred
Stock or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(b) So long as any shares of Class I Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class I Preferred
Stock voting as a single class with the holders of all other classes or series
of Parity Stock entitled to vote on such matters, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for the
purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of the
Class I Preferred Stock; provided, however, that the amendment of or supplement
to the provisions of the Charter so as to authorize or create, or to increase or
decrease the authorized amount of, or to issue any Junior Stock, Class I
Preferred Stock or any shares of any class of Parity Stock shall not be deemed
to materially adversely affect the voting powers, rights or preferences of the
holders of Class I Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of Senior
Stock or any security convertible into shares of any class or series of Senior
Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class I Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to
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take effect, or when the issuance of any such Senior Stock or convertible or
exchangeable security is to be made, as the case may be, provision is made for
the redemption of all shares of Class I Preferred Stock at the time outstanding
to the extent such redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class I Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class I
Preferred Stock as a single class on any matter, then the Class I Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class I Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class I Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
10. RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(a) (i) LIMITATION ON BENEFICIAL OWNERS. Except as provided in Section
10(h), from and after the Issue Date, no Person (other than the Initial Holder
or a Look-Through Entity) shall Beneficially Own shares of Class I Preferred
Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class I Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class I
Preferred Stock in excess of the Look-Through Ownership Limit.
(ii) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10(h), from and after the Issue Date (and subject to Section 10(l)), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class I Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class I Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class I Preferred Stock.
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(iii) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 10(h), from and after the Issue Date (and subject to Section
10(l)), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class I Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class I Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder Limit, and the
Initial Holder shall acquire no rights in such shares of Class I Preferred
Stock.
(iv) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10(h) from and after the Issue Date (and subject to Section
10(l)), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class I Preferred Stock in
excess of the Look-Through Ownership Limit shall be void ab initio as to the
Transfer of such shares of Class I Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class I Preferred Stock.
(v) TRANSFERS RESULTING IN "CLOSELY HELD" SHARES. From and after
the Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class I Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class I
Preferred Stock.
(vi) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of
Class I Preferred Stock that is null and void under Sections 10(a)(ii), (iii),
(iv), or (v) of this Article because it would, if effective, result in (i) the
ownership of Class I Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class I Preferred Stock in
the same or any other related transaction.
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(b) REMEDIES FOR BREACH. If the Board of Directors shall at any time
determine in good faith that a Transfer or other event has taken place in
violation of Section 10(a) of this Article or that a Person intends to acquire
or has attempted to acquire Beneficial Ownership of any shares of Class I
Preferred Stock in violation of Section 10(a) of this Article (whether or not
such violation is intended), the Board of Directors shall be empowered to take
any action as it deems advisable to refuse to give effect to or to prevent such
Transfer or other event, including, but not limited to, refusing to give effect
to such Transfer or other event on the books of the Corporation, causing the
Corporation to redeem such shares at the then current Market Price and upon such
terms and conditions as may be specified by the Board of Directors in its sole
discretion (including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of any
distributions received in respect of shares of Class I Preferred Stock acquired
in violation of Section 10(a) of this Article or instituting proceedings to
enjoin such Transfer or to rescind such Transfer or attempted Transfer;
provided, however, that any Transfers or attempted Transfers (or, in the case of
events other than a Transfer, Beneficial Ownership) in violation of Section
10(a) of this Article, regardless of any action (or non-action) by the Board of
Directors (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 10(c) of this Article; provided, further, that the
provisions of this Section 10(b) shall be subject to the provisions of Section
10(l) of this Article; provided, further, that the Board of Directors may not
exercise such authority in a manner that interferes with any ownership or
transfer of Class I Preferred Stock that is expressly authorized pursuant to
Section 10(h)(iii) of this Article.
(c)(i) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "Excess Transfer") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Equity Stock) or other event (including, but not limited to, any
acquisition of any share of Equity Stock) such that (a) any Person (other than
the Initial Holder or a Look-Through Entity) would Beneficially Own shares of
Class I Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class I Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class I Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class I Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "Prohibited Transferee"), then, except
as otherwise provided in Section 10(h) of this Article, such shares of Class I
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the
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exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
Business Day prior to the Excess Transfer, change in capital structure or
another event giving rise to a potential violation of the Ownership Limit, the
Initial Holder Limit or the Look-Through Entity Ownership Limit.
(ii) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(iii) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class I
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10(c)(v), the Prohibited Transferee shall have no rights in the Class I
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
(iv) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class I Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class I Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void ab
initio with respect to such shares of Class I Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class I
Preferred Stock have been transferred to the Trustee will be rescinded as void
ab initio and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class I Preferred Stock
for the benefit of the Charitable Beneficiary.
(v) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a Person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10(c)(v). The Prohibited Transferee
shall receive the lesser of (1) the price paid by the Prohibited Transferee for
the shares or, if the Prohibited Transferee
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did not give value for the shares (through a gift, devise or other transaction),
the Market Price of the shares on the day of the event causing the shares to be
held in the Trust and (2) the price per share received by the Trustee from the
sale or other disposition of the shares held in the Trust. Any proceeds in
excess of the amount payable to the Prohibited Transferee shall be payable to
the Charitable Beneficiary. If any of the transfer restrictions set forth in
this Section 10(c)(v) or any application thereof is determined in a final
judgment to be void, invalid or unenforceable by any court having jurisdiction
over the issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class I Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class I Preferred Stock on behalf of the Corporation.
(vi) PURCHASE RIGHT IN STOCK TRANSFERRED TO TRUSTEE. Shares of
Class I Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors or a committee thereof
determines in good faith that an Excess Transfer or other event occurred.
(vii) REGISTRATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class I Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
(d) NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts
to acquire shares of Class I Preferred Stock in violation of Section 10(a) of
this Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 10(c) of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted Transfer
or other event on the Corporation's status as a REIT. Failure to give such
notice shall not limit the rights and remedies of the Board of Directors
provided herein in any way.
(e) OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class I
Preferred Stock will be required to provide certain information as set out
below.
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(i) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more
than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class I Preferred Stock shall, within 30 days after January 1 of each
year, give written notice to the Corporation stating the name and address of
such record or Beneficial Owner, the number of shares of Class I Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record or Beneficial Owner of Class I Preferred Stock shall, upon demand by
the Corporation, disclose to the Corporation in writing such additional
information with respect to the Beneficial Ownership of the Class I Preferred
Stock as the Board of Directors, in its sole discretion, deems appropriate or
necessary to (i) comply with the provisions of the Code regarding the
qualification of the Corporation as a REIT under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class I Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 10(e) from the Beneficial Owner.
(ii) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that
is a Beneficial Owner of shares of Class I Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class I
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
shall provide such information as the Corporation, in its sole discretion, may
request in order to determine the Corporation's status as a REIT, to comply with
the requirements of any taxing authority or other governmental agency, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class I Preferred Stock already Beneficially Owned by such stockholder or
proposed transferee and any related persons specified, which statement or
affidavit shall be in the form prescribed by the Corporation for that purpose.
(f) REMEDIES NOT LIMITED. Nothing contained in this Article shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 10(l) of this
Article) (i) to protect the Corporation and the interests of its stockholders in
the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
(g) AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 10 of this Article, or in the case of an ambiguity in
any definition contained in Section 10 of this Article, the Board of Directors
shall have the power to determine the application of the provisions of this
Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
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(h) EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10(a) of this Article.
(i) WAIVER OF OWNERSHIP LIMITS. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code and is a corporation, partnership, estate or trust. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person and may impose such other
conditions as the Board of Directors deems necessary, in its sole discretion, to
determine the effect, if any, of the proposed Transfer on the Corporation's
status as a REIT.
(ii) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision
of this Article, the pledge by the Initial Holder of all or any portion of the
Class I Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 10(a) of this Article and the pledgee
shall not be subject to the Ownership Limit with respect to the Class I
Preferred Stock so pledged to it either as a result of the pledge or upon
foreclosure.
(iii) UNDERWRITERS. For a period of 270 days (or such longer period
of time as any underwriter described below shall hold an unsold allotment of
Class I Preferred Stock) following the purchase of Class I Preferred Stock by an
underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class I Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class I Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class I Preferred Stock purchased in connection
with market making activities.
(i) LEGEND. Each certificate for Class I Preferred Stock shall bear
substantially the following legend:
"The shares of Class I Cumulative Preferred Stock represented
by this certificate are subject to restrictions on transfer. No person
may Beneficially Own shares of Class I Cumulative Preferred Stock in
excess of the Ownership Restrictions, as applicable, with certain
further restrictions and exceptions set forth in the Charter (including
the Articles Supplementary setting forth the terms of the Class I
Cumulative Preferred Stock). Any Person that attempts to Beneficially
Own shares of Class I Cumulative Preferred Stock in excess of the
applicable limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed to such
terms in the Charter (including the Articles Supplementary setting
forth the terms of the Class I Cumulative Preferred
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Stock), as the same may be amended from time to time, a copy of which,
including the restrictions on transfer, will be sent without charge to
each stockholder that so requests. If the restrictions on transfer are
violated (i) the transfer of the shares of Class I Cumulative Preferred
Stock represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class I Cumulative Preferred Stock) or (ii) the shares of Class I
Cumulative Preferred Stock represented hereby will automatically be
transferred to a Trustee of a Trust for the benefit of one or more
Charitable Beneficiaries."
(j) SEVERABILITY. If any provision of this Article or any application
of any such provision is determined in a final and unappealable judgment to be
void, invalid or unenforceable by any Federal or state court having jurisdiction
over the issues, the validity and enforceability of the remaining provisions
shall not be affected and other applications of such provision shall be affected
only to the extent necessary to comply with the determination of such court.
(k) BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
(l) SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class I Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXII of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on April 21, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LESLIE OBLAS /s/ JOEL BONDER
- ------------------------------ ---------------------------------
Leslie Oblas
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ JOEL BONDER
---------------------------------
Senior Vice President and
Chief Financial Officer
<PAGE> 281
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLES SUPPLEMENTARY
Apartment Investment and Management Company, a Maryland corporation, having
its principal office in Baltimore, Maryland (hereinafter called the
"CORPORATION"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "SDAT") that:
FIRST: The terms of the Class B Common Stock, par value $.01 per share (the
"CLASS B COMMON STOCK"), of the Corporation contained in Article FOURTH, Section
6 of the Articles of Amendment of the Corporation as filed with the SDAT on July
28, 1994 (as corrected by Certificate of Correction as filed with the SDAT on
November 6, 1997 at 1:40 p.m.) are as follows:
"The number of authorized shares of the Class B Common Stock shall be
reduced automatically by (a) the number of shares of the Class B Common
Stock converted into shares of the Class A Common Stock pursuant to Section
4 of this Article and (b) the number of shares of the Class B Common Stock
repurchased by the Corporation pursuant to Section 5(a) or Section 5(c) of
this Article."
All of the issued shares of Class B Common Stock have been converted or
otherwise acquired by the Corporation and cancelled as provided above. The Board
of Directors pursuant to Article IV, Section 1.2 of the Charter of the
Corporation hereby reclassifies all 100,000 authorized but unissued shares of
Class B Common Stock into 100,000 shares of Class A Common Stock, par value $.01
per share (the "CLASS A COMMON STOCK"), of the Corporation.
SECOND: The terms of the 10,000,000 shares of Class E Cumulative
Convertible Preferred Stock, par value $.01 per share (the "CLASS E PREFERRED
STOCK"), of the Corporation contained in Article THIRD, paragraph 7 of the
Articles Supplementary of the Corporation as filed with the SDAT on October 1,
1998 are as follows:
"All shares of Class E Preferred Stock which shall have been issued
and reacquired in any manner by the Corporation shall be retired and cannot
be reissued."
<PAGE> 282
All of the issued shares of Class E Preferred Stock have been converted into
Class A Common Stock of the Corporation. The Board of Directors pursuant to
Article IV, Section 1.2 of the Charter of the Corporation hereby reclassifies
all 10,000,000 authorized shares of Class E Preferred Stock into 10,000,000
shares of Class A Common Stock.
THIRD: The Corporation has not issued 360,000 shares of Class C Cumulative
Preferred Stock, par value $.01 per share (the "CLASS C PREFERRED STOCK"), of
the Corporation. The Board of Directors pursuant to Article IV, Section 1.2 of
the Charter of the Corporation hereby reclassifies all 360,000 authorized but
unissued shares of Class C Preferred Stock into 360,000 shares of Class A Common
Stock.
FOURTH: The Corporation has not issued 400,000 shares of Class D Cumulative
Preferred Stock, par value $.01 per share (the "CLASS D PREFERRED STOCK"), of
the Corporation. The Board of Directors pursuant to Article IV, Section 1.2 of
the Charter of the Corporation hereby reclassifies all 400,000 authorized but
unissued shares of Class D Preferred Stock into 400,000 shares of Class A Common
Stock.
FIFTH: The Corporation has not issued 300,000 shares of Class H Cumulative
Preferred Stock, par value $.01 per share (the "CLASS H PREFERRED STOCK"), of
the Corporation. The Board of Directors pursuant to Article IV, Section 1.2 of
the Charter of the Corporation hereby reclassifies all 300,000 authorized but
unissued shares of Class H Preferred Stock into 300,000 shares of Class A Common
Stock.
SIXTH: The Corporation has not issued 750,000 shares of Class J Cumulative
Convertible Preferred Stock, par value $.01 per share (the "CLASS J PREFERRED
STOCK"), of the Corporation. The Board of Directors pursuant to Article IV,
Section 1.2 of the Charter of the Corporation hereby reclassifies all 750,000
authorized but unissued shares of Class J Preferred Stock into 750,000 shares of
Class A Common Stock.
SEVENTH: The Corporation has not issued 750,000 shares of Class K
Convertible Cumulative Preferred Stock, par value $.01 per share (the "CLASS K
PREFERRED STOCK"), of the Corporation. The Board of Directors pursuant to
Article IV, Section 1.2 of the Charter of the Corporation hereby reclassifies
all 750,000 authorized but unissued shares of Class K Preferred Stock into
750,000 shares of Class A Common Stock.
EIGHTH: As a result of the reclassifications described herein, the
Corporation's authorized capital stock currently consists of the following:
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<PAGE> 283
480,937,500 shares of Class A Common Stock, par value $.01 per share.
750,000 shares of Class B Cumulative Convertible Preferred Stock, par value
$.01 per share.
2,400,000 shares of Class C Cumulative Preferred Stock, par value $.01 per
share.
4,200,000 shares of Class D Cumulative Preferred Stock, par value $.01 per
share.
4,050,000 shares of Class G Cumulative Preferred Stock, par value $.01 per
share.
2,000,000 shares of Class H Cumulative Preferred Stock, par value $.01 per
share.
10,000,000 shares of Class I Cumulative Preferred Stock, par value $.01 per
share.
1,250,000 shares of Class J Cumulative Convertible Preferred Stock, par
value $.01 per share.
5,000,000 shares of Class K Convertible Cumulative Preferred Stock, par
value $.01 per share.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Vice Chairman and President and witnessed
by its Secretary on April 21, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- ------------------------------- -------------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of Apartment Investment and
Management Company, who executed on behalf of the Corporation the foregoing
Articles Supplementary of which this Certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ PETER K. KOMPANIEZ
-------------------------------
Peter K. Kompaniez,
Vice Chairman and President
4
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLES OF RESTATEMENT
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation,
having its principal office in Baltimore City, Maryland (hereinafter referred to
as the "CORPORATION" or "AIMCO"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The Corporation desires to and does hereby restate its Charter
as currently in effect. The Charter as currently in effect is found in the
following charter documents filed with the State Department of Assessments and
Taxation of Maryland (the "SDAT"):
(1) Articles of Amendment and Restatement as filed with the
SDAT on July 15, 1994 (as corrected by Certificates of Correction as
filed with the SDAT on November 6, 1997 at 1:35 p.m., on November 30,
1998 at 1:22 p.m., on May 24, 1999 at 1:38 p.m. and on May 24, 1999 at
1:47 p.m., respectively);
(2) Articles of Amendment as filed with the SDAT on July 28,
1994 at 11:33 a.m. (as corrected by Certificate of Correction as filed
with the SDAT on November 6, 1997 at 1:37 p.m. and on May 24, 1999 at
1:43 p.m.);
(3) Articles Supplementary as filed with the SDAT on August 4,
1997 (Class B Preferred Stock);
<PAGE> 286
(4) Articles Supplementary as filed with the SDAT on December
22, 1997 (as corrected by Certificates of Correction as filed with the
SDAT on February 18, 1998 and on November 30, 1998 at 1:24 p.m.,
respectively) (Class C Preferred Stock);
(5) Articles Supplementary as filed with the SDAT on February
18, 1998 (as corrected by Certificate of Correction as filed with the
SDAT on November 30, 1998 at 1:26 p.m.) (Class D Preferred Stock);
(6) Articles of Amendment as filed with the SDAT on June 19,
1998;
(7) Articles Supplementary as filed with the SDAT on July 13,
1998 (Class G Preferred Stock);
(8) Articles Supplementary as filed with the SDAT on August
13, 1998 (Class H Preferred Stock);
(9) Articles of Merger as filed with the SDAT on October 1,
1998 (as corrected by Certificate of Correction as filed with the SDAT
on May 24, 1999 at 1:33 p.m.);
(10) Articles Supplementary as filed with the SDAT on November
6, 1998 (Class J Preferred Stock);
(11) Articles Supplementary as filed with the SDAT on February
17, 1999 (Class K Preferred Stock);
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<PAGE> 287
(12) Articles Supplementary as filed with the SDAT on May 25,
1999 at 1:24 p.m. (Class I Preferred Stock); and
(13) Articles Supplementary as filed with the SDAT on May 25,
1999 at l:29 p.m.
SECOND: The Charter of the Corporation as restated in its entirety
(except to the extent that the provisions of Articles Supplementary referred to
in Article FIRST, paragraphs (3), (4), (5), (7), (8), (10), (11), and (12) above
relating to the various classes of Preferred Stock of the Corporation are
incorporated by reference) is as follows:
ARTICLE I
ARTICLE II
PURPOSE
The purpose for which the Corporation is formed is to engage in any
lawful act or activity for which corporations may be organized under the general
laws of the State of Maryland authorizing the formation of corporations as now
or hereafter in force.
ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in
the State of Maryland is c/o CSC -- Lawyers Incorporating Service Company, 11
East Chase Street, Baltimore, Maryland 21202. The name and address of the
resident agent of the Corporation in the State of Maryland is CSC -- Lawyers
Incorporating Service Company, 11 East Chase Street, Baltimore, Maryland 21202.
The resident agent is a Maryland corporation located in the State of Maryland.
3
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ARTICLE IV
STOCK
SECTION 1. AUTHORIZED SHARES
1.1 CLASS AND NUMBER OF SHARES. The total number of shares of
stock that the Corporation from time to time shall have authority to issue is
510,587,500 shares of capital stock having a par value of $.01 per share,
amounting to an aggregate par value of $5,105,875, consisting of 480,937,500
shares currently classified as Class A Common Stock, par value $.01 per share
(the "CLASS A COMMON STOCK") (the Class A Common Stock and all other classes or
series of common stock hereafter classified being referred to collectively
herein as the "COMMON STOCK"), 750,000 shares currently classified as Class B
Cumulative Convertible Preferred Stock, par value $.01 per share (the "CLASS B
PREFERRED STOCK"), 2,400,000 shares currently classified as Class C Cumulative
Preferred Stock, par value $.01 per share (the "CLASS C PREFERRED STOCK"),
4,200,000 shares currently classified as Class D Cumulative Preferred Stock, par
value $.01 per share (the "CLASS D PREFERRED STOCK"), 4,050,000 shares currently
classified as Class G Cumulative Preferred Stock, par value $.01 per share (the
"CLASS G PREFERRED STOCK"), 2,000,000 shares currently classified as Class H
Cumulative Preferred Stock, par value $.01 per share (the "CLASS H PREFERRED
STOCK"), 10,000,000 shares currently classified as Class I Cumulative Preferred
Stock, par value $.01 per share (the "CLASS I PREFERRED STOCK"), 1,250,000
shares currently classified as Class J Cumulative Convertible Preferred Stock,
par value $.01 per share (the "CLASS J PREFERRED STOCK"), and 5,000,000 shares
currently classified as Class K Convertible Cumulative Preferred Stock, par
value $.01 per share (the "CLASS K PREFERRED STOCK") (the Class B Preferred
Stock, the Class C Preferred Stock, the Class D Preferred Stock, the Class G
Preferred Stock, the Class H Preferred Stock, the Class J Preferred Stock, Class
K Preferred Stock, and all other classes or series of preferred stock hereafter
classified being referred to collectively herein as the "PREFERRED STOCK").(1)
- -----------------------
(1) This section has been revised to reflect action taken in articles
supplementary filed since the section was last amended on June 19, 1998: (i) to
delete language relating to Class B Common Stock, the shares of which were
either cancelled or reclassified into Class A Common Stock; (ii) to add language
relating to Class G Preferred Stock, Class H Preferred Stock, Class I Preferred
Stock, Class J Preferred Stock, and Class K Preferred Stock which were
reclassified from Class A Common Stock; (iii) to adjust the number of shares and
aggregate par value of the authorized
(continued...)
4
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1.2 CHANGES IN CLASSIFICATION AND PREFERENCES. The Board of
Directors by resolution or resolutions from time to time may classify and
reclassify any unissued shares of capital stock by setting or changing in any
one or more respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption of such shares of capital stock, including, but not limited to,
ownership restrictions consistent with the Ownership Restrictions with respect
to each such class or subclass of capital stock, and the number of shares
constituting each such class or subclass, and to increase or decrease the number
of shares of any such class or subclass.
SECTION 2. NO PREEMPTIVE RIGHTS. No holder of shares of stock of the
Corporation shall, as such holder, have any preemptive right to purchase or
subscribe for any additional shares of the stock of the Corporation or any other
security of the Corporation that it may issue or sell.
SECTION 3. COMMON STOCK.
3.1 DIVIDEND RIGHTS. The holders of shares of Common Stock
shall be entitled to receive such dividends as may be declared by the Board of
Directors of the Corporation out of funds legally available therefor.
3.2 RIGHTS UPON LIQUIDATION. Subject to the preferential
rights of Preferred Stock, if any, as may be determined by the Board of
Directors pursuant to Section l of this Article IV, in the event of any
voluntary or involuntary liquidation, dissolution or winding up of, or any
distribution of the assets of the Corporation, each holder of shares of Common
Stock shall be entitled to receive, ratably with each other holder of Common
Stock, that portion of the assets of the Corporation available for distribution
to its shareholders as the number of shares of the Common Stock held by such
holder bears to the total number of shares of Common Stock then outstanding.
- -----------------------
(1) (...continued)
capital stock of the Corporation for those shares of Class B Common Stock that
were cancelled, and (iv) to adjust the number of shares of authorized Class A
Common Stock, Class C Preferred Stock, Class D Preferred Stock, Class H
Preferred Stock, Class I Preferred Stock, and Class K Preferred Stock for shares
reclassified into or from Class A Common Stock. Class E Preferred Stock was
authorized, issued, converted and reclassified into Class A Common Stock. Class
F Preferred Stock has not heretofore been used as class a designations.
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3.3 VOTING RIGHTS. The holders of shares of Common Stock shall
be entitled to vote on all matters (on which a holder of shares of Common Stock
shall be entitled to vote) at the meetings of the shareholders of the
Corporation, and shall be entitled to one vote for each share of Common Stock
entitled to vote at such meeting.
3.4 RESTRICTION ON OWNERSHIP AND TRANSFERS. The Beneficial
Ownership and Transfer of Common Stock shall be subject to the restrictions set
forth in this Section 3.4 of this Article IV.
3.4.1 RESTRICTIONS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP.
Except as provided in Section 3.4.8 of this Article IV, from and after the date
of the Initial Public Offering, no Person (other than the Initial Holder or a
Look-Through Entity) shall Beneficially Own shares of Common Stock in excess of
the Ownership Limit, the Initial Holder shall not Beneficially Own shares of
Common Stock in excess of the Initial Holder Limit and no Look-Through Entity
shall Beneficially Own shares of Common Stock in excess of the Look-Through
Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT.
Except as provided in Section 3.4.8 of this Article IV, from and after the date
of the Initial Public Offering (and subject to Section 3.4.12 of this Article
IV), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Common Stock in excess of the Ownership Limit shall be void ab
initio as to the Transfer of such shares of Common Stock that would be otherwise
Beneficially Owned by such Person in excess of the Ownership Limit, and the
intended transferee shall acquire no rights in such shares of Common Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER
LIMIT. Except as provided in Section 3.4.8 of this Article IV, from and after
the date of the Initial Public Offering (and subject to Section 3.4.12 of this
Article IV), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in the Initial Holder Beneficially Owning shares of Common Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Common Stock that would be otherwise
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Beneficially Owned by the Initial Holder in excess of the Initial Holder Limit,
and the Initial Holder shall acquire no rights in such shares of Common Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH
OWNERSHIP LIMIT. Except as provided in Section 3.4.8 of this Article IV, from
and after the date of the Initial Public Offering (and subject to Section 3.4.12
of this Article IV), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Common
Stock in excess of the Look-Through Ownership Limit shall be void ab initio as
to the Transfer of such shares of Common Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look- Through
Ownership Limit, and such Look-Through Entity shall acquire no rights in such
shares of Common Stock.
(E) TRANSFERS RESULTING IN OWNERSHIP BY
FEWER THAN 100 PERSONS. Except as provided in Section 3.4.8 of this Article IV,
from and after the date of the Initial Public Offering (and subject to Section
3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in the Common Stock being Beneficially Owned by less
than 100 Persons (determined without reference to any rules of attribution)
shall be void ab initio as to the Transfer of such shares of Common Stock that
would be otherwise Beneficially Owned by the transferee, and the intended
transferee shall acquire no rights in such shares of Common Stock.
(F) TRANSFERS RESULTING IN "CLOSELY HELD"
STATUS. From and after the date of the Initial Public Offering, any Transfer
that, if effective, would result in the Corporation being "closely held" within
the meaning of Section 856(h) of the Code, or would otherwise result in the
Corporation failing to qualify as a REIT (including, without limitation, a
Transfer or other event that would result in the Corporation owning (directly or
constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Corporation from such
tenant would cause the Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code) shall be void ab initio as to the
Transfer of shares of Common Stock that would cause the Corporation (i) to be
"closely held" within the meaning of Section 856(h) of the Code or (ii)
otherwise fail to qualify as a REIT, as the case may be, and the intended
transferee shall acquire no rights in such shares of Common Stock.
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(G) SEVERABILITY ON VOID TRANSACTIONS. A
Transfer of a share of Common Stock that is null and void under Sections
3.4.1(B), (C), (D), (E) or (F) of this Article IV because it would, if
effective, result in (i) the ownership of Common Stock in excess of the Initial
Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii)
the Common Stock being Beneficially Owned by less than 100 Persons (determined
without reference to any rules of attribution), (iii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iv) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Common Stock in the same or
any other related transaction.
3.4.2 REMEDIES FOR BREACH. If the Board of Directors
or a committee thereof shall at any time determine in good faith that a Transfer
or other event has taken place in violation of Section 3.4.1 of this Article IV
or that a Person intends to acquire or has attempted to acquire Beneficial
Ownership of any shares of Common Stock in violation of Section 3.4.1 of this
Article IV (whether or not such violation is intended), the Board of Directors
or a committee thereof shall be empowered to take any action as it deems
advisable to refuse to give effect to or to prevent such Transfer or other
event, including, but not limited to, refusing to give effect to such Transfer
or other event on the books of the Corporation, causing the Corporation to
redeem such shares at the then current Market Price and upon such terms and
conditions as may be specified by the Board of Directors in its sole discretion
(including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of any
distributions received in respect of shares of Common Stock acquired in
violation of Section 3.4.1 of this Article IV or instituting proceedings to
enjoin such Transfer or to rescind such Transfer or attempted Transfer;
provided, however, that any Transfers or attempted Transfers (or in the case of
events other than a Transfer, Beneficial Ownership) in violation of Section
3.4.1 of this Article IV, regardless of any action (or non-action) by the Board
of Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 3.4.3 of this Article
IV; provided, further, that the provisions of this Section 3.4.2 shall be
subject to the provisions of Section 3.4.12 of this Article IV; provided,
further, that neither the Board of Directors nor any committee thereof may
exercise such authority in a manner that interferes with any ownership or
transfer of Common Stock that is expressly authorized pursuant to Section
3.4.8(D) of this Article IV.
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3.4.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If,
notwithstanding the other provisions contained in this Article IV, at any time
after the date of the Initial Public Offering there is a purported Transfer (an
"EXCESS TRANSFER") (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) or other change in the capital
structure of the Corporation (including, but not limited to, any redemption of
Preferred Stock) or other event such that (a) any Person (other than the Initial
Holder or a Look-Through Entity) would Beneficially Own shares of Common Stock
in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially
Own shares of Common Stock in excess of the Initial Holder Limit, or (c) any
Person that is a Look-Through Entity would Beneficially Own shares of Common
Stock in excess of the Look-Through Ownership Limit (in any such event, the
Person, Initial Holder or Look-Through Entity that would Beneficially Own shares
of Common Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Entity Limit is referred to as a "PROHIBITED TRANSFEREE"),
then, except as otherwise provided in Section 3.4.8 of this Article IV, such
shares of Common Stock in excess of the Ownership Limit, the Initial Holder
Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to
the nearest whole share) shall be automatically transferred to a Trustee in his
capacity as trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be
effective as of the close of business on the business day prior to the date of
the Excess Transfer, change in capital structure or another event giving rise to
a potential violation of the Ownership Limit, the Initial Holder Limit or the
Look Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee
shall be appointed by the Corporation and shall be a Person unaffiliated with
either the Corporation or any Prohibited Transferee. The Trustee may be an
individual or a bank or trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE.
Shares of Common Stock held by the Trustee shall be issued and outstanding
shares of capital stock of the Corporation. Except to the event provided in
Section 3.4.3(E), the Prohibited Transferee shall have no rights in the Common
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
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(D) DIVIDEND AND VOTING RIGHTS. The Trustee
shall have all voting rights and rights to dividends with respect to shares of
Common Stock held in the Trust, which rights shall be exercised for the benefit
of the Charitable Beneficiary. Any dividend or distribution paid prior to the
discovery by the Corporation that the shares of Common Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void ab
initio with respect to such shares of Common Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Common
Stock have been transferred to the Trustee will be rescinded as void ab initio
and shall be recast in accordance with the desires of the Trustee acting for the
benefit of the Charitable Beneficiary. The owner of the shares at the time of
the Excess Transfer, change in capital structure or other event giving rise to a
potential violation of the Ownership Limit, Initial Holder Limit or Look-Through
Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the
Trustee to vote the shares of Common Stock for the benefit of the Charitable
Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of
the Trust may transfer the shares held in the Trust to a person, designated by
the Trustee, whose ownership of the shares will not violate the Ownership
Restrictions. If such a transfer is made, the interest of the Charitable
Beneficiary shall terminate and proceeds of the sale shall be payable to the
Prohibited Transferee and to the Charitable Beneficiary as provided in this
Section 3.4.3(E). The Prohibited Transferee shall receive the lesser of (l) the
price paid by the Prohibited Transferee for the shares or, if the Prohibited
Transferee did not give value for the shares (through a gift, devise or other
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
proceeds in excess of the amount payable to the Prohibited Transferee shall be
payable to the Charitable Beneficiary. if any of the transfer restrictions set
forth in this Section 3.4.3(E) or any application thereof is determined in a
final judgment to be void, invalid or unenforceable by any court having
jurisdiction over the issue, the Prohibited Transferee may be deemed, at the
option of the Corporation, to have acted as the agent of the Corporation in
acquiring the Common Stock as to which such restrictions would, by their terms,
apply, and to hold such Common Stock on behalf of the Corporation.
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(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO
THE TRUSTEE. Shares of Common Stock transferred to the Trustee shall be deemed
to have been offered for sale to the Corporation, or its designee, at a price
per share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on
the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer for a period of 90 days after the
later of (i) the date of the Excess Transfer or other event resulting in a
transfer to the Trust and (ii) the date that the Board of Directors determines
in good faith that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES.
By written notice to the Trustee, the Corporation shall designate one or more
nonprofit organizations to be the Charitable Beneficiary of the interest in the
Trust relating to such Prohibited Transferee if (i) the shares of Common Stock
held in the Trust would not violate the Ownership Restrictions in the hands of
such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
3.4.4 NOTICE OF RESTRICTED TRANSFER. Any Person that
acquires or attempts to acquire shares of Common Stock in violation of Section
3.4.1 of this Article IV, or any Person that is a Prohibited Transferee such
that stock is transferred to the Trustee under Section 3.4.3 of this Article IV,
shall immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted Transfer
or other event on the Corporation's status as a REIT. Failure to give such
notice shall not limit the rights and remedies of the Board of Directors
provided herein in any way.
3.4.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From
and after the date of the Initial Public Offering certain record and Beneficial
Owners and transferees of shares of Common Stock will be required to provide
certain information as set out below.
(A) ANNUAL DISCLOSURE. Every record and
Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%,
as provided in the applicable regulations adopted under the Code) of the number
of Outstanding shares of Common Stock shall, within 30 days after January l of
each year, give written notice to the Corporation stating the name and address
of such record or Beneficial Owner, the number of shares of Common Stock
Beneficially Owned, and a full
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description of how such shares are held. Each such record or Beneficial Owner of
Common Stock shall, upon demand by the Corporation, disclose to the Corporation
in writing such additional information with respect to the Beneficial Ownership
of the Common Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (i) comply with the provisions of the Code regarding
the qualification of the Corporation as a REIT under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each shareholder of record,
including without limitation any Person that holds shares of Common Stock on
behalf of a Beneficial Owner, shall take all reasonable steps to obtain the
written notice described in this Section 3.4.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE
CORPORATION. Any Person that is a Beneficial Owner of shares of Common Stock and
any Person (including the shareholder of record) that is holding shares of
Common Stock for a Beneficial Owner, and any proposed transferee of shares,
shall provide such information as the Corporation, in its sole discretion, may
request in order to determine the Corporation's status as a REIT, to comply with
the requirements of any taxing authority or other governmental agency, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Common Stock already Beneficially Owned by such shareholder or proposed
transferee and any related persons specified, which statement or affidavit shall
be in the form prescribed by the Corporation for that purpose.
3.4.6 REMEDIES NOT LIMITED. Nothing contained in this
Article IV shall limit the authority of the Board of Directors to take such
other action as it deems necessary or advisable (subject to the provisions of
Section 3.4.12 of this Article IV) (i) to protect the Corporation and the
interests of its shareholders in the preservation of the Corporation's status as
a REIT and (ii) to insure compliance with the Ownership Limit, the Initial
Holder Limit and the Look-Through Ownership Limit.
3.4.7 AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of Section 3.4 of this Article IV, or in
the case of an ambiguity in any definition contained in Section 4 of this
Article IV, the Board of Directors shall have the power to determine the
application of the provisions of this Article IV with respect to any situation
based on its reasonable belief, understanding or knowledge of the circumstances.
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3.4.8 EXCEPTIONS. The following exceptions shall
apply or may be established with respect to the limitations of Section 3.4.1 of
this Article IV.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of
Directors, upon receipt of a ruling from the Internal Revenue Service or an
opinion of tax counsel or other evidence or undertaking acceptable to it, may
waive the application, in whole or in part, of the Ownership Limit to a Person
subject to the Ownership Limit, if such person is not an individual for purpose
of Section 542(a) of the Code and is a corporation, partnership, estate or
trust; provided, however, that in no event may any such exception cause such
Person's ownership, direct or indirect (without taking into account such
Person's ownership of interests in any partnership of which the Corporation is a
partner), to exceed 9.8% of the number of Outstanding shares of Common Stock. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person and may impose such other
conditions as the Board deems necessary, in its sole discretion, to determine
the effect, if any, of the proposed Transfer on the Corporation's status as a
REIT.
(B) PLEDGE BY INITIAL HOLDER.
Notwithstanding any other provision of this Article IV, the pledge by the
Initial Holder of all or any portion of the Common Stock directly owned at any
time or from time to time shall not constitute a violation of Section 3.4.1 of
this Article IV and the pledgee shall not be subject to the Ownership Limit with
respect to the Common Stock so pledged to it either as a result of the pledge or
upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days
following the purchase of Common Stock by an underwriter that (i) is a
corporation or a partnership and (ii) participates in an offering of the Common
Stock, such underwriter shall not be subject to the Ownership Limit with respect
to the Common Stock purchased by it as a part of or in connection with such
offering and with respect to any Common Stock purchased in connection with
market making activities.
(D) OWNERSHIP AND TRANSFERS BY THE CMO
TRUSTEE. The Ownership Limit shall not apply to the initial holding of Common
Stock by the "CMO TRUSTEE" (as that term is defined in the "Glossary" to the
Prospectus) for the benefit of "HF FUNDING TRUST" (as that term is defined in
the "Glossary" to the Prospectus), to any subsequent acquisition of Common Stock
by the CMO Trustee in connection with any conversion of Preferred Stock or to
any transfer or assignment of all or any part of the legal or beneficial
interest in the Common Stock to the CMO Trustee, "FSA" (as that term is defined
in the "Glossary" to the Prospectus), any entity
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controlled by FSA, or any direct or indirect creditor of HF Funding Trust
(including without limitation any reinsurer of any obligation of HF Funding
Trust) or any acquisition of Common Stock by any such person in connection with
any conversion of Preferred Stock.
3.4.9 LEGEND. Each certificate for Common Stock shall
bear the following legend:
"The shares of Class A Common Stock represented by this
certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class A Common Stock in excess of the
Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter. Any Person that
attempts to Beneficially Own shares of Class A Common Stock in excess
of the applicable limitation must immediately notify the Corporation.
All capitalized terms in this legend have the meanings ascribed to such
terms in the Charter, as the same may be amended from time to time, a
copy of which, including the restrictions on transfer, will be sent
without charge to each stockholder that so requests. If the
restrictions on transfer are violated, (i) the transfer of shares of
Class A Common Stock represented hereby will be void in accordance with
the Charter or (ii) the shares of Class A Common Stock represented
hereby automatically be will transferred to a Trustee of a Trust for
the benefit of one or more Charitable Beneficiaries."
3.4.10 SEVERABILITY. If any provision of this Article
IV or any application of any such provision is determined in a final and
unappealable judgment to be void, invalid or unenforceable by any Federal or
state court having jurisdiction over the issues, the validity and enforceability
of the remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
3.4.11 BOARD OF DIRECTORS DISCRETION. Anything in
this Article IV to the contrary notwithstanding, the Board of Directors shall be
entitled to take or omit to take such actions as it in its discretion shall
determine to be advisable in order that the Corporation maintain its status as
and continue to qualify as a REIT, including, but not limited to, reducing the
Ownership Limit, the Initial Holder Limit and the Look- Through Ownership Limit
in the event of a change in law.
3.4.12 SETTLEMENT. Nothing in this Section 3.4 of
this Article IV shall be interpreted to preclude the settlement of any
transaction entered into through the
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facilities of the NYSE or other securities exchange or an automated inter-dealer
quotation system.
SECTION 4. DEFINITIONS. The terms set forth below shall have the
meanings specified below when used in this Article IV or in Article V of the
Charter.(2)
4.1 BENEFICIAL OWNERSHIP. The term "BENEFICIAL OWNERSHIP"
shall mean, with respect to any Person, ownership of shares of Common Stock
equal to the sum of (i) the shares of Common Stock directly owned by such
Person, (ii) the number of shares of Common Stock indirectly owned by such
Person (if such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of
shares of Common Stock that such Person is deemed to beneficially own pursuant
to Rule 13d-3 under the Exchange Act or that is attributed to such Person
pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the
Code, provided that when applying this definition of Beneficial Ownership to the
Initial Holder, clause (iii) of this definition, and clause (b) of the
definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER,"
"BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative
meanings.
4.2 CHARITABLE BENEFICIARY. The term "CHARITABLE BENEFICIARY"
shall mean one or more beneficiaries of the Trust as determined pursuant to
Section 3.4.3 of this Article IV, each of which shall be an organization
described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
4.3 CODE. The term "CODE" shall mean the Internal Revenue Code
of 1986, as amended from time to time, or any successor statute thereto.
Reference to any provision of the Code shall mean such provision as in effect
from time to time, as the same may be amended, and any successor thereto, as
interpreted by any applicable regulations or other administrative pronouncements
as in effect from time to time.
4.4 COMMON STOCK. The term "COMMON STOCK" shall mean all
shares now or hereafter authorized of any class of Common Stock of the
Corporation and any other capital stock of the Corporation, however designated,
authorized after the Issue Date, that has the right (subject always to prior
rights of any class of Preferred Stock)
- ------------------------
(2) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
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to participate in the distribution of the assets and earnings of the Corporation
without limit as to per share amount.
4.5 EXCESS TRANSFER. The term "EXCESS TRANSFER" has the
meaning set forth in Section 3.4.3(A) of this Article IV.
4.6 EXCHANGE ACT. The term "EXCHANGE ACT" shall mean the
Securities Exchange Act of 1934, as amended.
4.7 INITIAL HOLDER. The term "INITIAL HOLDER" shall mean Terry
Considine.
4.8 INITIAL HOLDER LIMIT. The term "INITIAL HOLDER LIMIT"
shall mean 15% of the number of Outstanding shares of Common Stock applied, in
the aggregate, to the Initial Holder. From the date of the Initial Public
Offering, the secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available to the
representative(s) of the Initial Holder and the Board of Directors, a schedule
that sets forth the then-current Initial Holder Limit applicable to the Initial
Holder.
4.9 INITIAL PUBLIC OFFERING. The term "INITIAL PUBLIC
OFFERING" shall mean the first underwritten public offering of Class A Common
Stock registered under the Securities Act of 1933, as amended, on a registration
statement on Form S-11 filed with the Securities and Exchange Commission.
4.10 LOOK-THROUGH ENTITY. The term "LOOK-THROUGH ENTITY" shall
mean a Person that is either (i) described in Section 401(a) of the Code as
provided under Section 856(h)(3) of the Code or (ii) registered under the
Investment Company Act of 1940.
4.11 LOOK-THROUGH OWNERSHIP LIMIT. The term "LOOK-THROUGH
OWNERSHIP LIMIT" shall mean 15% of the number of Outstanding shares of Common
Stock.
4.12 MARKET PRICE. The term "MARKET PRICE" on any date shall
mean the Closing Price on the Trading Day immediately preceding such date. The
term "CLOSING PRICE" on any date shall mean the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting
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system with respect to securities listed or admitted to trading on the NYSE or,
if the Common Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if the Common Stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Company. The term "TRADING DAY" shall mean a day on which the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business or, if the Common
Stock is not listed or admitted to trading on any national securities exchange,
shall mean any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
4.13 NYSE. The term "NYSE" shall mean the New York Stock
Exchange, Inc.
4.14 OUTSTANDING. The term "OUTSTANDING" shall mean issued and
outstanding shares of Common Stock of the Corporation, provided that for
purposes of the application of the Ownership Limit, the Look-Through Ownership
Limit or the Initial Holder Limit to any Person, the term "OUTSTANDING" shall be
deemed to include the number of shares of Common Stock that such Person alone,
at that time, could acquire pursuant to any options or convertible securities.
4.15 OWNERSHIP LIMIT. The term "OWNERSHIP LIMIT" shall mean,
for any Person other than the Initial Holder or a Look-Through Entity, 8.7% of
the number of the Outstanding shares of Common Stock of the Corporation.
4.16 OWNERSHIP RESTRICTIONS. The term "OWNERSHIP RESTRICTIONS"
shall mean collectively the Ownership Limit as applied to Persons other than the
Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to
the Initial Holder and the Look-Through Ownership Limit as applied to
Look-Through Entities.
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4.17 PERSON. The term "PERSON" shall mean (A) an individual,
corporation, partnership, estate, trust (including a trust qualifying under
Section 401(a) or 501(c) of the Code), association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or other entity,
and (B) also includes a group as that term is used for purposes of Section
13(d)(3) of the Exchange Act.
4.18 PROHIBITED TRANSFEREE. The term "PROHIBITED TRANSFEREE"
has the meaning set forth in Section 3.4.3(A) of this Article IV.
4.19 REIT. The term "REIT" shall mean a "real estate
investment trust" as defined in Section 856 of the Code.
4.20 TRANSFER. The term "TRANSFER" shall mean any sale,
transfer, gift, assignment, devise or other disposition of a share of Common
Stock (including (i) the granting of an option or any series of such options or
entering into any agreement for the sale, transfer or other disposition of
Common Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Common Stock), whether
voluntary or involuntary, whether of record or Beneficial Ownership, and whether
by operation of law or otherwise (including, but not limited to, any transfer of
an interest in other entities that results in a change in the Beneficial
Ownership of shares of Common Stock). The term "TRANSFERS" and "TRANSFERRED"
shall have correlative meanings.
4.21 TRUST. The term "TRUST" shall mean the trust created
pursuant to Section 3.4.3 of this Article IV.
4.22 TRUSTEE. The term "TRUSTEE" shall mean the Person
unaffiliated with either the Corporation or the Prohibited Transferee that is
appointed by the Corporation to serve as trustee of the Trust.
4.23 PROSPECTUS. The term "PROSPECTUS" shall mean the
prospectus that forms a part of the registration statement filed with the
Securities and Exchange Commission in connection with the initial Public
Offering, in the form included in the registration statement at the time the
registration statement becomes effective; provided, however, that, if such
prospectus is subsequently supplemented or amended for use in connection with
the Initial Public Offering, "PROSPECTUS" shall refer to such prospectus as so
supplemented or amended.
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ARTICLE V
GENERAL REIT PROVISIONS
SECTION 1. TERMINATION OF REIT STATUS. The Board of Directors shall
take no action to terminate the Corporation's status as a REIT until such time
as (i) the Board of Directors adopts a resolution recommending that the
Corporation terminate its status as a REIT, (ii) the Board of Directors presents
the resolution at an annual or special meeting of the shareholders and (iii)
such resolution is approved by the vote of a majority of the shares entitled to
be cast on the resolution.
SECTION 2. EXCHANGE OR MARKET TRANSACTIONS. Nothing in Article IV or
this Article V shall preclude the settlement of any transaction entered into
through the facilities of the NYSE or other national securities exchange or an
automated inter-dealer quotation system. The fact that the settlement of any
transaction is permitted shall not negate the effect of any other provision of
this Article V or any provision of Article IV, and the transferee, including but
not limited to any Prohibited Transferee, in such a transaction shall remain
subject to all the provisions and limitations of Article IV and this Article V.
SECTION 3. SEVERABILITY. If any provision of Article IV or this Article
V or any application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
SECTION 4. WAIVER. The Corporation shall have authority at any time to
waive the requirement that the Corporation redeem shares of Preferred Stock if,
in the sole discretion of the Board of Directors, any such redemption would
jeopardize the status of the Corporation as a REIT for federal income tax
purposes.
ARTICLE VI
BOARD OF DIRECTORS
SECTION 1. MANAGEMENT. The business and the affairs of the Corporation
shall managed under the direction of its Board of Directors.
SECTION 2. NUMBER. The number of directors that will constitute the
entire Board of Directors shall be fixed by, or in the manner provided in, the
Bylaws but shall
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in no event be less than three. Any increases or decreases in the size of the
board shall be apportioned equally among the classes of directors to prevent
stacking in any one class of directors. There are currently six directors in
office whose names are as follows: Terry Considine, Peter K. Kompaniez, Richard
S. Ellwood, J. Landis Martin, Thomas L. Rhodes and John D. Smith.(3)
SECTION 3. Intentionally deleted.
SECTION 4. VACANCIES. Except as otherwise provided in the Charter,(4)
newly created directorships resulting from any increase in the number of
directors may be filled by the majority vote of the Board of Directors, and any
vacancies on the Board of Directors resulting from death, resignation, removal
or other cause shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even if less than a quorum of the Board of
Directors, or, if applicable, by a sole remaining director. Any director elected
in accordance with the preceding sentence shall hold office until the next
annual meeting of the Corporation at which time a successor shall be elected to
fill the remaining term of the position filled by such director.
SECTION 5. REMOVAL. Except as otherwise provided in the Charter,(5) any
director may be removed from office only for cause and only by the affirmative
vote of two-thirds of the aggregate number of votes then entitled to be cast
generally in the election of directors. For purposes of this Section 5, "CAUSE"
shall mean the willful and continuous failure of a director to substantially
perform the duties to the Corporation of such director (other than any such
failure resulting from temporary incapacity due to physical or mental illness)
or the willful engaging by a director in gross misconduct materially and
demonstrably injurious to the Corporation.
SECTION 6. BYLAWS. The Board of Directors shall have power to adopt,
amend, alter, change and repeal any Bylaws of the Corporation by vote of the
majority of the Board of Directors then in office. Any adoption, amendment,
alteration, change or repeal of any Bylaws by the shareholders of the
Corporation shall require the affirmative vote
- ------------------------
(3) See Article FORTH.
(4) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
(5) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
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of a majority of the aggregate number of votes then entitled to be cast
generally in the election of directors. Notwithstanding anything in this Section
6 to the contrary, no amendment, alteration, change or repeal of any provision
of the Bylaws relating to the removal of directors or repeal of the Bylaws shall
be effected without the vote of two-thirds of the aggregate number of votes
entitled be cast generally in the election of Directors.
SECTION 7. POWERS. The enumeration and definition of particular powers
of the Board of Directors included elsewhere in the Charter(6) shall in no way
be limited or restricted by reference to or inference from the terms of any
other clause of this or any other Article of the Charter,(7) or construed as
excluding or limiting, or deemed by inference or otherwise in any manner to
exclude or limit, the powers conferred upon the Board of Directors under the
Maryland General Corporation Law ("MGCL") as now or hereafter in force.
ARTICLE VII
LIMITATION OF LIABILITY
No director or officer of the Corporation shall be liable to the
Corporation or its shareholders for money damages to the maximum extent that
Maryland law in effect from time to time permits limitation of the liability of
directors and officers. Neither the amendment nor repeal of this Article VII,
nor the adoption or amendment of any other provision of the charter or Bylaws of
the Corporation inconsistent with this Article VII, shall apply to or affect in
any respect the applicability of the preceding sentence with respect to any act
or failure to act that occurred prior to such amendment, repeal or adoption.
- ------------------------
(6) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
(7) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
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ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by
Maryland law, as applicable from time to time, all persons who at any time were
or are directors or officers of the Corporation for any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) relating to any action alleged to have been taken or omitted in
such capacity as a director or an officer. The Corporation shall pay or
reimburse all reasonable expenses incurred by a present or former director or
officer of the Corporation in connection with any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) in which the present or former director or officer is a party, in
advance of the final disposition of the proceeding, to the fullest extent
permitted by, and in accordance with the applicable requirements of, Maryland
law, as applicable from time to time. The Corporation may indemnify any other
persons permitted but not required to be indemnified by Maryland law, as
applicable from time to time, if and to extent indemnification is authorized and
determined to be appropriate, in each case in accordance with applicable law, by
the Board of Directors, the majority of the shareholders of the Corporation
entitled to vote thereon or special legal counsel appointed by the Board of
Directors. No amendment of the Charter(8) of the Corporation or repeal of any of
its provisions shall limit or eliminate any of the benefits provided to
directors and officers under this Article VIII in respect of any act or omission
that occurred prior to such amendment or repeal.
ARTICLE IX
WRITTEN CONSENT OF SHAREHOLDERS
Any corporate action upon which a vote of shareholders is required or
permitted may be taken without a meeting or vote of shareholders with the
unanimous written consent of shareholders entitled to vote thereon.
- ------------------------
(8) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
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ARTICLE X
AMENDMENT
The Corporation reserves the right to amend, alter or repeal any
provision contained in this charter upon (i) adoption by the Board of Directors
of a resolution recommending such amendment, alteration, or repeal, (ii)
presentation by the Board of Directors to the shareholders of a resolution at an
annual or special meeting of the shareholders and (iii) approval of such
resolution by the affirmative vote of the holders of a majority (or, as
applicable, a two-thirds vote) of the aggregate number of votes entitled to be
case generally in the election of directors. All rights conferred upon
shareholders herein are subject to this reservation.
ARTICLE XI
EXISTENCE
The Corporation is to have a perpetual existence.
ARTICLE XII
[Reserved.]
ARTICLE XIII
CLASS B PREFERRED STOCK
The terms of the Class B Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class B Preferred Stock, as filed with the SDAT on
August 4, 1997.
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ARTICLE XIV
CLASS C PREFERRED STOCK
The terms of the Class C Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class C Preferred Stock, as filed with the SDAT on
December 22, 1997 (as corrected by Certificates of Correction as filed with the
SDAT on February 18, 1998 and on November 30, 1998 at 1:24 p.m., respectively).
ARTICLE XV
CLASS D PREFERRED STOCK
The terms of the Class D Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class D Preferred Stock, as filed with the SDAT on
February 18, 1998 (as corrected by Certificate of Correction as filed with the
SDAT on November 30, 1998 at 1:26 p.m.).
ARTICLE XVI
CLASS G PREFERRED STOCK
The terms of the Class G Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other
distributions, qualifications, or terms or conditions of redemption) as set by
the Board of Directors are as set forth in the Articles Supplementary relating
to the Class G Preferred Stock, as filed with the SDAT on July 13, 1998.
ARTICLE XVII
CLASS H PREFERRED STOCK
The terms of the Class H Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class G Preferred Stock, as filed with the SDAT on
July 13, 1998.
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<PAGE> 309
ARTICLE XVIII
[Reserved.]
ARTICLE XIX
In accordance with Section 15.4 of the Indenture, dated as of November
1, 1996. by and between Insignia Financial Group, Inc. ("INSIGNIA"), a Delaware
corporation (as Issuer) and First Union National Bank of South Carolina (as
Trustee)(the "INDENTURE"), upon effectiveness of the Merger (as defined in the
Amended and Restated Agreement and Plan of Merger, dated as of May 26, 1998, by
and among the Corporation, Insignia, Insignia/ESG Holdings, Inc., a Delaware
corporation, and AIMCO Properties, L.P., a Delaware limited partnership (the
"MERGER AGREEMENT")), the 6 1/2% Convertible Subordinated Debentures due 2016
issued by Insignia (the "CONVERTIBLE DEBENTURES") will become convertible into
the same consideration received by holders of Class A Common Stock, par value
$.01 per share, of Insignia, pursuant to the Merger (i.e., shares of Class E
Cumulative Preferred Stock, par value $.01 per share, of AIMCO (the "AIMCO CLASS
E PREFERRED STOCK"), (or shares of Class A Common Stock, par value $.01 per
share, of the Corporation (the "AIMCO COMMON STOCK"), if such Convertible
Debentures are converted after the AIMCO Class E Preferred Stock has been
converted into AIMCO Common Stock), the Cash Amount (as defined in the Merger
Agreement), if any, and cash in lieu of fractional shares). Furthermore, the
consideration to be received by holders of Convertible Debentures who convert
such Convertible Debentures subsequent to the effectiveness of the Merger shall
be adjusted as required by Article XV of the Indenture.(9)
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(9) All of the outstanding shares of AIMCO Class E Preferred Stock were
converted into shares of AIMCO Common Stock on January 15, 1999 and all of the
authorized shares of AIMCO Class E Preferred Stock have been reclassified into
Class A Common Stock.
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ARTICLE XX
CLASS J PREFERRED STOCK
The terms of the Class J Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class J Preferred Stock, as filed with the SDAT on
November 6, 1998.
ARTICLE XXI
CLASS K PREFERRED STOCK
The terms of the Class K Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class K Preferred Stock, as filed with the SDAT on
February 17, 1999.
ARTICLE XXII
CLASS I PREFERRED STOCK
The terms of the Class I Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, forth in the Articles Supplementary relating
to the Class K Preferred Stock, as filed with the SDAT on February 17, 1999.
ARTICLE XXII
CLASS I PREFERRED STOCK
The terms of the Class I Preferred Stock (including the preferences,
conversion or other rights, voting powers restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class I Preferred Stock, as filed with the SDAT on
May 25, 1999 at 1:24 p.m.
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* * * * * * *
THIRD: The Board of Directors of the Corporation at a meeting or by a
unanimous consent in writing in lieu of a meeting under Section 2-408 of the
Maryland General Corporation Law adopted a resolution that set forth and
approved the foregoing restatement of the Charter.
FORTH: The Charter of the Corporation is not amended by these Articles
of Amendment and Restatement; provided, however, consistent with Section
2-608(b)(7) of the Maryland General Corporation Law, the current number and
names of directors are provided in the last sentence of Section 2 of Article VI
of the restated Charter of the Corporation.
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IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has
caused these presents to be signed in its name and on its behalf by its Vice
Chairman and President and witnessed by its Secretary on April 21, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By:
- -------------------------------- ----------------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the foregoing
Articles of Restatement of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles of Restatement to be the corporate act of said Corporation and hereby
certifies that to the best of his knowledge, information, and belief the matters
and facts set forth therein with respect to the authorization and approval
thereof are true in all material respects under the penalties of perjury.
----------------------------------
Peter K. Kompaniez,
Vice Chairman and President
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ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS L CONVERTIBLE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 5,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class L Convertible Cumulative Preferred
Stock, par value $.01 per share, and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified
as Class L Convertible Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 5,000,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 480,937,500 shares
immediately prior to the reclassification to 475,937,500 shares immediately
after the reclassification.
THIRD: The terms of the Class L Convertible Cumulative Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class L
Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class L
Preferred Stock"), and Five Million (5,000,000) shall be the authorized number
of shares of such Class L Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class L Preferred Stock, the following terms shall
have the meanings indicated:
<PAGE> 314
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial Holder,
clause (iii) of this definition, and clause (a) (ii) of the definition
of "Person" shall be disregarded. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class L
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 9 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class L Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
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<PAGE> 315
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case, as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotation system that may then be in use
or, if the Equity Stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Equity Stock selected
by the Board of Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time
to time, as the same may be amended, and any successor thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation and such other shares of the Corporation's
capital stock into which outstanding shares of such Class A Common
Stock shall be reclassified.
"Conversion Price" shall mean the conversion price per share of Class A
Common Stock for which each share of Class L Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section 7 of this Article. The initial Conversion Price shall be $46.48
(equivalent to a conversion rate of 0.5379 shares of Class A Common
Stock for each share of Class L Preferred Stock).
"Dividend Payment Date" shall mean February 28, May 28, August 28, and
November 28 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
3
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"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
February 28, May 28, August 28, and November 28 of each year and ending
on and including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
L Preferred Stock shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the Optional Redemption Date or Mandatory
Redemption Date, as applicable, with respect to the Class L Preferred
Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 11.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean May 28, 1999.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including August 27, 1999.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class L Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class L Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
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"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class L Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class L Preferred Stock that are Beneficially Owned by the
Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone, at
that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class L Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class L Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article, (i)
an individual, corporation, partnership, estate, trust (including a
trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) a "group,"
as that term is used for purposes of Section 13(d)(3) of the Exchange
Act, and (b) for purposes of the remaining Sections of this Article,
any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity.
5
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"Prohibited Transferee" has the meaning set forth in Section 11.3(A) of
this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of
Section 3 of this Article.
"Redemption Date" shall mean, in the case of any redemption of any
shares of Class L Preferred Stock, the date fixed for redemption of
such shares.
"Redemption Price" shall mean, with respect to any shares of Class L
Preferred Stock to be redeemed, (i) if the Redemption Date occurs
during the period from and including May 28, 2002, to but excluding May
27, 2003, 102.025% of the Liquidation Preference thereof, and (ii) if
the Redemption Date occurs on or after May 28, 2003, 100.000% of the
Liquidation Preference thereof, plus, in the case of clause (i) or
(ii), all accumulated, accrued and unpaid dividends (whether or not
earned or declared), if any, to the Redemption Date; provided, however,
that if a Redemption Date occurs after a dividend record date and on or
prior to the related Dividend Payment Date, the dividend payable on
such Dividend Payment Date in respect of such shares called for
redemption shall be payable on such Dividend Payment Date to the
holders of record at the close of business on such dividend record date
notwithstanding the redemption of such shares, and shall not be payable
as part of the redemption price for such shares.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class L
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE, a
day on which the NYSE is open for the transaction of business, (ii) if
the Equity Stock is not
6
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listed or admitted to trading on the NYSE but is listed or admitted to
trading on another national securities exchange or automated quotation
system, a day on which the principal national securities exchange or
automated quotation system, as the case may be, on which the Equity
Stock is listed or admitted to trading is open for the transaction of
business, or (iii) if the Equity Stock is not listed or admitted to
trading on any national securities exchange or automated quotation
system, any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of a share of Class L Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
L Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class L Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class L Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class L Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class L Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 9
of this Article.
3. DIVIDENDS.
(a) The holders of Class L Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class L Preferred
Stock in an amount per share equal to (i) during the period from the Issue Date
through and including May 27, 2002, the greater of $0.50625 or the quarterly
cash dividend paid or payable (determined on each Dividend Payment Date by
reference to the dividend most recently declared on the Class A Common Stock) on
the number of shares of Class A
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Common Stock (or portion thereof) into which a share of Class L Preferred Stock
is convertible, and (ii) during the period from and after May 28, 2002, the
greater of $0.625 or the quarterly cash dividend paid or payable (determined on
each Dividend Payment Date by reference to the dividend most recently declared
on the Class A Common Stock) on the number of shares of Class A Common Stock (or
portion thereof) into which a share of Class L Preferred Stock is convertible.
Such dividends shall be cumulative from the Issue Date, whether or not in any
Dividend Period or Periods such dividends shall be declared or there shall be
funds of the Corporation legally available for the payment of such dividends,
and shall be payable quarterly in arrears on each Dividend Payment Date,
commencing on August 28, 1999. Each such dividend shall be payable in arrears to
the holders of record of the Class L Preferred Stock, as they appear on the
stock records of the Corporation at the close of business on the tenth Business
Day immediately preceding such Dividend Payment Date (each a "Record Date").
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) Any dividend payable on the Class L Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class L Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the Class L
Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Class L Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class L Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class L Preferred
Stock have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is set apart
for payment of such dividends on the Class L Preferred Stock for all Dividend
Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made, as the case may be, with respect
to such shares of Parity Stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class L Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the respective
amounts of dividends accumulated, accrued and unpaid on the Class L Preferred
Stock and accumulated, accrued and unpaid on such Parity Stock.
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(d) So long as any of the shares of Class L Preferred Stock
are outstanding, no dividends (other than dividends or distributions paid in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Junior Stock) shall be declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock), directly or indirectly, by the Corporation (except by
conversion into or exchange for shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Stock), nor shall any other cash or
other property otherwise be paid or distributed to or for the benefit of any
holder of shares of Junior Stock in respect thereof, directly or indirectly, by
the Corporation unless, in each case, dividends equal to the full amount of all
accumulated, accrued and unpaid dividends on all outstanding shares of Class L
Preferred Stock have been declared and paid, or such dividends have been
declared and a sum sufficient for the payment thereof has been set apart for
such payment, on all outstanding shares of Class L Preferred Stock for all
Dividend Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made with respect to such shares of
Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or
otherwise acquired or monies paid to or made available for any sinking fund for
such redemption, or the date any such cash or other property is paid or
distributed to or for the benefit of any holders of Junior Stock in respect
thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class L Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class L Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class L Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not
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earned or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class L Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class L Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class L Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
L Preferred Stock and any Parity Stock, as provided in Section 4(a), any other
series or class or classes of Junior Stock shall, subject to the respective
terms thereof, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Class L Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION
(a) Shares of Class L Preferred Stock shall not be redeemable
by the Corporation prior to May 28, 2002, except as set forth in Section 11.2 of
this Article. On or after May 28, 2002, the Corporation, at its option, may
redeem shares of Class L Preferred Stock, in whole or from time to time in part,
for cash in an amount equal to the applicable Redemption Price.
(b) In the event of any redemption, the Redemption Date shall
be selected by the Corporation, shall be specified in the notice of redemption
and shall be not less than 30 days nor more than 60 days after the date notice
of redemption is sent by the Corporation.
(c) If full cumulative dividends on all outstanding shares of
Class L Preferred Stock have not been declared and paid, or declared and set
apart for payment, for all preceding Dividend Periods no shares of Class L
Preferred Stock may be redeemed unless all outstanding shares of Class L
Preferred Stock are simultaneously redeemed, and neither the Corporation nor any
affiliate of the Corporation may purchase or acquire shares of Class L Preferred
Stock, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of shares of Class L Preferred Stock.
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(d) In the event of a redemption, notice of such redemption
shall be given to each holder of record of the shares to be redeemed. Such
notice shall be provided by first class mail, postage prepaid, at such holder's
address as the same appears on the stock records of the Corporation. Neither the
failure to mail any notice required by this paragraph (d), nor any defect
therein or in the mailing thereof to any particular holder, shall affect the
sufficiency of the notice or the validity of the proceedings for redemption with
respect to the other holders. Any notice which has been mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state, as appropriate: (i) the Redemption Date; (ii) the number of shares
of Class L Preferred Stock to be redeemed and, if fewer than all such shares
held by such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (iii) the place or places at which certificates for such
shares are to be surrendered for cash; and (iv) the Redemption Price payable on
such Redemption Date, including, without limitation, a statement as to whether
or not accumulated, accrued and unpaid dividends will be payable as part of the
Redemption Price, or payable on the next Dividend Payment Date to the record
holder at the close of business on the relevant record date as described in the
next succeeding sentence. Notice having been mailed as aforesaid, from and after
the Redemption Date (unless the Corporation shall fail to make available the
amount of cash necessary to effect such redemption), (i) dividends on the shares
of Class L Preferred Stock so called for redemption shall cease to accumulate or
accrue on the shares of Class L Preferred Stock called for redemption, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class L Preferred Stock of the Corporation shall
cease except the right to receive the cash payable upon such redemption, without
interest thereon, upon surrender of their certificates if so required. The
Corporation's obligation to make available the cash necessary to effect such
redemption in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the applicable Redemption Date, the Corporation shall
irrevocably deposit in trust with a bank or trust company (which may not be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption plus, if such Redemption Date occurs
after any dividend record date and on or prior to the related Dividend Payment
Date, such amount of cash as is necessary to pay the dividend payable on such
Dividend Payment Date in respect of such shares of Class L Preferred Stock
called for redemption, with irrevocable instructions that such cash be applied
to the redemption of the shares of Class L Preferred Stock so called for
redemption and, if applicable, the payment of such dividend. No interest shall
accrue for the benefit of the holders of shares of Class L Preferred Stock to be
redeemed on any cash so set aside by the Corporation. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class L Preferred Stock so called for
redemption shall look only to the general funds of the Corporation for the
payment of such cash.
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As promptly as practicable after the surrender in accordance
with such notice of the certificates for any such shares of Class L Preferred
Stock to be so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), such certificates
shall be exchanged for the cash (without interest thereon) for which such shares
have been redeemed in accordance with such notice. If fewer than all the
outstanding shares of Class L Preferred Stock are to be redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding shares of Class L
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class L Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable. If fewer
than all the shares of Class L Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class L Preferred Stock that have been issued
and reacquired in any manner by the Corporation (including, without limitation,
shares of Class L Preferred Stock which have been surrendered for conversion)
shall be returned to the status of authorized but unissued shares of Class L
Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, holders of shares of
Class L Preferred Stock shall have the right to convert all or a portion of such
shares into shares of Class A Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, each share of Class L Preferred Stock shall, at the option of the
holder thereof, be convertible at any time (unless such share is called for
redemption, then to and including but not after the close of business on the
date immediately prior to the Redemption Date, unless the Corporation shall
default in payment due upon redemption thereof), into that number of fully paid
and non-assessable shares of Class A Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing $25 by the
Conversion Price in effect at such time and by surrender of the certificate
representing such shares to be converted in the manner provided in subsection
(b) of this Section 7.1.
(b) In order to convert shares of Class L Preferred Stock, the
holder of the shares to be converted shall surrender the certificate
representing such shares at any office or agency maintained by the Corporation
for such purpose, accompanied by the funds, if any, required by the last
paragraph of this subsection (b) to be paid by
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such holder, and shall give written notice of conversion in the form provided on
such certificate representing shares of Class L Preferred Stock (or such other
notice as is acceptable to the Corporation) to the Corporation at such office or
agency that the holder elects to convert the shares of Class L Preferred Stock
specified in such notice. Such notice shall also state the name or names,
together with address or addresses, in which the certificate or certificates for
shares of Class A Common Stock which shall be issuable in such conversion shall
be issued. Unless the shares issuable on conversion are to be issued in the same
name as the name in which such share of Class L Preferred Stock is registered,
each certificate representing a share of Class L Preferred Stock surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation that such taxes have been
paid).
As promptly as practicable after the surrender of certificates
representing such shares of Class L Preferred Stock and the receipt of such
notice and instruments of transfer as aforesaid, the Corporation shall issue and
shall deliver at such office or agency to such holder, or as designated in such
holder's written instructions, a certificate or certificates for the number of
full shares of Class A Common Stock issuable upon the conversion of such share
or shares of Class L Preferred Stock in accordance with provisions of this
Section 7, and a check or cash in respect of (i) the cash amount payable to such
holder, if any, referred to in the last paragraph of this subsection (b), and
(ii) any fractional interest in a share of Class A Common Stock arising upon
such conversion, as provided in paragraph (c) of this Section 7.1.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which certificates
representing such shares of Class L Preferred Stock shall have been surrendered
and such notice (and any applicable instruments of transfer and any required
taxes) received by the Corporation as aforesaid, and the Person or Persons in
whose name or names any certificate or certificates for shares of Class A Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby at such time on
such date, and such conversion shall be at the Conversion Price in effect at
such time on such date, unless the stock transfer books of the Corporation shall
be closed on that date, in which event such Person or Persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on which such
shares shall have been surrendered and such notice received by the Corporation.
Except as provided herein, the Corporation will make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends (other than dividends on the Class A Common
Stock the record date for
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which is after the conversion date and which the Corporation shall pay in the
ordinary course to the record holder as of the record date) on the Class A
Common Stock issued upon such conversion. Holders of Class L Preferred Stock at
the close of business on a Record Date will be entitled to receive an amount
equal to the dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the conversion of such shares following such Record
Date. If the Dividend Adjustment Amount (as defined below) with respect to any
shares of Class L Preferred Stock surrendered for conversion is positive, the
holders of such shares shall, as of the date of conversion, be entitled to
receive a cash payment equal to such Dividend Adjustment Amount. If the Dividend
Adjustment Amount with respect to any shares of Class L Preferred Stock
surrendered for conversion is negative, such shares must be accompanied by
payment of a cash amount equal to the absolute value of such Dividend Adjustment
Amount. As used herein, "Dividend Adjustment Amount" shall mean, with respect to
any share of Class L Preferred Stock that has been surrendered for conversion,
the sum of:
(i) the aggregate amount of any dividends (whether or not
earned or declared) that are accumulated, accrued and unpaid on such
share as of the time of such conversion; minus
(ii) if such share has been surrendered for conversion during
the period between the close of business on any Record Date and the
opening of business on the corresponding Dividend Payment Date, the
amount of the dividend payable thereon on such Dividend Payment Date;
minus
(iii) if such share has not been surrendered for conversion
during the period between the close of business on any record date for
the payment of a dividend on the Class A Common Stock and the opening
of business on the corresponding dividend payment date, an amount equal
to the product of (A) the quarterly cash dividend per share that was
most recently declared on the Class A Common Stock, determined as of
the date of conversion, and (B) a fraction, the numerator of which is
the number of days in the period from and including the date of the
most recent dividend payment date for the Class A Common Stock or the
Class L Preferred Stock, whichever is later, to but excluding the date
of such conversion, and the denominator of which is 90.
(c) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class L Preferred Stock. If more than one share of Class
L Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class L Preferred Stock so surrendered. In lieu of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of any share of Class L Preferred Stock, the Corporation
shall pay to the holder of such shares an amount
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in cash (computed to the nearest cent) equal to the Closing Price of the Class A
Common Stock on the Trading Day immediately preceding the date of conversion,
multiplied by the fractional interest that otherwise would have been deliverable
upon conversion of such share.
7.2 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to
time as follows:
(i) If the Corporation shall after the Issue Date (A)
pay a dividend or make a distribution on its Class A Common Stock in shares of
Class A Common Stock, (B) subdivide its outstanding shares of Class A Common
Stock into a greater number of shares, (C) combine its outstanding shares of
Class A Common Stock into a smaller number of shares or (D) issue any shares of
capital stock by reclassification of its outstanding Class A Common Stock
(including a reclassification pursuant to a merger or consolidation in which the
Corporation is the continuing entity and in which the Class A Common Stock
outstanding immediately prior to the merger or consolidation is not exchanged
for cash, or securities or other property of another entity), then, in each such
case, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any share of Class L Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Class A Common Stock or other capital stock of the Corporation which such holder
would have owned or been entitled to receive immediately following such action
had such share been converted immediately prior to the occurrence of such event.
An adjustment made pursuant to this subsection (i) of this Section 7.2(a) shall
become effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification. If, as a result of an adjustment
made pursuant to this subsection (i), the holder of any share of Class L
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes of capital stock or shares of Class A
Common Stock and other capital stock of the Corporation, the Board of Directors
(whose determination shall be conclusive and shall be described in a statement
filed by the Corporation with the Transfer Agent) shall determine the allocation
of the adjusted Conversion Price between or among shares of such classes of
capital stock or shares of Class A Common Stock and other capital stock.
(ii) If the Corporation shall, after the Issue Date,
issue rights, options or warrants to all holders of its outstanding shares of
Class A Common Stock entitling them (for a period expiring within 45 days after
the record date described below) to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the current market price per share
(determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A
Common Stock (other than pursuant to any stock option, restricted stock or other
incentive or benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers or any dividend
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reinvestment plan of the Corporation in effect at the time hereof or any other
similar plan adopted or implemented hereafter), then the Conversion Price in
effect immediately prior thereto shall be adjusted so that it shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the record date by a fraction, the numerator of which shall be the sum of (A)
the number of shares of Class A Common Stock outstanding on the record date and
(B) the number of shares which the aggregate proceeds to the Corporation from
the exercise of such rights, options or warrants for Class A Common Stock would
purchase at such current market price, and the denominator of which shall be the
sum of (A) the number of shares of Class A Common Stock outstanding on the
record date and (B) the number of additional shares of Class A Common Stock
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall be made successively whenever any rights,
options or warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants; provided, however, that if all of the shares of
Class A Common Stock offered for subscription or purchase are not delivered upon
the exercise of such rights, options or warrants, upon the expiration of such
rights, options or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would have been in effect had the numerator and the
denominator of the foregoing fraction and the resulting adjustment been made
based upon the number of shares of Class A Common Stock actually delivered upon
the exercise of such rights, options or warrants rather than upon the number of
shares of Class A Common Stock offered for subscription or purchase. In
determining whether any rights, options or warrants entitle the holders to
subscribe for or purchase shares of Class A Common Stock at less than such
current market price, and in determining the aggregate offering price of such
shares of Class A Common Stock, there shall be taken into account any
consideration received by the Corporation for such rights, options or warrants,
with the value of such consideration, if other than cash, determined by the
Board of Directors (whose determination shall be conclusive and shall be
described in a statement filed by the Corporation with the Transfer Agent).
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its outstanding Class A Common Stock any
capital stock (other than Class A Common Stock), evidences of its indebtedness
or assets or rights or warrants to subscribe for or purchase securities of the
Corporation (excluding (A) those referred to in subsections (i) and (ii) of this
Section 7.2(a), (B) dividends and distributions paid in cash out of the retained
earnings of the Corporation, and (C) distributions upon mergers or
consolidations to which subsection (b) of this Section 7.2 applies), then, in
each such case, the Conversion Price shall be adjusted to equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date of such distribution by a fraction, the numerator of which shall
be the current market price per share (determined pursuant to subsection (iv) of
this Section 7.2(a)) of the Class A Common Stock, less the fair market value on
such record date (determined by the Board or Directors, whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent) of
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the portion of the capital stock or assets or the evidences of indebtedness or
assets so distributed to the holder of one share of Class A Common Stock or of
such subscription rights or warrants applicable to one share of Class A Common
Stock, and the denominator of which shall be such current market price per share
of Class A Common Stock. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such distribution.
(iv) For the purpose of any computation under
subsections (ii) and (iii) of this Section 7.2(a), the current market price per
share of Class A Common Stock on any date shall be the average of the Closing
Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading
Days ending on the last full Trading Day prior to the Time of Determination or
(B) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such distribution
through such last full Trading Day prior to the Time of Determination. For
purposes of the foregoing, the term "Time of Determination" shall mean the time
and date of the earlier of (A) the record date for determining stockholders
entitled to receive the rights, warrants or distribution referred to in
subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of
"ex-dividend" trading on the exchange or market referred to in the definition of
"Closing Price."
(v) No adjustment in the Conversion Price shall be
required to be made unless such adjustment would require an increase or decrease
of at least one percent of such price; provided, however, that any adjustment
which by reason of this subsection (v) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 7.2 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to
the contrary notwithstanding, the Corporation shall be entitled to make such
reduction in the Conversion Price, in addition to those required by this Section
7.2, as it shall determine in its discretion to be advisable in order that any
stock dividend, subdivision of shares, distribution of rights to purchase stock
or securities, or distribution of securities convertible into or exchangeable
for stock hereafter made by the Corporation to its stockholders shall not be
taxable to the recipients. Except as set forth in subsections (i), (ii) and
(iii) above, the Conversion Price shall not be adjusted for the issuance of
Class A Common Stock, or any securities convertible into or exchangeable for
Class A Common Stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
(vi) The Corporation from time to time may decrease
the Conversion Price by any amount for any period of time if the period is at
least 20 days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Corporation shall mail to holders of
record of shares of Class L Preferred Stock a notice of the decrease at least 15
days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be in
effect.
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(b) Notwithstanding any other provision herein to the
contrary, in case of any merger or consolidation to which the Corporation is a
party (other than a merger or consolidation in which the Corporation is the
continuing entity and in which the Class A Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, or the
securities or other property of another entity), or in the case of any sale or
transfer of all or substantially all of the Corporation's property and assets to
another entity, there will be no adjustment of the Conversion Price, and lawful
provision shall be made by the entity formed by such consolidation or the entity
whose securities, cash or other property will immediately after the merger or
consolidation be owned, by virtue of the merger or consolidation, by the holders
of Class A Common Stock immediately prior to the merger or consolidation, or the
entity which shall have acquired such assets of the Corporation, such that each
share of Class L Preferred Stock then outstanding will, without the consent of
the holder thereof, become convertible into the kind and amount of securities,
cash or other property receivable upon such merger, consolidation, sale or
transfer by a holder of the number of shares of Class A Common Stock into which
such share of Class L Preferred Stock was convertible immediately prior to such
merger, consolidation, sale or transfer assuming such holder of Class A Common
Stock did not exercise his rights of election, if any, as to the kind or amount
of securities, cash or other property receivable upon such merger,
consolidation, sale or transfer. In the case of a cash merger of the Corporation
into another entity or any other cash transaction of the type mentioned in this
Section 7.2(b), each share of Class L Preferred Stock will thereafter be
convertible at the Conversion Price in effect at such time into the same amount
of cash per share into which each share of Class L Preferred Stock would have
been convertible had such share been converted into Class A Common Stock
immediately prior to the effective date of such cash merger or other
transaction. The foregoing provisions of this Section 7.2(b) shall similarly
apply to successive mergers, consolidations, sales or transfers.
(c) If (i) the Corporation shall take any action that would
require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the
Corporation shall authorize the granting to the holders of the Class A Common
Stock generally of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants; (iii) there
shall be any reorganization or reclassification of the Class A Common Stock
(other than an event to which subsection (i) of Section 7.2(a) applies) or any
consolidation or merger to which the Corporation is a party or any sale or
transfer of all or substantially all of the assets of the Corporation, in each
case, for which approval of any stockholders of the Corporation is required; or
(iv) there shall be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation; then, in each such case, the Corporation shall
cause to be given to the holders of shares of Class L Preferred Stock and the
Transfer Agent as promptly as possible, but in any event at least 15 days prior
to the applicable date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such action or granting of
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Class A Common Stock of record to be entitled to such
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dividend, distribution, rights or warrants are to be determined, or (ii) the
date on which such reorganization, reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is expected to become
effective or occur, and the date as of which it is expected that holders of
Class A Common Stock of record shall be entitled to exchange their shares of
Class A Common Stock for securities, cash or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up. Failure to give such notice or any
defect therein shall not affect the legality or validity of the proceedings
described in this Section 7.2(c).
(d) Whenever the Conversion Price is adjusted as herein
provided, (i) the Corporation shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment and a brief
statement of the facts requiring such adjustment and the manner of computing the
same, which certificate shall be conclusive evidence of the correctness of such
adjustment, and (ii) the Corporation shall mail or cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder of record of
shares of Class L Preferred Stock a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price.
(e) In any case in which paragraph (a) of this Section 7.2
shall require that an adjustment be made immediately following a record date or
an effective date, the Corporation may elect to defer (but only until the filing
by the Corporation with the Transfer Agent of the certificate required by
subsection 7.2(d)) (i) issuing to the holder of any share of Class L Preferred
Stock converted after such record date or effective date the shares of Class A
Common Stock issuable upon such conversion in excess of the shares of Class A
Common Stock issuable upon such conversion on the basis of the Conversion Price
prior to adjustment, and (ii) paying to such holder any amount of cash in lieu
of a fractional share.
(f) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any
share of Class L Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares of
Class A Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any share of Class L Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A Common Stock
contained in this Section 7.2.
(g) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Class A Common Stock, for the purpose of effecting
conversion of shares of Class L Preferred Stock, the full number of shares of
Class A Common Stock deliverable upon the conversion of all outstanding shares
of Class L Preferred Stock not theretofore converted and on or before (and as a
condition of) taking any action that
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would cause an adjustment of the Conversion Price resulting in an increase in
the number of shares of Class A Common Stock deliverable upon conversion in
excess of the number thereof previously reserved and available therefor, the
Corporation shall take all such action so required. For purposes of this
paragraph (g), the number of shares of Class A Common Stock which shall be
deliverable upon the conversion of all outstanding shares of Class L Preferred
Stock shall be computed as if at the time of computation all such outstanding
shares of Class L Preferred Stock were held by a single holder (and without
regard to the Ownership Limit).
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value (if any) of the shares of
Class A Common Stock deliverable upon conversion of the shares of Class L
Preferred Stock, the Corporation shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of Class A Common
Stock at such adjusted Conversion Price.
(h) The Corporation will pay any and all documentary stamp,
issue or transfer taxes, and any other similar taxes, payable in respect of the
issue or delivery of shares of Class A Common Stock upon conversion of shares of
Class L Preferred Stock pursuant hereto; provided, however, that the Corporation
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Class A Common Stock in
a name other than that of the holder of the shares of Class L Preferred Stock to
be converted, and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Corporation the amount
of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
(i) Notwithstanding anything to the contrary contained in this
Section 7, conversion of Class L Preferred Stock pursuant to this Section 7
shall be permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in the Charter).
(j) If the Corporation shall take any action affecting the
Class A Common Stock, other than action described in this Section 7, that in the
opinion of the Board of Directors would materially adversely affect the
conversion rights of the holders of Class L Preferred Stock, the Board of
Directors may, but shall have no obligation to, adjust the Conversion Price for
the Class L Preferred Stock to the extent permitted by law in such manner, if
any, and at such time as the Board of Directors, in its sole discretion, may
determine to be equitable under the circumstances.
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8. RANKING.
Any class or series of capital stock of the Corporation shall
be deemed to rank:
(a) prior or senior to the Class L Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class L Preferred Stock ("Senior Stock");
(b) on a parity with the Class L Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class L Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock or Class K Convertible Cumulative
Preferred Stock of the Corporation, or (ii) the holders of such class of stock
or series and the Class L Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority of one over the
other (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class L Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Common Stock or (ii)
the holders of Class L Preferred Stock shall be entitled to receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of shares of such class or
series (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Junior Stock").
9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class L Preferred Stock shall be in arrears (which
shall, with respect to any such quarterly dividend, mean that any such dividend
has not been paid in full), whether or not earned or declared, the number of
directors then constituting the Board of Directors shall be increased by two (if
not already increased by reason of similar types of provisions with respect to
shares of Parity Stock of any
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other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class L Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class L
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class L Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been declared and paid, or
declared and set apart for payment, then the right of the holders of the Class L
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages), and the
terms of office of all persons elected as directors by the holders of the Class
L Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class L Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Class L Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Class L Preferred Stock and of the Voting Preferred Stock for the
election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Class L Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall hold office
until the next annual meeting of the stockholders or special meeting held in
lieu thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the directors elected by the holders
of the Class L Preferred Stock and the Voting Preferred Stock, a successor shall
be elected by the Board of Directors, upon the nomination of the then-remaining
director elected by the holders of the Class L Preferred Stock and the Voting
Preferred Stock or the successor of such remaining director, to serve until the
next annual meeting of the stockholders or special meeting held in place thereof
if such office shall not have previously terminated as provided above.
(b) So long as any shares of Class L Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class L Preferred
Stock voting as a single class, given in person or by proxy, either in writing
without a meeting or by vote at any meeting called for the purpose, shall be
necessary for effecting or validating:
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(i) Any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of the
Class L Preferred Stock (including any amendment, alteration or repeal effected
pursuant to a merger, consolidation or similar transaction) or would convert the
Class L Preferred Stock into cash or any other security other than a preferred
stock with terms and provisions equivalent to those set forth in these Articles
Supplementary; provided, however, that the amendment of the provisions of the
Charter so as to authorize or create, or to increase the authorized amount of,
or issue any Junior Stock or any shares of any class of Parity Stock shall not
be deemed to materially adversely affect the voting powers, rights or
preferences of the holders of Class L Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of Senior
Stock or any security convertible into shares of any class or series of Senior
Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class L Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class L Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting
rights under these Articles Supplementary, each share of Class L Preferred Stock
shall have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class L
Preferred Stock as a single class on any matter, then the Class L Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class L Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the
record holder of any share of Class L Preferred Stock as the true and lawful
owner thereof for all purposes, and neither the Corporation nor the Transfer
Agent shall be affected by any notice to the contrary.
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11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class L
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class L Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class L
Preferred Stock in excess of the Look- Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided
in Section 11.8, from and after the Issue Date (and subject to Section 11.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class L Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class L Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class L Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class L Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class L Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder limit, and the
Initial Holder shall acquire no rights in such shares of Class L Preferred
Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 11.8 from and after the Issue Date (and subject to
Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Class L
Preferred Stock in excess of the Look- Through Ownership limit shall be void ab
initio as to the Transfer of such shares of Class L Preferred Stock that would
be otherwise Beneficially Owned by such Look- Through Entity in excess of the
Look-Through Ownership Limit and such Look- Through Entity shall acquire no
rights in such shares of Class L Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being
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"closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class L Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class L
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class L Preferred Stock that is null and void under Sections 11.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class L Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class L Preferred Stock in
the same or any other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 11.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class L Preferred Stock in violation of Section 11.1 of this Article
(whether or not such violation is intended), the Board of Directors or a
committee thereof shall be empowered to take any action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event, including,
but not limited to, refusing to give effect to such Transfer or other event on
the books of the Corporation, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class L Preferred Stock acquired in violation of Section
11.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; provided, however, that any
Transfers or attempted Transfers (or, in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 11.3 of this Article; provided, further, that the
provisions of this Section 11.2 shall be subject to the provisions of Section
11.12 of this Article; provided, further, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of
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Class L Preferred Stock that is expressly authorized pursuant to Section 11.8(C)
of this Article.
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) or other
change in the capital structure of the Corporation (including, but not limited
to, any redemption of Equity Stock) or other event (including, but not limited
to, any acquisition of any share of Equity Stock) such that (a) any Person
(other than the Initial Holder or a Look-Through Entity) would Beneficially Own
shares of Class L Preferred Stock in excess of the Ownership Limit, or (b) the
Initial Holder would Beneficially Own shares of Class L Preferred Stock in
excess of the Initial Holder Limit, or (c) any Person that is a Look-Through
Entity would Beneficially Own shares of Class L Preferred Stock in excess of the
Look- Through Ownership Limit (in any such event, the Person, Initial Holder or
Look- Through Entity that would Beneficially Own shares of Class L Preferred
Stock in excess of the Ownership Limit, the Initial Holder Limit or the
Look-Through Entity Limit, respectively, is referred to as a "Prohibited
Transferee"), then, except as otherwise provided in Section 11.8 of this
Article, such shares of Class L Preferred Stock in excess of the Ownership
Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case
may be, (rounded up to the nearest whole share) shall be automatically
transferred to a Trustee in his capacity as trustee of a Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the Business Day
prior to the Excess Transfer, change in capital structure or another event
giving rise to a potential violation of the Ownership Limit, the Initial Holder
Limit or the Look- Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class L
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
11.3(E), the Prohibited Transferee shall have no rights in the Class L Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
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(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class L
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class L Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class L Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class L Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure or
other event giving rise to a potential violation of the Ownership Limit, Initial
Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have
given an irrevocable proxy to the Trustee to vote the shares of Class L
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the Trust
and (2) the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any proceeds in excess of the
amount payable to the Prohibited Transferee shall be payable to the Charitable
Beneficiary. If any of the transfer restrictions set forth in this Section
11.3(E) or any application thereof is determined in a final judgment to be void,
invalid or unenforceable by any court having jurisdiction over the issue, the
Prohibited Transferee may be deemed, at the option of the Corporation, to have
acted as the agent of the Corporation in acquiring the Class L Preferred Stock
as to which such restrictions would, by their terms, apply, and to hold such
Class L Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares
of Class L Preferred Stock transferred to the Trustee shall be deemed to have
been offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of
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90 days after the later of (i) the date of the Excess Transfer or other event
resulting in a transfer to the Trust and (ii) the date that the Board of
Directors determines in good faith that an Excess Transfer or other event
occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class L Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class L Preferred Stock in violation of Section
11.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 11.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted Transfer
or other event on the Corporation's status as a REIT. Failure to give such
notice shall not limit the rights and remedies of the Board of Directors
provided herein in any way.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class L
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class L Preferred Stock shall, upon written request by the
Corporation, such request to be made within 30 days after January 1 of each
year, give written notice to the Corporation stating the name and address of
such record or Beneficial Owner, the number of shares of Class L Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record or Beneficial Owner of Class L Preferred Stock shall, upon demand by
the Corporation, disclose to the Corporation in writing such additional
information with respect to the Beneficial Ownership of the Class L Preferred
Stock as the Board of Directors, in its sole discretion, deems appropriate or
necessary to (i) comply with the provisions of the Code regarding the
qualification of the Corporation as a REIT under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the Look-
Through Ownership Limit, as applicable. Each stockholder of record, including
without limitation any Person that holds shares of Class L Preferred Stock on
behalf of a Beneficial Owner, shall take all reasonable steps to obtain the
written notice described in this Section 11.5 from the Beneficial Owner.
28
<PAGE> 341
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class L Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class L
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
shall provide such information as the Corporation, in its sole discretion, may
request in order to determine the Corporation's status as a REIT, to comply with
the requirements of any taxing authority or other governmental agency, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall
provide a statement or affidavit to the Corporation setting forth the number of
shares of Class L Preferred Stock already Beneficially Owned by such stockholder
or proposed transferee and any related persons specified, which statement or
affidavit shall be in the form prescribed by the Corporation for that purpose.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (i) to protect the Corporation and the interests of its stockholders in
the preservation of the Corporation's status as a REIT and (ii) to insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 11 of this Article, or in the case of an ambiguity
in any definition contained in Section 11 of this Article, the Board of
Directors shall have the power to determine the application of the provisions of
this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code and is a corporation, partnership, estate or trust. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person and may impose such other
conditions as the Board of Directors deems necessary, in its sole discretion, to
determine the effect, if any, of the proposed Transfer on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class L Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and the
pledgee shall not be subject to the
29
<PAGE> 342
Ownership Limit with respect to the Class L Preferred Stock so pledged to it
either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold allotment
of Class L Preferred Stock) following the purchase of Class L Preferred Stock by
an underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class L Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class L Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class L Preferred Stock purchased in connection
with market making activities.
11.9 LEGEND. Each certificate for Class L Preferred Stock shall bear
substantially the following legend:
"The shares of Class L Convertible Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class L Convertible
Cumulative Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class L Convertible Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class L Convertible
Cumulative Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter
(including the Articles Supplementary setting forth the terms of the
Class L Convertible Cumulative Preferred Stock), as the same may be
amended from time to time, a copy of which, including the restrictions
on transfer, will be sent without charge to each stockholder that so
requests. If the restrictions on transfer are violated (i) the transfer
of the shares of Class L Convertible Cumulative Preferred Stock
represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class L Convertible Cumulative Preferred Stock) or (ii) the shares of
Class L Convertible Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit of
one or more Charitable Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article or any application
of any such provision is determined in a final and unappealable judgment to be
void, invalid or unenforceable by any Federal or state court having jurisdiction
over the issues, the validity and enforceability of the remaining provisions
shall not be affected and other applications of such provision shall be affected
only to the extent necessary to comply with the determination of such court.
30
<PAGE> 343
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, the Board of Directors shall be entitled to take or
omit to take such actions as it in its discretion shall determine to be
advisable in order that the Corporation maintain its status as and continue to
qualify as a REIT, including, but not limited to, reducing the Ownership Limit,
the Initial Holder Limit and the Look- Through Ownership Limit in the event of a
change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class L Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXIII of the Charter.
(the next page is the signature page)
31
<PAGE> 344
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on May 28, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ KATHLEEN HARVEY /s/ TROY D. BUTTS
- ------------------------- ---------------------------
Kathleen Harvey Troy D. Butts
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ TROY D. BUTTS
---------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
32
<PAGE> 1
EXHIBIT 10.1
SIXTH AMENDMENT TO THE THIRD
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.
This SIXTH AMENDMENT TO THE THIRD AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of May 28, 1999 (this
"Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the
"General Partner"), as the general partner of AIMCO Properties, L.P., a
Delaware limited partnership (the "Partnership"), pursuant to the authority
conferred on the General Partner by Section 7.3.C(7) of the Third Amended and
Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as
of July 29, 1994 (the "Agreement"). Capitalized terms used, but not otherwise
defined herein, shall have the respective meanings ascribed thereto in the
Agreement.
WHEREAS, on May 28, 1999, the Previous General Partner filed Articles
Supplementary amending its Charter to reclassify 5,000,000 shares of authorized
but unissued shares of its Class A Common Stock, par value $.01 per share, as
shares of its Class L Convertible Cumulative Preferred Stock, par value $.01
per share (the "Class L Preferred Stock");
WHEREAS, in accordance with Section 4.3.E of the Agreement, upon the
issuance of any such shares of Class L Preferred Stock, the Previous General
Partner will contribute the net cash proceeds from such issuance to the Special
Limited Partner, which will contribute such net cash proceeds to the
Partnership in exchange for a number of Partnership Preferred Units equal to
the number of shares of Class L Preferred Stock so issued, which Partnership
Preferred Units shall have designations, preferences and other rights, terms
and provisions that are substantially the same as the designations, preferences
and other rights, terms and provisions of the Class L Preferred Stock, except
as otherwise set forth herein; and
WHEREAS, pursuant to Section 4.2.A of the Agreement, the General
Partner is authorized to determine the designations, preferences and relative,
participating, optional or other special rights, powers and duties of such
Partnership Preferred Units.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
<PAGE> 2
1. The Agreement is hereby amended by the addition of a new exhibit,
entitled "Exhibit S", in the form attached hereto, which shall be attached to
and made a part of the Agreement.
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and effect and, except as amended hereby, all of the terms,
covenants, provisions and conditions of the Agreement are hereby ratified and
confirmed in all respects.
2
<PAGE> 3
IN WITNESS WHEREOF, this Amendment has been executed as of the date
first written above.
GENERAL PARTNER:
AIMCO-GP, INC.
By: /s/ PETER K. KOMPANIEZ
-------------------------------------
Name: Peter K. Kompaniez
Title: President and Vice Chairman
<PAGE> 4
EXHIBIT S
PARTNERSHIP UNIT DESIGNATION OF THE
CLASS L 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
L Partnership Preferred Units," and the number of Partnership Preferred Units
constituting such class shall be 5,000,000.
2. DEFINITIONS.
For purposes of the Class L Partnership Preferred Units, the following
terms shall have the meanings indicated in this Section 2, and capitalized
terms used and not otherwise defined herein shall have the meanings assigned
thereto in the Agreement:
"Agreement" shall mean the Third Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of July 29, 1994, as
amended.
"Call Date" shall have the meaning set forth in paragraph (a) of
Section 5 of this Exhibit S.
"Class L Partnership Preferred Unit" means a Partnership Preferred
Unit with the designations, preferences and relative, participating,
optional or other special rights, powers and duties as are set forth
in this Exhibit S. It is the intention of the General Partner that
each Class L Partnership Preferred Unit shall be substantially the
economic equivalent of one share of Class L Preferred Stock.
"Class L Preferred Stock" means the Class L Convertible Cumulative
Preferred Stock, par value $0.01 per share, of the Previous General
Partner.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time
to time, as the same may be amended, and any successor thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
1
<PAGE> 5
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Previous General Partner or such shares of the Previous
General Partner's capital stock into which outstanding shares of
Common Stock shall be reclassified.
"Distribution Payment Date" shall mean any date on which cash
dividends are paid on all outstanding shares of the Class L Preferred
Stock.
"Junior Partnership Units" shall have the meaning set forth in
paragraph (c) of Section 8 of this Exhibit S.
"Parity Partnership Units" shall have the meaning set forth in
paragraph (b) of Section 8 of this Exhibit S.
"Partnership" shall mean AIMCO Properties, L.P., a Delaware limited
partnership.
"Senior Partnership Units" shall have the meaning set forth in
paragraph (a) of Section 8 of this Exhibit S.
3. DISTRIBUTIONS.
On every Distribution Payment Date, the holders of Class L
Partnership Preferred Units shall be entitled to receive distributions payable
in cash in an amount per Class L Partnership Preferred Unit equal to the per
share dividend payable on the Class L Preferred Stock on such Distribution
Payment Date. Each such distribution shall be payable to the holders of record
of the Class L Partnership Preferred Units, as they appear on the records of
the Partnership at the close of business on the record date for the dividend
payable with respect to the Class L Preferred Stock on such Distribution
Payment Date. Holders of Class L Partnership Preferred Units shall not be
entitled to any distributions on the Class L Partnership Preferred Units,
whether payable in cash, property or stock, except as provided herein.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding
up of the Partnership, whether voluntary or involuntary, before any payment or
distribution of the Partnership (whether capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Partnership Units, the
holders of Class L Partnership Preferred Units shall be entitled to receive
Twenty-Five Dollars ($25) per Class L Partnership Preferred Unit (the
"Liquidation Preference"), plus an amount per Class L Partnership Preferred
2
<PAGE> 6
Unit equal to all dividends (whether or not declared or earned) accumulated,
accrued and unpaid on one share of Class L Preferred Stock to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Class L Partnership Preferred Units
have been paid the Liquidation Preference in full, plus an amount equal to all
dividends (whether or not declared or earned) accumulated, accrued and unpaid
on the Class L Preferred Stock to the date of final distribution to such
holders, no payment shall be made to any holder of Junior Partnership Units
upon the liquidation, dissolution or winding up of the Partnership. If, upon
any liquidation, dissolution or winding up of the Partnership, the assets of
the Partnership, or proceeds thereof, distributable among the holders of Class
L Partnership Preferred Units shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any Parity
Partnership Units, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class L Partnership Preferred Units and any
such Parity Partnership Units ratably in the same proportion as the respective
amounts that would be payable on such Class L Partnership Preferred Units and
any such other Parity Partnership Units if all amounts payable thereon were
paid in full. For the purposes of this Section 4, (i) a consolidation or merger
of the Partnership with one or more partnerships, or (ii) a sale or transfer of
all or substantially all of the Partner ship's assets shall not be deemed to be
a liquidation, dissolution or winding up, voluntary or involuntary, of the
Partnership.
(b) Upon any liquidation, dissolution or winding up of the
Partnership, after payment shall have been made in full to the holders of Class
L Partnership Preferred Units and any Parity Partnership Units, as provided in
this Section 4, any other series or class or classes of Junior Partnership
Units shall, subject to the respective terms thereof, be entitled to receive
any and all assets remaining to be paid or distributed, and the holders of the
Class L Partnership Preferred Units and any Parity Partnership Units shall not
be entitled to share therein.
5. REDEMPTION.
Class L Partnership Preferred Units shall be redeemable by the
Partnership as follows:
(a) At any time that the Previous General Partner exercises
its right to redeem all or any of the shares of Class L Preferred Stock, the
General Partner shall cause the Partnership to redeem an equal number of Class
L Partnership Preferred Units, at a redemption price per Class L Partnership
Preferred Unit equal to the same price paid by the Previous General Partner to
redeem the Class L Preferred Stock and such price shall be paid in the same
manner (including but not limited to, by means of issuance of long-term
indebtedness for purpose of such redemption) as paid by the Previous General
3
<PAGE> 7
Partner for the Class L Preferred Stock redeemed (the "Call Date"), in the
manner set forth herein; provided, however, that in the event of a redemption
of Class L Partnership Preferred Units, if the Call Date occurs after a
dividend record date for the Class L Preferred Stock and on or prior to the
related Distribution Payment Date, the distribution payable on such
Distribution Payment Date in respect of such Class L Partnership Preferred
Units called for redemption shall be payable on such Distribution Payment Date
to the holders of record of such Class L Partnership Preferred Units on the
applicable dividend record date, and shall not be payable as part of the
redemption price for such Class L Partnership Preferred Units.
(b) If the Partnership shall redeem Class L Partnership
Preferred Units pursuant to paragraph (a) of this Section 5, from and after the
Call Date (unless the Partnership shall fail to make available the amount of
cash or other forms of consideration necessary to effect such redemption), (i)
except for payment of the redemption price, the Partnership shall not make any
further distributions on the Class L Partnership Preferred Units so called for
redemption, (ii) said units shall no longer be deemed to be outstanding, and
(iii) all rights of the holders thereof as holders of Class L Partnership
Preferred Units of the Partnership shall cease except the rights to receive the
cash payable upon such redemption, without interest thereon; provided, however,
that if a Call Date occurs after a dividend record date for the Class L
Preferred Stock and on or prior to the related Distribution Payment Date, the
full distribution payable on such Distribution Payment Date in respect of such
Class L Partnership Preferred Units called for redemption shall be payable on
such Distribution Payment Date to the holders of record of such Class L
Partnership Preferred Units on the applicable dividend record date
notwithstanding the prior redemption of such Class L Partnership Preferred
Units. No interest shall accrue for the benefit of the holders of Class L
Partnership Preferred Units to be redeemed on any cash set aside by the
Partnership.
6. STATUS OF REACQUIRED UNITS.
All Class L Partnership Preferred Units which shall have been issued
and reacquired in any manner by the Partnership shall be deemed cancelled.
7. CONVERSION.
Class L Partnership Preferred Units shall be convertible as follows:
(a) Upon any conversion of shares of Class L Preferred Stock
into shares of Common Stock, the General Partner shall cause a number of Class
L Partnership Preferred Units equal to the number of such converted shares of
Class L Preferred Stock to be converted by the holders thereof into Partnership
Common Units.
4
<PAGE> 8
The conversion ratio in effect from time to time for the conversion of Class L
Partnership Preferred Units into Partnership Common Units pursuant to this
Section 7 shall at all times be equal to, and shall be automatically adjusted
as necessary to reflect, the conversion ratio in effect from time to time for
the conversion of Class L Preferred Stock into Common Stock.
(b) In the event of a conversion of any Class L Partnership
Preferred Units, the Partnership shall make a cash payment to the holder
thereof equal to the cash payment required to be made by the Previous General
Partner to the holder of the shares of Class L Preferred Stock the conversion
of which required the conversion of such Class L Partnership Preferred Units.
Holders of Class L Partnership Preferred Units at the close of business on a
distribution payment record date shall be entitled to receive the distribution
payable on such units on the corresponding Distribution Payment Date
notwithstanding the conversion thereof following such distribution payment
record date and prior to such Distribution Payment Date. Except as provided
above, the Partnership shall make no payment or allowance for unpaid
distributions on converted units or for distributions on the Partnership Common
Units issued upon such conversion. Each conversion of Class L Partnership
Preferred Units into Partnership Common Units shall be deemed to have been
effected at the same time and date that the corresponding conversion of Class L
Preferred Stock into Common Stock is deemed to have been effected.
(c) No fractional Partnership Common Units shall be issued
upon conversion of Class L Partnership Preferred Units. Instead of any
fractional Partnership Common Units that would otherwise be deliverable upon
the conversion of Class L Partnership Preferred Units, the Partnership shall
pay to the holder of such converted units an amount in cash equal to the cash
payable to a holder of an equivalent number of converted shares of Class L
Preferred Stock in lieu of fractional shares of Common Stock.
(d) The Partnership will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of (i) the issue or delivery
of Partnership Common Units or other securities or property on conversion or
redemption of Class L Partnership Preferred Units pursuant hereto, and (ii) the
issue or delivery of Common Stock or other securities or property on conversion
or redemption of Class L Preferred Stock pursuant to the terms hereof.
8. RANKING.
Any class or series of Partnership Units of the Partnership shall be
deemed to rank:
5
<PAGE> 9
(a) prior or senior to the Class L Partnership Preferred
Units, as to the payment of distributions and as to distributions of assets
upon liquidation, dissolution or winding up, if the holders of such class or
series shall be entitled to the receipt of distributions and of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of Class L Partnership Preferred Units
("Senior Partnership Units");
(b) on a parity with the Class L Partnership Preferred Units,
as to the payment of distributions and as to distribution of assets upon
liquidation, dissolution or winding up, whether or not the distribution rates,
distribution payment dates or redemption or liquidation prices per unit or
other denomination thereof be different from those of the Class L 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 Class Two Partnership Preferred Units or (ii)
the holders of such class or series of Partnership Units and the Class L
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 L 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 L 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").
9. SPECIAL ALLOCATIONS.
(a) Gross income and, if necessary, gain shall be allocated
to the holders of Class L Partnership Preferred Units for any Fiscal Year (and,
if necessary, subsequent Fiscal Years) to the extent that the holders of Class
L Partnership Preferred Units receive a distribution on any Class L Partnership
Preferred Units (other than an
6
<PAGE> 10
amount included in any redemption pursuant to Section 5 hereof) with respect to
such Fiscal Year.
(b) If any Class L Partnership Preferred Units are redeemed
pursuant to Section 5 hereof, for the Fiscal Year that includes such redemption
(and, if necessary, for subsequent Fiscal Years) (a) gross income and gain (in
such relative proportions as the General Partner in its discretion shall
determine) shall be allocated to the holders of Class L Partnership Preferred
Units to the extent that the redemption amounts paid or payable with respect to
the Class L Partnership Preferred Units so redeemed exceeds the aggregate
Capital Contributions (net of liabilities assumed or taken subject to by the
Partnership) per Class L Partnership Preferred Unit allocable to the Class L
Partnership Preferred Units so redeemed and (b) deductions and losses (in such
relative proportions as the General Partner in its discretion shall determine)
shall be allocated to the holders of Class L Partnership Preferred Units to the
extent that the aggregate Capital Contributions (net of liabilities assumed or
taken subject to by the Partnership) per Class L Partnership Preferred Unit
allocable to the Class L Partnership Preferred Units so redeemed exceeds the
redemption amount paid or payable with respect to the Class L Partnership
Preferred Units so redeemed.
10. RESTRICTIONS ON OWNERSHIP.
The Class L Partnership Preferred Units shall be owned and held solely
by the General Partner or the Special Limited Partner.
11. GENERAL.
(a) The ownership of Class L Partnership Preferred Units may
(but need not, in the sole and absolute discretion of the General Partner) be
evidenced by one or more certificates. The General Partner shall amend Exhibit
A to the Agreement from time to time to the extent necessary to reflect
accurately the issuance of, and subsequent conversion, redemption, or any other
event having an effect on the ownership of, Class L Partnership Preferred
Units.
(b) The rights of the General Partner and the Special Limited
Partner, in their capacity as holders of the Class L Partnership Preferred
Units, are in addition to and not in limitation of any other rights or
authority of the General Partner or the Special Limited Partner, respectively,
in any other capacity under the Agreement or applicable law. In addition,
nothing contained herein shall be deemed to limit or otherwise restrict the
authority of the General Partner or the Special Limited Partner under the
Agreement, other than in their capacity as holders of the Class L Partnership
Preferred Units.
7
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 105,925
<SECURITIES> 0
<RECEIVABLES> 20,027
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,971,072
<DEPRECIATION> (291,755)
<TOTAL-ASSETS> 4,400,690
<CURRENT-LIABILITIES> 0
<BONDS> 1,567,095
149,500
641,250
<COMMON> 651
<OTHER-SE> 1,631,524
<TOTAL-LIABILITY-AND-EQUITY> 4,400,690
<SALES> 244,915
<TOTAL-REVENUES> 266,857
<CGS> 161,494
<TOTAL-COSTS> 171,928
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,064
<INCOME-PRETAX> 37,073
<INCOME-TAX> 0
<INCOME-CONTINUING> 37,073
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,073
<EPS-BASIC> 0.16
<EPS-DILUTED> 0.16
</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,
Apartment Investment and Management Company, a Maryland corporation (the
"Company") has not filed as an exhibit to its Quarterly Report on Form 10-Q for
the quarterly period ending June 30, 1999, any instrument with respect to
long-term debt not being registered where the total amount of securities
authorized thereunder does not exceed 10 percent of the total assets of the
Company and its subsidiaries on a consolidated basis. Pursuant to Item 601
(b)(4) (iii) (A), of Regulation S-K, the Company hereby agrees to furnish a copy
of any such agreement to the Securities Exchange Commission upon request.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ PETER KOMPANIEZ
------------------------------------
Peter Kompaniez
President
